In many cases, consumers prefer to deal with smaller firms. This means that there are benefits in terms of image to position a small firm as part of a network of local experts. Niche marketers can be winners. Risks Companies with physical products may be at a disadvantage. They must deal with the complexities and expenses of international order fulfilment.
Small companies competing in standardized product areas face serious challenges.
Products such as CDs or DVDs which are effectively identical, and for which only service and price can differentiate sellers face enormous competition and frequently do not last long. Customers of online stores are notoriously fickle and disloyal. One example of poor service can be enough to send an online shopper to a rival store, while order fulfilment and product returns are difficult, expensive and logistically complex. It is already becoming apparent that successful online purveyors of CDs, books, DVDs and videos are comparatively large companies which can absorb freight costs and can offer a speedy and efficient returns service for imperfect products. Companies without these advantages are more likely to fail under the multiple and complex pressures of competing with large firms having deep pockets.