What Businesses Have Been Affected Negatively by the Internet?by Finn McCuhil
Shopping on the Internet at home in your pajamas is killing local businesses. Actually, it doesn't matter what you wear. While online shopping is convenient and, in many instances, offers immediate delivery of goods and services, every dollar spent online is one less dollar circulating in your local economy. This diminishing revenue stream has an effect on a wide range of businesses.
Record stores were the canary in the coal mine for local specialty stores. They were early victims of Internet sales when compact disc sales plunged with the availability of instant MP3 downloads. By eliminating the need for a consumer to purchase an entire disc to get the one or two songs they wanted, MP3s quickly suppressed the demand and attraction of boutique record stores. Even the market for used and rare recordings was supplanted by the seemingly endless selection available on sites like eBay and Amazon. This downturn hasn't been limited to small stores; even large retailers have seen a permanent effect. The Virgin Megastore in Manhattan's Times Square closed in April of 2009, citing the inability to compete with online outlets. At the time, it was the world's largest music store.
While the death of the printed book is by no means certain, local or small chain book stores can't match the prices offered by large Internet booksellers. Sites like Amazon and Barnes & Noble offer instant downloads for e-books and electronic periodicals, and their massive purchasing power enables them to get discounts far below those available to smaller chains or individual shops. Internet resellers' ability to carry wider selections at lower prices necessarily have an adverse impact on the competitiveness of smaller chains and local stores.
Local and small chain stores that sell musical instruments have also fallen victim to Internet discount sites. In a market where customers like to test the feel and sound of an instrument before they buy, cost was once a secondary consideration. Currently, potential customers commonly test an instrument at a local store, then shop for the best price online. Strings, drumsticks, sheet music and other less expensive and commonly replaced items, once a stable income for music stores, are also available at discounted prices on the Internet. This has the effect of making many stores de facto showrooms for online retailers.
Travel agencies were once the preferred method of booking trips and vacations. They eliminated the need for a potential traveler to call airlines, railways and hotels for the best prices and schedules. In return, they took a small commission for the service of making reservations and finding the best available prices. Current Internet travel services are tied directly into the booking computers for car rental agencies, hotels and airlines. Simple algorithms eliminate the need for a human employee to contact each transport or hospitality provider individually and lower the cost of service to a point that makes it difficult for traditional travel agencies to compete profitably.
Even the venerable U.S. Postal Service has seen its revenues drop with the adoption of Internet services. Business and personal mail that once required a stamp on every envelope is now delivered instantly and without charge. Much of the junk mail that was a constant revenue stream for the post office has taken the form of inbox spam. The shrinking volume of mail, along with online stamp and postage sales, has reduced the ability of the post office to employ many of the postal clerks and letter carriers who were once responsible for delivery of most of the country's letters and parcels.
- The Wall Street Journal: Chapter 11 for Borders, New Chapter for Books
- Wired: "World's Largest Music Store" Closing Down
- WQXR: Colony Records, Broadway Music Landmark, to Close
- The Washington Post: Mourning the Closure of the Guitar Shop
- The New York Times: With Cuts on the Way, Postal Service Customers Already Bemoan Delays
- The Washington Post: Mail Volume Expected to Continue to Decline; U.S. Postal Service Adapting Services
- Jupiterimages/Goodshoot/Getty Images