It is no surprise that a site dedicated to finding the lowest prices is great for consumers. But what are the long-term effects?
As with so many other things it has had an impact on, the pc and its nascent but pervasive internet infrastructure has brought efficiency into the consumer market. One of the by-products of that efficiency are the various sites dedicated to finding the lowest price for any number of items. On a small scale, there would be minimal, if any, effect on the economy. But as these sites become more popular, individuals could use the listed prices as a starting point for their purchases, forcing retail companies to either match the price or lose the sale. Short of collusion, this forces other companies to compete on price, commoditizing the product and lowering the overall value of said product(s). In the end, the customer sacrifices service for product. Over the long term, this creates a cycle of depreciating values (such as services) and in come deflation, to the delight of the consumer. The vicious cycle can only come to an end once the market has settled down and companies either go out of business and/or a few big ones are left to stand. But the damage has already been done. Consumers will continue to use these tools and eventually determine market price. This is nothing short of a virtual auction.
The global effect on such tools is that as price efficiency sets in, so does deflation. This puts pressure on the dollar. Companies cut costs (employees) to keep up with the market, competing soley on price. Service may (or may not) be sold separately. In the end, companies will be living on the slimmest margins as profit is also brought to the brink.
Is this the future of shopping? A faceless transaction that occurs between two computers (the individual's and retail servers)?
P.S. Hot Deals section can be any site, from those such as the Hot Deals section here at Anandtech to global exchanges such as Covisint
As with so many other things it has had an impact on, the pc and its nascent but pervasive internet infrastructure has brought efficiency into the consumer market. One of the by-products of that efficiency are the various sites dedicated to finding the lowest price for any number of items. On a small scale, there would be minimal, if any, effect on the economy. But as these sites become more popular, individuals could use the listed prices as a starting point for their purchases, forcing retail companies to either match the price or lose the sale. Short of collusion, this forces other companies to compete on price, commoditizing the product and lowering the overall value of said product(s). In the end, the customer sacrifices service for product. Over the long term, this creates a cycle of depreciating values (such as services) and in come deflation, to the delight of the consumer. The vicious cycle can only come to an end once the market has settled down and companies either go out of business and/or a few big ones are left to stand. But the damage has already been done. Consumers will continue to use these tools and eventually determine market price. This is nothing short of a virtual auction.
The global effect on such tools is that as price efficiency sets in, so does deflation. This puts pressure on the dollar. Companies cut costs (employees) to keep up with the market, competing soley on price. Service may (or may not) be sold separately. In the end, companies will be living on the slimmest margins as profit is also brought to the brink.
Is this the future of shopping? A faceless transaction that occurs between two computers (the individual's and retail servers)?
P.S. Hot Deals section can be any site, from those such as the Hot Deals section here at Anandtech to global exchanges such as Covisint
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