To what extent has the internet made the clothing market more competitive?
One way in which the internet has made the clothing market more competitive is due to there being fewer barriers to enter into business on the internet. This is largely because rents are higher when opening an actually clothing store on a busy street; this however is not so much of a problem for online retailers. Therefore, this would make the cost of production for online retailers less than that of street stores, thus enabling online clothing prices to be significantly lower, boosting competition. However, this may not be the case if other factors of production for online retailers are high, such as rent for a warehouse to keep stocks, as this would cancel out the low cost of not paying rent for a store, although the rent for the warehouse would be considerable low as the location is not important.
Furthermore, the internet has allowed consumers to have more information about different prices of clothing available by various retailers; this has been made even easier by price comparison sites. Amazon for example, has various prices for one particular piece of clothing offered by multiple providers. This reduces monopoly power as consumers are increasing able to buy their needed product at the lowest price, thus encouraging competition. However, price comparison websites themselves have come under criticism. As for example, they might not take into account the different types of consumers looking for the best price, so they may display a vast amount of prices for the consumers which do not accurately reflect their precise needs, the consumer would only realise this once they have brought the item. Also, price comparison sites hold monopoly power, with moneysupermarket.com holding 40%.
In addition, it can be argued that traditional ‘bricks and mortar’ retailers such as Zara do not respond