Negative Impact of the Internet on Business

Today, a massive amount of business is done over the Internet. Everything from buying stock to paying taxes to making household purchases can be done online, often at a substantial savings. But in certain fields or situations, the Internet is simply bad for business.

Since the late 1990s, Internet retailers have seen rapid growth in their businesses, both in terms of customer volume and total online sales. What started out as only certain products being widely available online has come to a point at which today, nearly everything that can be bought in a store (and some things that can't) are available for purchase somewhere online.

Of course, not all of these Internet sales represent new customers and new money. The vast majority come at the expense of traditional retailers, who have seen sales decline in accordance with the rise of online shopping. For sellers who maintain both retail locations ("bricks") and an online store ("clicks"), the pressure is on to find a balance between customers who prefer a traditional shopping experience and those who appreciate the convenience of using the Internet.

The Internet also brings new competitors to many areas of business. It is within the ability of just about anyone to offer his products or services online through any number of selling venues, thus adding literally millions of new merchants to the global marketplace. For existing businesses, these new online sellers represent a challenge to retain customers or risk being driven out of business.

Additionally, the Internet removes the restrictions of geography. Shopping locally is no longer the only choice, and goods can be ordered from anywhere. Smaller businesses need only create a website to expand their customer bases to everyone with Internet access rather than being restricted by a local or regional market.

Certain products and services are quickly becoming obsolete in the digital age, including stock brokers, travel agents and even the post office. They have been largely replaced by stock websites, travel websites and e-mail, respectively. While some companies have spotted these trends before they occurred and offered online services to augment their business model, others have been left with a depleted customer base.

Automation on the Internet also has eliminated countless jobs. As businesses use the Internet to simplify and streamline their operations, there is less need for a large labor force. For cases in which an automated online system can sort data or answer customers' questions, the human element is sometimes deemed unnecessary.

For all of the business conducted online, security and confidentiality become major concerns. Each year, millions of dollars are spent on security efforts to ensure that transactions are safe and that customers will feel comfortable conducting business online.

Beyond day-to-day transactions, major security threats such as hackers, viruses, and e-terrorism mean that providing security online means an added expenditure that simply doesn't exist elsewhere. Breaches of security, such as the highly publicized theft of credit card data on several occasions, lead customers to question the safety of doing business online, which can hurt business further by lowering confidence levels.

One final way in which the Internet is bad for business doesn't concern the business that happens online at all. Instead, it relates to lost productivity due to employees using the Internet at work. Estimates vary, but it is agreed that American workers spend a substantial amount of their workday replying to personal e-mail, following live sporting events and web surfing. During the NCAA college basketball March Madness competition, the effect of lost productivity due to employees watching basketball games online is especially visible.

Even for scenarios in which employees are not equipped with computers, the availability of wireless Internet on phones and other mobile devices creates a constant swarm of distraction that can cut into work time. Many employers have taken steps to regulate their employees' Internet usage, but concerns about privacy and legality linger.