E-commerce accounts for hundreds of billions of dollars in sales annually in the US and in Europe, and that figure is growing rapidly. The price effects of internet shopping, and e-commerce in general, have received a lot of research attention (see for example Brynjolfsson and Smith 2000, Scott Morton et al. 2001, Brown and Goolsbee 2002, Baye et al. 2007, and Ellison and Ellison 2009). The findings of this research have been drawn on in policy discussions of subjects like net neutrality and the tax treatment of online sales.
But the diffusion of e-commerce through an industry is likely to affect more than just prices. Market structure likely changes as well, as reduced consumer search costs lead to a wave of creative destruction. The tools of e-commerce make it easier for consumers to find lower-price sellers, meaning lower-cost firms (or those able to deliver higher quality at the same cost) will grab larger shares of business away from their higher-cost competitors.
I remember making the same observation in 1980 at Warner Cable, then Warner Amex, to Lou Gerstner who was at Amex, that this was the start of a new marketing and distribution channel and the roles would change. I wrote of this for two decades since then especially in my book on Business Plans in 1988.
Now that it has happened we have economists writing of this discovery. This proves my theory that economists are not the brightest bulbs on the rack! It took them more than 30 years! It was there from the mid 70s with the Warner Qube system. All you had to do was look and listen.
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