In the article by Porter (2001) on Strategy and the Internet, I was surprised by the paragraphs where it was stated that internet is being used as a complementary aspect of business by existing companies such as Walgreens and W.W. Grainger. Defending the Internet as being cannibalizing existing companies – something I think the Internet is actually doing. The author is mentioning that “virtual activities do not eliminate the need for physical activities, but often amplify their importance” for three reasons. Concluding that the Internet will never replace the entire value chain of goods and services, moreover stating that traditional stores have an advantage over online stores. However, how sustainable are these three arguments? For example, consider the more recent article From Niches to Riches: Anatomy of the Long Tail by Brynjolfssson et al. (2006). In the article, it is indicated that due to the Internet, companies can offer a much wider range of goods and services resulting in changing behavior of the customers. The customer’s desire for variety is addressed by offering an almost unlimited range of products online. More importantly, changing, or better said enhancing, current business practices. Honestly, I am wondering how these (new) online stores, including the offering of a wider range of products, can compete against the brick-and-mortar stores. And thus conquer the three reasons mentioned earlier, if it is expected that customers are continuing to increase their wishes for the online concept or more specifically the wide range of tastes.
In line with these thoughts, I would the Internet not consider as an enabling Technology like Porter (2001) stated, but rather as a disruptive technology. To be clear on the definition of disruptive, I refer to a Harvard Business Review article named What is disruptive Technology by Christensen et al. (2015), which defined the following: a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Then also, arguing with Brynjolfssson et al. (2006), the Internet would not just be a complement but a core component of existing businesses. However, this might be a bold statement to make especially as Christensen et al. (2015) is mentioning a current problem where it is observed that disruptive innovations are easily given to new concepts, as the core concepts of a disruptive innovation are misunderstood as well as its basic tenets are being misapplied.
This leaves me with the following question, what role will the Internet play in the future of traditional (shopping) markets?
https://hbr.org/2015/12/what-is-disruptive-innovation
Brynjolfsson, E., Hu, Y., & Smith, M. D. (2006). From Niches to Riches: Anatomy of the Long Tail. MITSloan Management Review, 67-71 .
Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review.
