Negative Impact of the Internet on Business

Because of their reduced overhead costs, online retailers can offer customers a wider range of products at prices that are competitive with those of traditional brick-and-mortar stores. This can lead to "showrooming," a phenomenon in which customers browse products on the shelves of a traditional store, identify the item they want to purchase, and then leave and purchase it online for cheaper prices. The resulting loss of revenues can cause issues even for large retail chains such as Target, Walmart or Best Buy; small specialty stores may be driven completely out of business.

Although business communication might be faster and easier over the Internet, the lack of face-to-face communication often leads to the perception of a company as impersonal, faceless and uncaring. Potential customers who receive automated or stock responses to their questions may be deterred from making a purchase by the frustration they feel. Similarly, employees who only communicate with managers and co-workers through email may feel demoralized and thus become less productive and invested in the company's success.

When business is conducted over the Internet, technical glitches or malicious hackers can expose sensitive data, such as addresses, passwords, credit card details or bank account details. At best, such an occurrence can result in bad publicity for the affected company, leading to a loss of revenue as the company struggles to regain the customers' trust; at worst, it could lead to fraud or identity theft.

Review websites such as Yelp, Epinions and TripAdvisor have magnified the impact of dissatisfied customers. Without the Internet, a single negative opinion may have a limited reach, reaching only the immediate social circle of the original customer. When posted on review websites, however, the same negative opinion is visible to potential customers all over the world and may deter them from doing business with the company.