How the Internet has transformed the way in which markets operate?

John Sloman and Alison Wride in their book Economics (2009) describe market as the interaction between buyers and sellers. It can be anything – a shop, a street market or, more and more frequently these days, online shopping website on the Internet or other computer networks. So, Internet made it easier to buy and sell all categories of products or services. This interaction is called electronic commerce. The beginning of electronic commerce was in 1994 when the German company Intershop created the first online shopping system, then in 1995 Amazon online shopping site was launched, and in 1996 eBay was released.
Office for National Statistics shows, that in 2010 just over 38 million Internet users access it every day or almost every day, and 31 million people bought or ordered products or services online in the last 12 months. This fact reveals how big Internet market is. All these people can access Internet shops 24 hours per day and look for goods. The bigger demand is, the more suppliers want to join the market, so there occurs the main advantage of electronic commerce – large number of firms and freedom of entry. Even Tesco, the United Kingdom’s largest supermarket, has its online shop, which now is the largest electronic commerce retailer. But lot of new companies are established every day; therefore their demand curves are becoming very price elastic. Also, establishers need less money to set up internet based business than their conventional rivals. Search engines also helps to have relatively low marketing costs. This let suppliers offer products and services for lower prices than in-store. Actually, buying on the Internet could replace, modify and generate shopping trips. Customers behaviour changed – they now take fewer shopping trips and trips are shorter (both in time and distance).
However, the Internet has also made negative influence on the way markets operate. Many firms are