People are reluctant to leave their homes due to the COVID-19 pandemic, so they increasingly turn to online sellers to satisfy their shopping needs instead of venturing out into the world. These days, online sellers are prevalent due to the convenience and ease with which customers can locate the products they desire. Customers only need to surf the website and click on the products they are interested in to complete the transaction. After the purchase, the seller will deliver the items to you via your chosen delivery method. A few years later, online sellers have evolved into one of the most superior services in various countries due to these factors.
What kind of an effect does the proliferation of online sellers have on the economy? Do online sellers affect anything else? If the ease of making online sellers is a benefit, what could be a drawback to this method? This article will answer in detail.
List of Contents
- The Rise of Online Sellers
- The Drawbacks of Online Sellers
- The Benefits of Online Sellers
- The Future of Shopping
The Rise of Online Sellers
Since the COVID-19 epidemic began along with inflation, there has been a significant shift in the habits of consumers in many different ways. People have started staying away from public indoor locations like restaurants and retail malls in favor of working from their homes full-time. Online sellers have maintained their rapid expansion as a direct result of the changes in customer behavior that have been seen.
As a result, many well-known businesses have adapted their commercial tactics to maintain their market share. The local economy has been thrown into a gloomy state, but those online sellers are gaining greater vitality. A survey conducted by Digital Commerce in 2022 found that the pandemic contributed to an increase in the amount of money made by online sellers in 2021 to more than $870.78 billion. The result can assume that pandemics can contribute to the rise of online sellers. Moreover, there is also an effect on the local economy.
The Drawbacks of Online Sellers
Most of the disadvantages of online sellers are associated with the local economy. Due to its worldwide reach, online sellers have become the main antagonist of the local economy. People choose online sellers over brick-and-mortar stores causing their customers’ loss. These businesses may go out of business or be forced to shut down. Here are some disadvantages:
1. The local economy can lose taxes collected from online sellers.
The amount of sales tax that the state collects and other local taxes that cities and countries collect are reduced due to online sellers. This is perhaps the most detrimental effect internet sales have on the economy.
2. Brick-and-mortar retailers have a more challenging time competing when people buy things online.
In addition, shoppers may place a more excellent value on sales tax reductions when trying to save money or making a significant number of purchases during special occasions like the Christmas season.
Because of this, traditional merchants who operate out of physical locations and are required to collect the relevant taxes sometimes have a more difficult time competing with online retailers that do not include these taxes in the prices of the products they sell.
3. When you buy something online, you’re taking money out of your community.
It’s possible that making online purchases takes money away from the local economy. For instance, if a consumer purchases a present from Amazon or eBay rather than from a local economy, that customer’s money contributes to the national store rather than the community in which the customer lives.
This drop in revenue has the potential to harm the local economy. The local economy thus has less income coming in, and as a result, they employ fewer people. When businesses use fewer people, less money goes into the local economy. Suppose there is a reduction in capital entering the local economy. There will be a corresponding reduction in the number of employment available and the amount of disposable income accessible to the local economy population. They spend less money in the community, which leads to a vicious cycle that may inhibit the growth of communities.
The Benefits of Online Sellers
Even though there are some disadvantages, there are also some benefits.
1. Online shopping boosts the economy by increasing demand, consumption, and employment.
Increasing demand, broadening consumption, and fostering employment are essential components of a healthy economy. One way that online sellers may accomplish this. It has increased its usage of computerized bookkeeping and records management. It has led to a significant improvement in operational efficiency. Internet placement results in fewer storage costs and space requirements and improved customer service delivered more quickly and efficiently. Services provided by online banks, such as electronic bill payment, money transfer, and payroll handling, all contribute to an increase in a company’s level of operational effectiveness.
2. The environmental advantages of online sellers are significant.
According to worldwide research conducted by Generation IM and the positive effects of internet purchases on a country’s economy, these transactions can also lower that nation’s carbon footprint. The percentage difference was 17%. Carbon efficiency refers to how well an organization manages its carbon dioxide emissions in all aspects of its operations. It includes product transit, buildings, warehouses, product packaging, and production. It’s because online sellers depend less on physical shop locations. They have greater freedom when implementing strategies that may minimize the number of carbon emissions they produce.
Customers in today’s market show a growing preference for environmentally conscious companies that teach them how to be more ethical consumers. The most successful businesses are reacting to this demand from consumers by using their power to encourage the adoption of more environmentally friendly business practices and cultivate a deeper relationship of trust with their clientele. This will result in more positive long-term advantages for the environment. Especially if online sellers’ firms continue to make meaningful changes and improve their efforts to promote sustainability.
The Future of Shopping
In the new model of consumer buying, customer preferences and expectations change at a breakneck pace. For the local economy to adjust to this new paradigm, they may increase the service they provide to their clients. Nevertheless, brands and retailers now have access to the tools and insights necessary to remain one step ahead of their competition.
1. Many businesses will become more environmentally friendly.
In recent years, several campaigns have emphasized the need to be environmentally friendly in recent years. As a result, many firms have been forced to modify their business models to become more ecologically friendly.
For instance, some businesses use the repurposing method. It refers to utilizing something for a purpose different from the one for which it was initially designed. It is used often by changing the object or using it differently. Reusing products may be an efficient use of a company’s resources. Consequently, it eliminates the need for the company to go out and buy brand new supplies to complete the project. Examples of things and materials are Steel, aluminum, polymers, and electronic components.
2. Online sellers will become more regulated by the government.
The proliferation of online shopping has led to an increase in the number of misunderstood regulations and the prevalence of fraudulent practices. As a result, the government will grow more worried about transactions that take place online. The fact that the government will assist consumers in having a more positive experience when making purchases via online platforms means that this is not disappointing news. Customers will benefit from this situation, and the regulated businesses will also gain popularity.
3. The local economy needs to adapt to the new technology.
In point of fact, online sellers are expanding at an alarming rate. It means that the local economy needs to be ready to adjust its operations in order to maintain its level of competitiveness in this environment. One of the best options for the local economy in the modern day is to determine their strengths and use those capabilities. It will help the local economy gain more profit and more popularity along with online sellers. In addition to the need for the control of online sellers, there is also a need for the development of the local economy. This is due to the fact that there are components of the local economy that need protection. Traditional markets such as Beijing’s famous Ghost Market are one example.
As a result of the rise in popularity of online sellers, there are now both benefits and drawbacks associated with this business model. The majority of them are representative of the economy of the surrounding area. By the way, the adaption will be vital for all economies, and not only the local economy. The government must provide assistance for the local economy as well as for online sellers and they must also regulate them. In the end, it will be up to the customer to determine what they want.
The online seller can reduce the local sales tax amount and the local economy’s income. It may cause unemployment and impact the economy further.
The best ways to increase online sales include optimizing product descriptions, providing affordable prices, offering free shipping, using high-quality goods images, replying to customers immediately, serving customer service, and promoting the product through social media and the digital market.
Common mistakes that online sellers should avoid include product optimization failure, overpricing products, customer service ignorance, high shipping costs, out-of-market and promotional items, and the inability to monitor competitors’ prices.
Read more: Economy
Source: Digital Commerce, IDC, Investopedia, WHO, Youtube