It’s been impossible to log onto a computer lately without seeing talk about the Federal Communications Commission’s (FCC) – an independent agency of the United States government created to regulate communications by radio, television, wire, satellite, and cable – December vote to repeal existing net neutrality legislations. Most recently, the New York Times published a report that state legislatures are pushing back on the net neutrality repeal ruling. As we wait to see if the repeal will go into effect, many retailers still don’t understand if this would be good or bad news for their existing business. The FCC’s net neutrality legislation stands to impact the daily lives of retailers and customers alike. But what does this really mean?
Whether the net neutrality repeal would mean the end of the internet is debatable, but it would most certainly signal the end to online retailing as we know it. As a result, you need to have a solid grasp on how the repeal might affect broadband service so that you can prepare your company for multiple potential changes to the online marketplace. Additionally, as (and if) the FCC’s repeal is enacted, you may need to modify how you operate your business to continue making a profit in a drastically different e-commerce environment.
With no more ado, here’s how the net neutrality repeal – as it stands – might impact both online and brick and mortar retailers.
The End of Search Equality
First of all, the repeal would make it easier for large e-commerce platforms to buy increased visibility and faster connection speeds. Business Insider explains, “Under the new proposal, companies would be able to block, slow, or provide fast lanes to particular sites or services.” This would enable large e-commerce platforms like Amazon to purchase better connection speeds and online visibility. Furthermore, the repeal would prevent the federal government from regulating broadband platforms, enabling companies to charge more for certain websites to keep their connection up-to-speed. Since the broadband provider would be able to choose which retailer sites to feature, online visibility would inevitably come down to which company is able to pay the highest premium.
Less Potential for Growth
Under the FCC’s repeal, small businesses and startups would be faced with the same large tolls as big box retailers to continue receiving adequate online visibility. As a result, there would be fewer opportunities for small to mid-sized online retailers to build their customer base. As of right now, many retailers start out online – whether selling through Amazon or selling through their own website with platforms like Squarespace – but if the repeal is enacted there will be less potential for indie retailers to gain a foothold or to find their audience online. As Amy Spitalnick told WWD, “If a company is blocked or throttled by an ISP, its customers would see much slower access — making it harder and much more frustrating to browse the site or complete a purchase. And if an ISP wants to block a site altogether, its customers would not even be able to browse in the first place.” Retailers who are just starting out won’t be able to afford to pay for a decent connection speeds, meaning it would be difficult for customers to find and navigate the websites of indie retailers.
A Boon for Physical Retail
The repeal would make it much easier for big box stores to gain a monopoly over online markets. President Barack Obama is quoted in The New York Times saying, “There are no toll roads on the information superhighway.” Although having so much about the way we do business up in the air can be scary, there is a silver lining to every looming, ominous cloud: the proposed net neutrality repeal may drive customers to do more of their shopping with brick and mortar retailers. After all, today’s customers take a major interest in shopping local – young consumer demographics in particular are apt to rebel against Big Internet restricting their browsing autonomy online. This means that if the repeal goes into effect there will be a big opportunity for physical retailers to pander to customer’s disenchantment over online monopolies, and an even greater opportunity to promote local and ethically-sourced products.
At this stage, it’s impossible to understand how every aspect of the proposed net neutrality repeal would impact your retail business. However, by reading up on the repeal and staying abreast of new developments, you can ensure you’re not blind sighted if and when these changes begin to take effect.
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By Jasmine Glasheen, RetailMinded.com