September Terrorist Attacks (11,) (2001 ): Impact on E-Commerce - Transforming E-commerce

Many analysts looked to the Internet as a source of hope in a difficult economic and social climate. As companies tried to cut costs to maintain profit margins, those firms that had invested heavily in successful e-commerce infrastructures were in a particularly good position, since the Internet afforded companies the ability to trim inventory and other costs while generating new revenue streams.

According to Business Week, the attacks bolstered the new, post-shakeout mood of Internet commerce and initiatives. Plans for e-commerce operations were more than ever calculated specifically with a profit-based focus, rather than simply to build a brand online. E-commerce schemes were evaluated and pursued in accordance with their ability to generate short-term cost savings and profits. AMR Research Inc. predicted that, in the year following the attacks, investment in e-commerce initiatives would rise 9 percent, below the pace of the previous few years but still relatively healthy, particularly in light of the receding economy. That projection was below the 11 percent that was forecast shortly before September 11. AMR reported that the most common initiatives being funded included supply-chain management projects, customer-service schemes, and Internet-based product-development programs.

On the other hand, one of the Internet's key advantages in the world of commerce proved a handicap in the immediate wake of September 11. A central feature of e-commerce is that it diminishes the importance of geography, so that physical distance and international borders are rendered less prohibitive in the shopping and trading processes. However, following the terrorist attacks, borders were fortified and tightened, severely slowing international trade and rendering it more costly. The dramatically heightened fears over international terrorism following September 11 were expected to have a lasting impact on security measures at borders, so that e-commerce that trades in physical products (rather than digital products) requiring international shipping will be hampered both by slower delivery times and higher delivery costs. In turn, though, this trend played into the hands of larger firms with their own production and storage facilities abroad, diminishing the need for international shipping.

As the economy reeled and the e-commerce world was shaken up, the time seemed right to many investors and analysts for e-commerce firms to take the time to re-evaluate their e-business practices in the hope of finding a winning strategy into which companies could put more of their faith. As a result, firms were expected to closely examine their existing Web business practices and take the time to implement quality systems as the climate straightened itself out. Companies seemed more willing to accept changes to their fundamental business practices, particularly in the realm of e-commerce.