Impact of the internet on location decisions

The internet has changed the location decision for many businesses. If customers can order and pay online, a business does not need a shop where lots of people walk past. That passing trade is called footfall, and a site with high footfall usually means expensive rent and business rates. A business that sells online can instead choose a cheaper or less central location, trade from home or from a warehouse, and avoid the higher costs of running a shop, such as rent, heating, security and shop staff. For example, a business printing personalised birthday banners might rent a small unit on an industrial estate a few miles outside town, where the rent is far lower than a unit in a shopping centre, and post every order out to customers.

Selling online also widens the market beyond the local area. Customers can come from anywhere, so the number of people living nearby matters much less. A small online shop in a rural village can sell to customers in cities across the UK.

What online businesses look for

An online business still makes a location decision, but its priorities change. It needs a fast and reliable internet connection for websites, orders and payments; good transport links so couriers can collect deliveries; and suitable storage or warehouse space for stock and packing. These needs may matter more than being close to shoppers.

Competition and research

The internet increases competition, because customers can compare prices and buy from businesses anywhere. A convenient location alone will not attract custom if an online rival offers a better deal. Before choosing a site, a business can use the internet to research where competitors are located and where demand is greatest, perhaps by checking online maps, search results and customer reviews. This helps it avoid a weak location and choose one that supports its online sales.