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The E-Commerce Impact on Traditional Businesses

The e-commerce industry has recently grown in popularity, revolutionizing how businesses and consumers conduct transactions and necessitating the growth of many businesses and job creation (Jain et al., 2021). It has undoubtedly had a significant impact on both businesses and consumers. It has introduced new selling channels to retailers, which may, in one way, be advantageous to some businesses and disadvantages to others. Many organizations are utilizing this technological advancement and have seen tremendous market growth. With the rise of digital platforms and technological advancements, online shopping has become a convenient and efficient way for consumers to purchase goods and services. The world has become fully digitalized. People now spend a lot of time on social platforms, making it a marketing ground that organizations can utilize to expand their customers’ reach. This has created many jobs in the e-commerce sector and introduced entirely new selling channels to retailers. The rise of the e-commerce industry has come with a fair share of its benefits to organizations, but it still has some drawbacks. Therefore, though e-commerce has its advantages, it also has its fair share of disadvantages for businesses and consumers. With the emergence of online shopping, traditional brick-and-mortar businesses face a threat to their survival (Kadam, 2019). Many retailers have struggled to keep up with the shift towards e-commerce and have been forced to adapt or risk going out of business. There is also a lack of physical interaction with products, the possibility of fraud and scams, and data privacy and security concerns. Therefore, there exist proponents and opponents for this e-commerce issue with arguments on whether the provided advantages by the e-commerce industry outweigh the disadvantages for both businesses and consumers. This essay will argue the emergence of e-commerce and the threat it poses to the survival of traditional businesses, with accessibility and efficiency being the main factors in the electronic revolution.

E-commerce has opened up a global marketplace for businesses which in advance increases their sales and revenue (Andonov et al., 2021). E-commerce has revolutionized the way businesses and consumers operate in recent years. It has necessitated the ability to buy and sell goods and services online, creating a level of convenience and accessibility that was not possible before the coming of the internet. Initially, businesses were limited within their physical reach, which barred them or limited their expansion. With this, businesses only controlled lower sales and revenue for the physical extent they could reach. Through opening the global market, E-commerce has necessitated businesses to generate higher sales and revenue (Lightspeed, 2021). This is also necessitated by the sense that e-commerce eliminates the need for storefronts, thus reducing other expenses associated with traditional retails, such as staffing, rent, utilities, etc. This can result in significant business cost savings, which can be passed on to consumers through lower prices. Businesses can now tap into new markets and increase their customer base easily. The rise of technology eliminated geographical barriers and necessitated reaching customers from far places. E-commerce allows businesses to reach a larger audience than traditional brick-and-mortar stores (Jimenez et al., 2019). This also means consumers can access a wider range of products and services worldwide, providing greater choices and convenience. Traditional brick-and-mortar businesses are often limited by geographic boundaries, limiting their potential customer base. A customer’s reach is limited within a specific boundary beyond which a business cannot extend. With e-commerce, businesses can sell commodities to anyone, anywhere in the world, as far as they have internet access and connection. With the help of e-commerce, businesses can now expand their reach beyond their local or geographical boundaries and enter new markets without having to invest in advertising campaigns or physical locations. E-commerce businesses can achieve economies of scale due to their expanded capability, leading to lower costs, higher profits, and greater market share. Expansion to the global marketplace means that consumers are provided with commodities they need and initially struggle to obtain within the market surrounding them. Today consumers can purchase commodities from online platforms, and delivery is made at the doorstep or places of their convenience. Businesses now utilize online platforms, which have digitalized marketing, necessitating consumer varieties. Many organizations are now competing in digital marketing, and this enhances varieties for consumers to select from.

E-commerce provides consumers with a level of convenience, greater selection, lower prices, and an improved shopping experience that traditional shopping methods cannot match or never provide (Taher, 2021). It improves customer experience by offering a more convenient and personalized shopping experience. E-commerce platforms often offer product recommendations, wish lists, and personalized promotions based on past purchases, enhancing the overall shopping experience. This saves time and effort and allows consumers to shop on their schedule. It also offers more product information, such as detailed descriptions, images, and videos, which can help consumers make informed purchasing decisions (Nolan, 2022). Traditional shopping was limited to physical reach, and consumers could only purchase what they could only physically access. Technological advancement has come with significant improvements in business operations that initially did not exist. With e-commerce, consumers can now shop from the comfort of their homes at any time of the day or night. The business has established avenues that require consumers to purchase through their smartphones, tablets, computers, and all internet-accessing gadgets, eliminating the need to visit physical stores. E-commerce has now relieved consumers’ worries about parking, long queuing, crowds, and all sorts of problems associated with traditional shopping (Joshi, 2018). E-commerce websites often offer a wider range of products and services than traditional retailers, making it easier for consumers to find what they want. Consumers can easily compare products and prices from multiple retailers and choose the best option for their needs and budget (Lightspeed, 2021). Moreover, e-commerce offers speciality products that may not be available in physical stores. Today, consumers can find any commodity they need in online businesses. Moreover, e-commerce platforms often provide consumers with various delivery options, including same-day and next-day delivery, further increasing convenience. Consumers are among the key beneficiaries of the emergence of e-commerce. Not much effort is needed in making purchases as digitalization has reduced movements and the burden of carrying purchased commodities. It has also necessitated saving time initially wasted selecting commodities, queuing, moving to the shops, and negotiating. This level of convenience has made e-commerce the preferred shopping method for many consumers, particularly those with a busy schedules. In terms of price, E-commerce often offers lower prices than traditional retail stores. Online retailers often offer lower prices due to lower overhead costs, such as rent, utilities, and staffing (Taher, 2021). E-commerce platforms often offer promotions, discounts, and loyalty programs to help consumers save money.

However, besides e-commerce necessitating global market expansion and consumer convenience level enhancement, it has led to such drawbacks as intense competition in the online marketplace, job loss, and increased cost of logistics and fulfilment (Nguyen & Khoa, 2019). E-commerce has made it easier for small businesses to enter the market and compete with larger, established ones. The entry has led to a more competitive environment, with more businesses rivalling for customers and potentially squeezing out existing businesses (Lightspeed, 2021). Almost every organization is now pursuing the utilization of this new norm and is flooding digital marketing. E-commerce, Low barriers to entry characterize e-commerce, and with a large number of online retailers, firms are now forced to compete on prices, which always leads to reduced profits. Organizations know that online platforms are flooded with retailers, and each focuses on winning these customers to increase their sales and enhance their profits. Some organizations employ the cost leadership approach, which now requires other businesses to engage in the same patterns or leave the market. This can make it challenging for businesses to grow and maintain profitability over the long term. The avenue is very competitive, and some organizations are straining to maintain their market grip. E-commerce has made it easier for customers to compare prices across multiple retailers, making it more challenging for businesses to justify premium pricing (Joshi, 2018). This gives an advantage to the business with favorable prices regardless of the varying cost of production. Increased competition may scare away some businesses, which end up closing. Moreover, the shift towards e-commerce has resulted in the loss of traditional retail jobs, such as sales associates and cashiers, as businesses move towards automation and self-checkout options. This can have a significant impact on local communities and the economy as a whole. Online marketing may not require as many employees as traditional businesses do, making some people lose their jobs. People have preferences in dealing with brands and some small firms may not survive keeping the pace of big companies and some end up closing. Besides competition, e-commerce has led to increased costs of logistics and fulfilment (Taher, 2021). The changing dynamics of marketing due to e-commerce requires firms to ensure reliable and fast delivery to maintain customer satisfaction. With these requirements, businesses are subjected to significant expenses, especially small companies with limited resources. E-commerce has also increased the number of returned goods, which can be costly for businesses to manage. There is an additional cost of processing these returned goods as they need to be restocked or disposed of. Moreover, the shipping cost of a purchased commodity requires a company to increase the price of that commodity, leading to that commodity costing higher. Customers may consider otherwise, and a business may have reduced sales.

E-commerce has also led to potential security and fraud risks and worn out the personal interactions of the buyer and the product and seller (Tokar et al., 2021). As online shopping and marketing continue to advance, cases of fraudulent activities, including theft, credit card fraud, and phishing scams, are also on the rise. E-commerce businesses are at risk of payment fraud, where fraudsters use stolen credit card information to make unauthorized purchases. This can lead to significant financial losses for the business and the customer. Fraudsters can also use stolen personal data to create new accounts or even make unauthorized purchases resulting in a loss of privacy and financial damages (Joshi, 2018). Many people have suffered from scamming and have lost a lot of money on that. Mostly, this has been happening to customers unfamiliar with online security measures or who may not have the resources to protect themselves adequately. All the online platforms require the customer to register or log in using personal details, and this data can be accessed by malicious people who use them harmfully. Therefore, with the increasing use of e-commerce, there is a higher risk of cyber-attacks and data breaches, which can result in a loss of customer information and damage to a business’s reputation. The business and the customer can suffer from fraud and security risks as the company’s reputation may be damaged, leading to lost customer trust and loyalty. Also, consumers may lose their money in the process of fraud. On top of fraud and security risks, e-commerce has led to a lack of personal interaction with products and sellers. When transactions are conducted online, physical contact is fully eliminated, and the transaction is based on trust and assumption. Consumers lack the opportunity to touch, try, or test products before purchasing, which can lead to dissatisfaction and returns (Nolan, 2022). Some consumers get frustrated after receiving their ordered items, only to find they do not suit what they thought. They end up returning the items or avoiding online shopping which is a minus to the business. Lack of personal interaction with sellers can make it challenging for consumers to get the information and support they need to make informed purchasing decisions. Consumers appreciate negotiating with the seller physically as it is more appealing and convincing to both parties. Therefore, through e-commerce, they may face challenges in resolving disputes or issues with purchases, particularly when dealing with sellers in different countries or legal systems.

Though businesses and consumers are subjected to various disadvantages from the onset of e-commerce like increased competition, loss of jobs like the closure of bricks-and-mortar stores, logistics and fulfilment costs, loss of personal interactions with the seller, frauds, and security risks, its benefits outweigh these drawbacks. E-commerce has brought numerous benefits to businesses and consumers, such as an expanded global market, increased sales and revenue, increased convenience, access to a broader customer base, lower prices due to increased competition, and many more benefits. It has also allowed businesses to reduce overhead costs, such as rent and utilities, by operating online. E-commerce has created new job opportunities, particularly in logistics and customer service. These benefits have led to the rapid growth of e-commerce in recent years and have made it a preferred shopping option for many consumers around the world. Therefore, e-commerce has created new opportunities and efficiencies, but its growth must be managed to ensure that its advantages are widely distributed and are not overtaken by negativities.

Overall, the emergence of e-commerce has significantly impacted both businesses and consumers. Organizations are significantly utilizing e-commerce, many of which are reaping significant benefits. Many organizations have little consideration for its negativity and only focus on the good side. Not many businesses or consumers can speak of its negativities as consumers can access commodities anytime, enjoy fair prices, have varieties, and have other benefits as businesses enjoy an expanded market and improve sales and revenue. While the benefits of the e-commerce industry outweigh the disadvantages, traditional businesses must adapt to survive in the digital age. Besides, the advantages outweigh the disadvantages; the few disadvantages are severe and must be managed effectively for the benefits to remain incredible. The threat of increased competition, crowds, and physical store traffic must be addressed. Businesses must ensure that the shift towards e-commerce considers workers who may lack the necessary skills for the digital sector. E-commerce has created new opportunities and efficiencies, but its growth must be managed to ensure that its advantages are widely distributed. Therefore, traditional businesses must adapt to survive as e-commerce advances, and businesses must find ways of thriving in this digital era. This can be through integrating online sales channels, investing in technology, and improving customer experience.

References

Andonov, A., Dimitrov, G. P., & Totev, V. (2021). Impact of E-commerce on Business Performance. TEM Journal10(4), 1558.

Jain, V. I. P. I. N., Malviya, B. I. N. D. O. O., & Arya, S. A. T. Y. E. N. D. R. A. (2021). An overview of electronic commerce (e-Commerce). Journal of Contemporary Issues in Business and Government| Vol27(3), 666.

Jimenez, D., Valdes, S., & Salinas, M. (2019). Popularity comparison between e-commerce and traditional retail business. International Journal of Technology for Business1(1), 10-16.

Joshi, S. J. (2018). A Study of Challenges and Benefits of Electronic Commerce. IMPACT: International Journal of Research in Humanities, Arts and Literature (IMPACT: IJRHAL)6(8), 25–32.

Kadam, M. B. (2019). ELECTRONIC COMMERCE: A STUDY ON BENEFITS AND CHALLENGES IN AN EMERGING ECONOMY.

Lightspeed. (2021). Exploring the Advantages and Disadvantages of E-commerce. Lightspeed HQ. https://www.lightspeedhq.com/blog/advantages-and-disadvantages-of-ecommerce/

Nguyen, M. H., & Khoa, B. T. (2019). Perceived mental benefit in electronic commerce: Development and validation. Sustainability11(23), 6587.

Nolan, P. (2022). Advantages and disadvantages of e-commerce businesses. The Balance. https://www.thebalancemoney.com/ecommerce-pros-and-cons-1141609

Taher, G. (2021). E-commerce: advantages and limitations. International Journal of Academic Research in Accounting Finance and Management Sciences11(1), 153–165.

Tokar, T., Jensen, R., & Williams, B. D. (2021). A guide to the seen costs and unseen benefits of e-commerce. Business Horizons64(3), 323-332.

 

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