Stephen Logan

Has Internet Retailing Beaten the Credit Crunch?

17th Aug 2009 News, Industry News 2 minutes to read

Over the past couple of years, the media buzzword has been ‘credit crunch’. We’ve been inundated with doom and gloom stories of struggling retailers, repossessed homes and banks collapsing. But as with all downturns, there are some businesses that buck the trend.

Whilst back in the 1920’s it was mostly bootleggers, today there is an altogether different trend. Although, that said, many might argue that today’s bootleggers have moved from ‘hooch’ to music and video, just look at Pirate Bay, but that’s a different story altogether.

No, instead, many of the recent successes have come online. Unlike the boom and bust years of the late 1990’s when so many start-ups took advantage of the newly found popularity of the Internet, today’s tech savvy entrepreneurs appear to be taking full advantage of the medium. Many retailers, think Woolworths or Littlewoods as good examples (both under Shop Direct leadership), have moved completely online to cut soaring high street costs.

Pay per Click advertising has fallen during the recession; however, this has been at a much slower rate than most offline forms and is mostly as a result of the top spenders cutting budgets. This is no doubt in part due to the added flexibility and ease of tracking with all sales data used. There are very few offline channels that can compare and, as such, the move online has been made far easier.

Then of course there is the newly found social aspect of the Internet. During the initial boom, customer service was restricted to call backs end emails; whilst still a vital part today, things have progressed. Social media allows businesses to communicate directly with their ‘followers’, be they clients, customers or just interested parties.

We reported on how Social Media could boost revenue by up to 18% last month, with companies such as Starbucks and Dell taking the initiative. There’s no doubt that the likes of Facebook and Twitter have transcended the idea of simply communicating amongst peers, to becoming a living, breathing marketing machine. This has once again pushed people back online to do business.

Whilst small companies are turning over tidy profits with far more limited budgets thanks to their ability to trade solely online, major strides have also been made at the top. Whilst offline you have disastrous stories about job losses and record losses from major international firms, take BA as a good example, the big players online have largely continued to churn a decent profit. Yes there are significant exceptions, MySpace is probably one that stands out, but the big four Google, Yahoo, Microsoft and now Facebook, are all delivering results that range from good to exceptional.

With the bottom falling out of property prices, money being tighter than ever for consumers and major competition on the high street, online is becoming an attractive proposal. Entrepreneurial spirit is hard to extinguish; people with ideas will always want to put them into practice. With a rising online population, the Internet arguably provides the most versatile, easily accessible and cost-efficient ways of putting business ideas into practice.

What do you think? Is the Internet really the place for businesses to beat the credit crunch? Will it become the dominant trading platform of the future or does the lure of physically purchasing items still outweigh the convenience of virtual goods?

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