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

E-commerce and location decisions

Spec point — 1.4.1 · the impact of the internet on location decisions - e-commerce and/or fixed premises

• 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

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 businesses 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

Exam Hint You could be asked to outline a benefit of e-commerce to a particular business. Outline questions require you to use the business context in your answer. A useful structure is to state A benefit, Business Reason, Consequence, or A → B → C.