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Intense Competitive Forces in E-Commerce

In the words of best-selling writer and journalist, Thomas Friedman, “the world is flat.” Businesses not only have to compete with domestic firms, but international alternatives that are no longer bound by communication, transportation, or cost restraints. It is in this e-commerce environment that four factors play a role in intensifying competition.

Having information available 24 hours a day, while at any location, and at the touch of a button, means that one does not have to wait, nor does one necessarily need the assistance of a live person to acquire data. Using search engines such as Google or Bing allows a broad range of results to be provided to the buyer. This translates to very low and often no costs associated with the search. Not only is it easy to locate the best price, but the search results can even be aggregated on one site for speedy comparisons. In the case of professional content, MGM’s offerings on iTunes, Amazon.com, or Hulu.com can be compared to a tremendous amount of alternatives that simply cannot be contained in a physical retail store or paper catalog. A recent MGM release on home video must now compete for an audience with a ritual tribal dance clip from Kenya that becomes an instant sensation on YouTube and generates millions of hits on the site.

In addition, content that was created at any time in history can be digitized and distributed instantaneously over the Internet. Therefore, if one is looking to make a purchase in a particular movie genre, one may scan releases from any era, studio, or country, and not be bound to what is heavily marketed at a particular point in time. So while the consumer has access to a plethora of options, it is becoming increasingly difficult to differentiate new concepts because of similarities to those products from the past being distributed in mass quantities still very popular. This is the case with MGM’s Stargate franchise, which has been in production for over a decade, but has not garnered enough viewers to be shown on broadcast television. Furthermore, personalized user generated clips on YouTube can be commented on and replied to by the viewers and the original poster of the video clip. This interactive dialogue can result in requests for content being posted or created.

With so many choices and outlets, competition has lowered prices for premium home video content due to the advantages of high volume transactions for companies such as Amazon.com and Wal-mart.com, we can buy amazon accounts with cheaper rates.

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Finally, and perhaps most importantly in terms of brand loyalty and ultimately brand equity: because it does not require much effort on the part of the consumer to compare the level of customer service between firms, the differences can often be glaring and when price is not a factor, tip the scale towards one company. For example, the customer service experience on Amazon.com is simple, efficient, predictable, and thus very user-friendly. This plays a large role in engendering repeat business and loyalty; which is a key for sustained e-businesses growth and profitability.

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