Has the Internet caused the recession?
Discussion
Wacky Racer said:
One thing is for sure:-
It's no use businesses moaning about the internet.
Like the atom bomb it isn't going to go away.
They have to learn to live with it or die a slow lingering death.
And they must be bold and creative with their approach to adapting to it. Trying a lame "online addition" to their business whilst trying to protect their current income streams won't cut it. It's no use businesses moaning about the internet.
Like the atom bomb it isn't going to go away.
They have to learn to live with it or die a slow lingering death.
Adapt or die. You can spend your time complaining about change, or you can change your own business to be competitive.
I went into halfords the other day for some windscreen wiper blades. £17.95. I thought that was a little steep for the pair so went onto ebay to see what kind of prices a pair of windscreen wiper blades were. £3.95 with free delivery.
Arrived 2 days later.
Adapt or die.
I went into halfords the other day for some windscreen wiper blades. £17.95. I thought that was a little steep for the pair so went onto ebay to see what kind of prices a pair of windscreen wiper blades were. £3.95 with free delivery.
Arrived 2 days later.
Adapt or die.
Hi,
I think there's some very valid points in this thread and they all combine as factors into why the recession, certainly here in the UK (to focus for a second) has happened. There is no one 'single' reason at all though, so to 'blame' the internet for causing the economic slump I think is misguided. I think a very big factor in the reason the UK is in this situation is many of the UK's population over borrowed when money was being thrown around like confetti/credit was cheap. When the party ended, and they realised that they had to pay it back as well, the 'hangover' kicked in.. with a vengeance. The 'government' and the 'banking sector' all had a part to play as well, it's just that the government cannot publicly say the banks and the people are at fault, the banks can't publicly say the people are at fault but will try to shift blame on the government.
Part of these factors is also 'culture' and 'mindset' - it's not really in the British psyche to 'save for a rainy day, it's usually spend spend and 'keeping up with the jones' - my background is that I'm Indian, and since being a small child, it's been 'drummed' into me to live within my means, spend wisely and save money. For me, there's no doubt that is a good mindset/culture to have.
I agree with the notion of businesses surviving by adapting and evolving. Those which don't are much more likely to fail or decline - over the last few years, plenty of big, well established and previously successful companies have folded due to not adapting their business to consumer trends and buying styles. Had they done so, perhaps some decline was inevitable but perhaps wouldn't have needed to fold completely?
For the future, things in the UK do need to move and adapt quicker, other countries are making rapid progression and I'm not talking about the BRIC nations here, but also other developed countries such as South Korea and some of the bigger former Eastern Block countries where the desire for progression is seemingly much greater than here. The amount of red tape, committee's and faffing around to decide things takes far,far too long in the UK - what was it? 20+ years of dithering to decide if Terminal 5 would be built and then another 5+ years for construction etc? - now it'll probably be another 20+ years dithering around for the 3rd Runway thing...
Overall, there's many factors involved in terms of doing business in the UK, we are still the 7th largest manufacturing nation in the world, we do make high tech/specialised products which are exported around the world, ok so the actual monetary figures don't stack up as good as the USA and China etc for example, but it's a big factor in keeping the UK 'going'. Retail level businesses do indeed have the potential to do well, but various industries are declining whilst others are picking up - being a book/paper printing business doesn't have long term survival chances for instance.. also, globalisation is something the UK does need to wake up to better and quicker.
Cheers, Dennis!
I think there's some very valid points in this thread and they all combine as factors into why the recession, certainly here in the UK (to focus for a second) has happened. There is no one 'single' reason at all though, so to 'blame' the internet for causing the economic slump I think is misguided. I think a very big factor in the reason the UK is in this situation is many of the UK's population over borrowed when money was being thrown around like confetti/credit was cheap. When the party ended, and they realised that they had to pay it back as well, the 'hangover' kicked in.. with a vengeance. The 'government' and the 'banking sector' all had a part to play as well, it's just that the government cannot publicly say the banks and the people are at fault, the banks can't publicly say the people are at fault but will try to shift blame on the government.
Part of these factors is also 'culture' and 'mindset' - it's not really in the British psyche to 'save for a rainy day, it's usually spend spend and 'keeping up with the jones' - my background is that I'm Indian, and since being a small child, it's been 'drummed' into me to live within my means, spend wisely and save money. For me, there's no doubt that is a good mindset/culture to have.
I agree with the notion of businesses surviving by adapting and evolving. Those which don't are much more likely to fail or decline - over the last few years, plenty of big, well established and previously successful companies have folded due to not adapting their business to consumer trends and buying styles. Had they done so, perhaps some decline was inevitable but perhaps wouldn't have needed to fold completely?
For the future, things in the UK do need to move and adapt quicker, other countries are making rapid progression and I'm not talking about the BRIC nations here, but also other developed countries such as South Korea and some of the bigger former Eastern Block countries where the desire for progression is seemingly much greater than here. The amount of red tape, committee's and faffing around to decide things takes far,far too long in the UK - what was it? 20+ years of dithering to decide if Terminal 5 would be built and then another 5+ years for construction etc? - now it'll probably be another 20+ years dithering around for the 3rd Runway thing...
Overall, there's many factors involved in terms of doing business in the UK, we are still the 7th largest manufacturing nation in the world, we do make high tech/specialised products which are exported around the world, ok so the actual monetary figures don't stack up as good as the USA and China etc for example, but it's a big factor in keeping the UK 'going'. Retail level businesses do indeed have the potential to do well, but various industries are declining whilst others are picking up - being a book/paper printing business doesn't have long term survival chances for instance.. also, globalisation is something the UK does need to wake up to better and quicker.
Cheers, Dennis!
sunbeam alpine said:
What bugs me is that I have friends who go to shops to look at/compare stuff, then they order it at a lower price on the internet. Don't they realise that there won't be anywhere to go look at products if they carry on like that? Maybe I just have some stupid friends!
This behaviour is indeed slowly eroding bricks and mortar stores as we know it. I had read somewhere that Best Buy in the states was getting so fed up of being a 'window for the internet' that they were using their muscle with their suppliers to ensure that rival online retailers had the same prices as their physical stores. If this happened throughout the world then perhaps people would only shop on the internet for convenience rather than for price.I fear that we will end up becoming a society that orders everything online to have it delivered to our own personal locker at the end of our street. When we have to return an item we will put it back in the locker and it will be picked up automatically. We will become anti-social beings who live in virtual worlds with no need to make contact with others! (I hope this doesn't happen!!!)
Edited by liller on Saturday 13th October 19:07
The internet has certainly changed the way we do business but I wouldn't say that it has caused the recession as there have been as many winners as losers. High street shops have lost, mail order companies have won, and the customer gets more choice and lower prices. The motor car wasn't good news for the horse and cart market but it created a whole new, and bigger, industry.
As a country, we need to face up to the challenge of international competitors. Before the internet, if I needed to find a new supplier I would look in the local Yellow Pages, or something like Kelly's Directory, now an internet search shows suppliers all round the world, and email means that communication is easy and free. This I think is the biggest challenge to the UK, but I'm not complaining as I do very well out of it.
As a country, we need to face up to the challenge of international competitors. Before the internet, if I needed to find a new supplier I would look in the local Yellow Pages, or something like Kelly's Directory, now an internet search shows suppliers all round the world, and email means that communication is easy and free. This I think is the biggest challenge to the UK, but I'm not complaining as I do very well out of it.
Edited by RYH64E on Saturday 13th October 20:17
Retailers have some part to play in this as well - it's not all down to price. When I go into a shop, and the person who serves me is knowledgeable, actually interested in my requirements, and takes the time to help me, then chances are I will spend money in that shop. It also increases the likelihood I will return to that shop in future as I know that I will be treated well.
What is more typical in my experience though, is I enter a shop and struggle to find someone who will even acknowledge my presence rather than treat me as a mere interruption to their conversation with their colleague or whatever ever else they are doing. When they do finally find the time to 'help' their product knowledge is poor, they can't answer basic questions and can't be bothered to find out what they don't know. They lie, and claim products do things they don't. They try to sell me things at vastly over inflated prices (£40 for a gold plated USB lead "because it will improve your printer quality" for example). They try to badger me into purchasing worthless extended warranties, and are often surly and rude. Is it any wonder then that having the option to sit in the comfort of my front room and research something in my own time, order it and have it delivered often at no extra cost, that I take it? If it happens to save me a few quid then so much the better.
Government has a part to play in this as well. It used to be that I could drive into my local town high street and park for nothing. The town centre was always busy and had a variety of small shops. The local council decided that it wasn't fair that the bigger town nearby had parking charges and we didn't, so they imposed parking charges. As a result, people just drive to the bigger town instead as there are more shops there and they have to pay wherever they go. The result is the previously busy car parks are underused a majority of the time, and several of the high street shops have closed.
What is more typical in my experience though, is I enter a shop and struggle to find someone who will even acknowledge my presence rather than treat me as a mere interruption to their conversation with their colleague or whatever ever else they are doing. When they do finally find the time to 'help' their product knowledge is poor, they can't answer basic questions and can't be bothered to find out what they don't know. They lie, and claim products do things they don't. They try to sell me things at vastly over inflated prices (£40 for a gold plated USB lead "because it will improve your printer quality" for example). They try to badger me into purchasing worthless extended warranties, and are often surly and rude. Is it any wonder then that having the option to sit in the comfort of my front room and research something in my own time, order it and have it delivered often at no extra cost, that I take it? If it happens to save me a few quid then so much the better.
Government has a part to play in this as well. It used to be that I could drive into my local town high street and park for nothing. The town centre was always busy and had a variety of small shops. The local council decided that it wasn't fair that the bigger town nearby had parking charges and we didn't, so they imposed parking charges. As a result, people just drive to the bigger town instead as there are more shops there and they have to pay wherever they go. The result is the previously busy car parks are underused a majority of the time, and several of the high street shops have closed.
Marf said:
No. A lack of confidence caused by an inability to accurately assess risk in a post-securitisation credit market caused the recession.
And they could pre-securitisation? Personally I don't think there's been any change in that regard.What has happened is that investors (at long last) accept that they need to do their DD. IMHO, the rate at which transactions were getting done in the boom years, there's no way they could have been doing it properly. That's by the by though.
What the internet has done is three things:
1) Reduce information asymmetry - buyers are now better informed about products, substitutes, and prices
2) Increase the geographical size of markets - not always limited to the local market
3) Made it easier to compare across those markets
Today I bought cheese. And bread. And a rugby shirt for my son. From 3 different shops, in a city centre, that we went to specifically to buy these things. All were probably overpriced for what they were, but I suspect none could have been bought online at the same quality or overall price (and even if they could, I wouldn't have wanted to wait for delivery). In fact, the cheesemonger I use has a website but doesn't sell online.
But on Friday I bought a load of standard electrical bits, online, based on specification, price, and availability for next day delivery. I'd already had a look for local suppliers, but they either couldn't supply, or would have been charging more and waiting longer for stock to arrive than it would take for me to receive them after ordering online. Would I have undertaken and 250 mile round trip to visit this supplier? No.
Two completely different sets of transactions, from two very different sources - both of which understand what it is their customers want and are prepared to pay for and have worked out how to deliver it. Has that not always been the recipe for success in competitive markets?
If margins are compressed to the point that viability is threatened in a sector, then expect a change in the market dynamics. Yes there may be a new equilibrium, but this isn't necessarily fixed in the medium term.
LooneyTunes said:
Marf said:
No. A lack of confidence caused by an inability to accurately assess risk in a post-securitisation credit market caused the recession.
And they could pre-securitisation? Personally I don't think there's been any change in that regard.Securitisation failed precisely because of it's main selling point.
Edited by Marf on Saturday 13th October 22:17
Welcome to the world of perfect competition.
http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
Things change. The way people shop has changed yet again. Nothing really new.
If you think about the green grocer, butcher, baker, corner shop etc. how many have given way after super markets?
Most city centres are busy, towns less so.
So I don't think the Internet is responsible for the recession. More to do with the facts our exports are far lower than they should be.
If you think about the green grocer, butcher, baker, corner shop etc. how many have given way after super markets?
Most city centres are busy, towns less so.
So I don't think the Internet is responsible for the recession. More to do with the facts our exports are far lower than they should be.
As said above the net has given opportunity, information and power to buyer and seller BUT its destroyed margin. Take the fishing shop, you can call up a specialist and find out the best reel for your rod from someone who really knows his stuff, you then order it from a multi channel dropshipper working on 5% and selling reels to kids tea sets.
Factor in amazon as a one stop seller suicide shop and we have a snapshot of new age retail but its not caused the recession.
Factor in amazon as a one stop seller suicide shop and we have a snapshot of new age retail but its not caused the recession.
ringram said:
Welcome to the world of perfect competition.
http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
From the website link in your profile.http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
"We are authorised European Distributors for EFILive and Innovate products."
Cool, as you add nothing of value I'll just give Innovate a call and buy direct from them. Thanks for the heads up.
ringram said:
Welcome to the world of perfect competition.
http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
So you are saying goodbye to yourself as a middleman?http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
ringram said:
Welcome to the world of perfect competition.
http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
Foot - bullet; bullet - foot!http://en.wikipedia.org/wiki/Perfect_competition
All positive IMO. Goodbye middlemen, you added nothing anyway.
Pioneer said:
0000 said:
The internet has cut margins for high street retailers, but it's created massive margins for online ones and others; Apple, Google, all those ISPs, IPTV the world over, mobile phone companies, software houses, etc., etc... billions and billions.
Yep, all massive multi nations sucking money out of the UK.... How much tax does Google pay in the UK? Apple?DSLiverpool said:
As said above the net has given opportunity, information and power to buyer and seller BUT it's destroyed margin.
That isn't the whole story, it's destroyed margin for those industries operating a traditional business model but created opportunity for those adapting to the new technologies. If you look at retail there's still margin for internet based sellers who don't have to maintain high street premises with customer facing staff and all the associated costs, lower selling costs maintain or even increase margins.Where it gets interesting is with things like newspapers, the traditional model involves printing ink on paper in the early hours of the morning, then delivering to newsagents across the country for sale to commuters or for kids on bicycles to push through letterboxes. The alternative is creating the newspapers electronically then distributing over the internet, instaneous and cheap. The new model is obviously much more efficient, the problem is that nobody (hardly anyone, anyway) actually pays for the electronic version of the news...
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