The Impact of E-Commerce on Real Estate

By McMahan, John | Real Estate Issues, Winter 2000 | Go to article overview

The Impact of E-Commerce on Real Estate


McMahan, John, Real Estate Issues


A took at the forces changing the way America lives and works and the implications for the real estate industry

"The world of the soft-the world of intangibles, of media, of software, and of services-will soon command the world of the hard-the world of reality, of atoms, of objects, of steel and oil, and the hard work done by the sweat of brows."

Kevin Kelly, New Rules for the New Economy, 1998

The real estate industry has experienced many setbacks over the years - the economic roller coaster of cyclical boom and bust, "credit crunches" when financing completely dries up, sudden changes in government land use or tax policy, and physical destruction as a result of wars or natural disasters.

But never in its history has the real estate industry faced a threat to its fundamental role in society - providing physical space for people and firms to perform their day-to-day activities. It is only in the last few years, as the use of the Internet has spread and been adapted to commercial transactions that the true nature of this threat has begun to emerge.1

This manuscript explores the e-commerce phenomenon and why it is so appealing to business firms and consumers. It then examines the nature of the threat to real estate and speculates on the magnitude of the impact on each property type.

WHAT IS E-COMMERCE?

Electronic business (e-business) is the use of the Internet and other electronic devices to operate and manage businesses.z Electronic commerce (e-commerce) is e-business involving a purchase or sale transaction that occurs electronically.

Electronic transactions involving the sale of products or services to retail customers are referred to as "Business to Consumer" or B2C.

Transactions conducted between business firms are called "Business to Business" or B2B. Figure 1 illustrates the process by which both B2C and B2B activities occur.

B2C activities, including payment for goods or services, are conducted through the Internet directly with the consumer. The delivery of the goods or service ("fulfillment") may be handled directly by the e-firm or by contracting with a logistics firm (e.g. UPS, FedEx, etc.). This interface is generally facilitated by the use of an "extranet," a dedicated portion of the Internet that connects an e-firm with its suppliers and customers. Either the logistics firm or the e-firm may operate the extranet.

The e-firm also may use the web3 to assist in producing and distributing goods or services. In the case of a manufacturer, this may involve an "intranet" connection within the firm with employees (and computers) involved in the marketing, production, and distribution process. Since many firms are outsourcing many of their non-core activities, the process also may involve an extranet connection with sub-contractors and suppliers.

WHY IS &COMMERCE SO APPEALING TO

BUSINESS FIRMS?

Most people think of e-commerce in terms of B2C transactions, largely because of the intense media scrutiny and the large ad budgets of the B2C firms. As indicated in Figure 2, however, 80 percent of e-commerce is currently B2B and its relative position is expected to increase over the next five years.

Improves Operating Efficiency

The rapid growth in B2B is due largely to a significant increase in firm operating efficiency made possible by the web. There are many reasons for this-shorter production cycles, higher employee productivity, better inventory management, and more direct control over distribution channels.

Many large firms such as GE, Ford, and General Motors are rapidly transforming their entire operations into Internet companies in which the web controls or influences virtually all aspects of their operations.

Lowers Investment Costs

Another major attraction of being an e-firm is the role of the web in dramatically lowering the amount of investment capital required to produce a given dollar amount of revenue. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Impact of E-Commerce on Real Estate
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.