The Impact of the Internet on Location Decisions (Edexcel IGCSE Business)

E-commerce & Location Decisions

• E-commerce involves the buying and selling of goods and services online

  • Some businesses sell goods online as well as operate physical stores

  • Small businesses have the ability to reach international customers by selling products online

  • E-commerce has grown significantly in recent decades

Graph: E-commerce Sales Growth in some Countries in 2023

E-commerce sales grew significantly in 2023, requiring many businesses to reconsider their location needs

(Source: Statista)

Factors for E-commerce stores to consider

Lower business costs 

• Business costs are likely to be reduced as smaller premises in lower-profile areas are usually cheaper to rent or buy

  • High-profile premises are less important than for physical stores as they do not rely on foot traffic

Cost and availability of labour

• Businesses with remote workers may only require a small hub, with workers requiring online access 

• Experienced call centre and sales staff may be needed

Proximity to transport infrastructure

• Products ordered online need to be delivered efficiently to customers

  • Location close to highways, rail networks or logistics partners is a key consideration

Reliable IT infrastructure and power

• Remote workers need to have access to good communications infrastructure, such as high-speed broadband, in their homes

• Businesses in areas prone to power outages may struggle to maintain their online services

• Many governments are prioritising the improvement of communication systems 

  • E.g. Sweden’s national broadband plan aims for all households and businesses to have access to high-speed broadband by 2025