How Online-Only Businesses Are Changing the Economy

published Jun 22, 2018
2 min read

Online Shopping

It’s obvious e-commerce changes the way we shop and do business. Global e-commerce sales are expected to reach $4.5 trillion by the year 2021. All sorts of companies are making the jump to online sales, and many new vendors are launching as online-only brands. Some existing companies are even shutting down their brick-and-mortar stores in favour of an exclusively online presence, while more and more fresh entrepreneurs start their own successful e-commerce businesses.

These shifts have broad impacts on our economy and how we live from day to day. Here’s how.

Increased Productivity Growth

Selling goods online has certain economic and productivity-related benefits over selling them in a physical store.

It substantially reduces the costs of transactions, including making payments and managing information. E-commerce businesses have to pay for their website, but that is less expensive than renting or owning physical stores. They also require fewer employees. Rather than maintain an inventory in-store, they can ship out of a warehouse or work with distributors who will handle the shipment of goods.

Handling sales and other customer interactions online also makes it easier to gather information on your customers, which e-commerce firms can use to improve their sales, marketing and customer service as well as offer personalised experiences to customers.

This personalisation is an integral part of what makes Amazon such a successful online retailer. It earns significant amounts of revenue from its product suggestions, and its knowledge of its customers enables it to make money from ads.

Opportunities for Enhanced Visibility

No longer are businesses limited in reach to their local community and people who happen to drive or walk by their establishment. Online companies can reach anyone in the world who has internet access. Even smaller e-commerce firms have the chance to get noticed online.

Ads can help online-only brands get noticed, but so can less expensive and even free platforms such as social media, viral videos, review sites and online directories. Online directories for physical businesses can help smaller companies get found and save customers time. There are even directories for highly specific types of services, such as pet washes.

Shifting Employment

The move to online-only sales shifts retail employment and what it means to work for a retail company.

Online sales have surged in recent years, but employment by online sellers has not equalled the displacement of workers from physical stores. Online storefronts require fewer employers to operate them. Almost three-quarters of e-commerce companies have only three or four employees.

Some large e-commerce companies employ many more though. Amazon, for instance, reached 300,000 workers more quickly than any U.S. company. Online businesses also tend to pay their employees more, though. Many e-commerce jobs are in large metro areas.

Internet technologies also enable increased collaboration between workers within a company and between outside contractors. E-commerce companies could potentially work with any company across the globe, supporting outsourcing of business functions and increasing access to resources.

Changing Relationships with Customers

Online-only vendors can, of course, only engage with their customers online, which is different from interacting with them in person or other ways. That means online-only businesses must be masters of the customer experience. Physical stores with online presences must as well if they want to survive.

Social media, for instance, enables customers and businesses to interface with each other in a public environment. Online review sites like Yelp and Google Reviews have a similar dynamic. Companies need to respond to customer comments and messages promptly and politely. They also need to maintain a consistent voice across all of their social pages.

Online selling also facilitates increased customisation. Customers can create profiles on an e-commerce site and enjoy personalised suggestions and interaction. Many online vendors even allow customers to design custom products, like Adidas and other apparel makers do with their shoes.

It’s safe to say that e-commerce transforms our economy. Whether or not you think the rise of online shopping is a positive thing, it’s certainly here to stay, and it will continue to alter the way we purchase goods and go about our day-to-day lives.



Emily Folk is a conservation and sustainability freelance writer. Check out her blog, Conservation Folks, or follow her on Twitter for the latest updates.