The Growing Online Businesses and Unemployment - Literature review Example

A review on the growing online businesses and unemployment A review on the growing online businesses and unemployment Introduction In the research conducted by IFF Research Limited (2008), online shopping is a trend to watch in the present day business world. Researchers and analysts indicate that online shopping has indeed exploded, and retailers have taken up the trend of expanding their businesses by diversifying the amount of goods being retailed online (IFF Research Limited, 2008). As if not enough, online shoppers have resulted to free shipping of goods purchased and proper advertisement in the social media that encompasses a huge number of personalities (IFF Research Limited, 2008). With a huge percentage of retailers opting to go the online way, it is evident that a lot of negative and positive impacts will be witnessed. Among the negative impacts include an increase in the unemployment levels in the business world. Additionally, IFF Research Limited (2008) is keen to explain the rate at which mobile phones and other devices like the tablets have reduced the world into one small village. As the online shopping thrives, it is evident that consumers have a myriad of ways of comparing the prices in the market, and a huge number of them are less interested in ‘physical’ shopping probably due to lack of time to window shop, and at times the consumers find it too intricate to shop in crowded shops. This essay will aim at highlight the impact of online shopping to the employment rates in the business world. With globalization, a major characteristic of the world today, the business world is not spared from going global. The essay will shed light on the rising unemployment rates, as a result of an increase in online shoppers, shedding light on globalization and consumer protection. Body Internet and business As seen in the work researched by Katz (2012), the retailers that have shifted to the ‘clicks’ have witnessed rapid growth in their business. This growth has been witnessed both in terms of the number of clients visiting their sites as well as the amount of goods being retailed. This is to mean that all the goods that clients have managed to access in shops are found in the ‘click’ shops. From an analysis of this situation, it is evident that there is an entry in novel funds and new clients in the online community. This money has been lost at the expense of traditional retailers who retain their businesses in well constructed buildings at strategic places in the society. In the research conducted by Katz (2012), the traditional retailers accept as true that they have witnessed a decline ion their sales, with a rise in online shopping. On a more pressing note, the retailers in the buildings are under a lot of pressure to find a way of dealing with the current market trend. Most of them are forced to come up with online stores lest they are pushed out of the market, with the current trends. It is palpable that a lot of entrepreneurs may not be in a position to acquire the necessary funds to do business online, with a great percentage of clients preferring the handiness of the internet (Rehmeyer, 2007; Phillips, 2009). The retailers, in the long run, end up incurring huge losses, and have no alternative, but to pull out of the market, or find other options. It is in this light, for that reason, that unemployment mushrooms. Consumer protection, competition and unemployment Over the years, online business has witnessed an incursion of new entrepreneurs in the businesses that pretense major rivalry to the existing businessmen in the international market. Nevertheless, this has not been spared from the subject of privacy of the online shoppers, and the way in which they carry out their business. It is apparent though that in spite of the issues, clients still procure goods online (Rausas et al., 2011). According to the research carried out by McParland & Connolly (2007) and Udo (2006), a huge number of UK online shoppers are faced with privacy and protection issues regarding their purchases. As Saban, McGivern & Saykiewicz (2002) indicate, cybercrimes have affected online purchase behavior among many clients. With the fear rising by the day and the hackers accessing data concerning the clients, Saban, McGivern & Saykiewicz (2002) insist that out of these clients, 17% percent of them repurchased goods online. An extra 48% of online shoppers were pleased with the entire business deal and made more transactions online. Regardless of the data insecurity scare as indicated in the research by Cheung & Lee (2006) and Smith (2004), this does not hinder clients from shopping online. Internet users have been indicated to shop in the privacy of their homes, and with minimal movements. This technology is one that has profound impact on the nature of business in the globe. In the long run, unemployment comes in due to a rise in the number of competitors in the business world. Businessmen are challenged to come up with attractive selling venues in the online market, lest they are pulled out of the market. Katz (2012) indicates that a lot of entrepreneurs have invested in the global market, a factor that challenges the existing businessmen to retain their current clients. Globalization and unemployment A discussion of the present day business world cannot ignore the aspect of globalization. In the words of Lachtnain (2011), the internet greatly reduces the restrictions of geographical boundaries in the globe. This is to mean that local shopping reduces to a great extent, as goods can be ordered from any corner of the world. Globalization has also resulted to educated consumers. Through globalization clients have resulted not being at the mercies of the existing businessmen, but have a higher chance of accessing whatever form of goods and services online. In the case of online shopping, the case of the resistors of the change has been left with no option, bit to drag in misery of change resistance. Thanks to globalization, the internet has taken business to a whole new level. From the local business to global, internet know-how is indeed a resource in the business world. It is evident that the internet connectivity through Wi-Fi and other connectivity’s is the basis of businessmen being up and functional (Lachtnain, 2011). With the consumers educated on various search engines ranging from Amazon to Google, the clients are able to get as much information from the online reviewers. Companies like FedEx have made it easier for clients to get their goods after online shopping (Marković, 2012). Clients are able to track the shipment of their goods till delivery at their doorstep. In this case, how does unemployment come in? Smaller businesses in the globe have been wiped out especially the ones that have not managed to create a website in which they can market their goods (Rausas et al., 2011). This is because the small businesses are not able to access a huge clientele base as the individuals using the internet are on the increase. Business has not only gone regional, but also international (Marković, 2012). With this aspect clear in the online shoppers- as a result of globalization- most of them have gone the digital way as opposed to the local traders who may be described as pure ‘analogue’ businessmen. Obsolescence In the market today, there are some goods and services that are slowly becoming outdated and outmoded. Some of these businesses that offered the outdated goods ands services were major sources of employment for a majority of persons. With the coming of the internet age, these goods and services have been replaced in totality. A good example is the post offices, travel agents, and stock brokers. In the example of the post office, the post-office has seen a downward fall of the clients visiting the post offices (International Labour Organization, 2002). Letters have been replaced by e-mails, stock brokers have been replaced by stock websites, and travel websites for the travel agents. However, with a few of companies and business in operation, it is evident that they have a reduced turn up rate for the clients visiting their business (International Labour Organization, 2002). Arguably, Castells (2009) and (Rausas et al., 2011) indicate that automation of the internet has eradicated a lot of jobs in the business world. Through the internet, businesses have been streamlined and their operations simplified as a result of the use of the internet. A large labor force has been rendered jobless, most of them having no hope of acquiring better employment. In the event that there is an automated customer care online system, human labor required is less as opposed to answering question manually and on phone. Human element, in this instance, is termed as unnecessary, and there is no point of employing a huge workforce. In this case, obsolescence is a major cause of unemployment as online business has replaced manual operations (Castells, 2009). Internet and unfair competition Big businesses have also faced the grip of the internet and online business in a negative way. In the argument by Katz (2012) electronic transfer of information has allowed numerous companies enter into foreign markets; thus, increase their profits twofold. However these companies have resulted to collapse, which ultimately causes unemployment of its labor force. Online business has reduced the markets that most of these companies have been investing in online. The reduced markets in this case entail the special-interest groups, government associations and the public in general (International Labour Organization, 2002). This comes in since the social media has no form of regulation on the posts made by online users. A lot of misinformation is posted regarding companies, an aspect that leads to clients that had an interest in the concerned company or business shift elsewhere. From the blogs, and other media sites, it is evident that the internet poses a great danger to the success of business. In the event of collapse, the internet may be termed as responsible for the unemployment of the concerned labor force. Additionally, in the case that the strategies of a company are publicized in the internet, the company / business faces unfair competition as other companies gather a considerable amount of information on the companies; thus, an additional advantage to the competitor. The media indeed has taken over as one of the major form of advertisements. Hu (n.d) indicates that with the number of online users adding up to billions, the big businesses have taken over the online industries. With time the small businesses have entirely been unable to fight this competition, and the few that have attempted have been wiped out with time (Hu, n.d). Hu (n.d) continues to argue that the big businesses have dominated the rankings in search engines such as Google that has its ranking page. Online clients are ones who are sure of making the purchases once they click on the concerned product. Due to the established links, the small businesses are being forced to retrench some of its employees as their services are no longer needed in the company, due to the reduced profits. The small businesses can hardly compete, situation that has created monopoly of the ‘renowned’ companies in the online businesses. Company X that was doing well in its ‘physical’ business realizes that its computers can only sell if they venture into online business, since most clients prefer online shopping. In this instance, it is almost impossible for Company X to wipe out the likes of HP, Dell, and Samsung amongst others. In this case, the management team will have no option, but to reduce the number of workers as the market does not favor their business at the time. Unfair competition in this case, causes unemployment for the upcoming brand names (Hu, n.d). Despite Rausas, et al’s (2011) argument that internet has been the major catalyst fro creation of employment, the authors admit that 500,000 jobs have been lost over the past 15 years. The United Kingdom has also leveraged very powerful use of the internet across the country. This has been aided by powerful telecom operators in the country. With the culture of internet use on the rise, it is evident that most individuals rely on the internet for their sales. As indicated above, Farrell (2001) confirms that through online business, companies have been forced to compete with their competitors, in a bid to optimize a myriad of business opportunities in the online market. New business models are being invented by the day as well as a wave of new entrepreneurs, who are in an attempt to devise internet-related ventures. Clients are able to compare prices; thus, do business at their pace and timing (Rausas, et al., 2011). The McKinsey Institute is of the opinion that UK is the most affected from online shopping, and as of 2009 data analysis, $2535 services and goods were transacted, which contributed to over $ 1000 for the country’s returns (Rausas, et al, 2011). From this study, it is apparent that the internet has had an impartial effect on employment, as a lot of changeovers have been enforced by the internet. Companies that have applied the use of the internet to a great extent are the mainly affected by the use of the internet. Conclusion and recommendation It is evident, from the above study, that online dealings have in one way or another wiped out traditional form of business. A lot of businesses in the world today have opted to invest in the development of their online businesses through the internet, by devising inventive ways of incorporating countless business models that catch the attention of customers to their websites (Babb, 2009). In addition, it is unmistakable that the traditional approaches of business in many sectors in the business world cannot match the present-day technical dexterities that have come with internet sites mushrooming by the day. The development of these sites has seen a lot of people lose their jobs especially the businessmen who are still in the traditional era of doing things, and the ones who cannot handle the competition from the big companies. This technology has indeed phased out a lot of entrepreneurs and their employees, as the nature of their clients has completely shifted to the digital era. It is also vital to note that customers have very high expectations on online trading and advertisements (Brynjolfsson, 2002). Web designs are therefore likely to be sophisticated so as to suit the growing needs and demands of the target clients. Since technology has offered clients a lot of freedom to access goods and services efficiently, it is recommended that the entrepreneurs find ways in which they will ensure that their clients feel safe in the course of making transactions online (Odlyzko & Coffman, 1998). If this happens, it is evident that the clients feel safe and free to transact at their pleasure. Entrepreneurs are also advised to update and advance their online sites and advertisements methods lest they are pulled out of the market by their competitors. There is also need by the government to ensure that they put in place stringent measures to deal with cybercrimes, and protection of the consumers, in this case, online clients. References Babb, D., 2009. The Online Professors Practical Guide to Starting an Internet Business. London: Entrepreneur Press. Brogan, C., 2010. Social Media 101: Tactics and Tips to Develop Your Business. NY: John Wiley & Sons. Brynjolfsson, E., 2002. 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Udo, J., 2006. ‘Privacy and security concerns as major barriers for e-commerce: a survey study.’ Information Management and Computer Security, Vol. 9 No. 4, pp. 165-174. Read More