The Internet has revolutionized the information that is available to businesses and the speed with which it is available. This has created both an opportunity and a challenge. The opportunity is that an established company has ways to expand, grow, and leverage its experience and current business base with lower cost and less investment. The challenge is that the Internet has opened businesses to new competition that does not need offices, sales representatives, or inventory.
An existing business has two choices:
In the book, Digital Siege, I write about the assault on traditional corporations by young, Internet based businesses that have created new business models. It is easy to see the sales that Amazon has taken from Borders, CompUSA, Tower Records, and others. It is less obvious to see the impact that new entrants are having on small, local businesses.
There are multitudes of small businesses that are struggling to deal with the changes impacting their business due to the Internet. I would classify these businesses into three groups: