The use of E-commerce started around two decades ago with the invention of technology such as electronic fund transfers. Introduction of electronic data interchange extended it to producers, retail traders and other services. Its use kept on spreading in many different areas such as stock market operations, travel reservations, etc.
Innovations in information and communications technologies have created a digital revolution that is changing the way the world works, learns, communicates and transacts business. E-commerce continues to show strong growth and has been influencing the social and economic growth of nations. On one hand, e-commerce technologies have helped nations to accelerate their economic growth and to provide more opportunities for businesses to grow, but it has also created many challenges and effects across numerous domains of society and for policymakers. These issues involve economic productivity, intellectual property rights, privacy protection, and affordability of and access to information, among other concerns.
Four broad themes have emerged as important for understanding the economic and social impact of electronic commerce:
- The effect on the marketplace
Electronic commerce transforms the marketplace. E-commerce will change the way business is conducted: traditional intermediary functions will be replaced, new products and markets will be developed, new and far closer relationships will be created between business and consumers. It will change the organization of work: new channels of knowledge diffusion and human interactivity in the workplace will be opened, more flexibility and adaptability will be needed, and workers’ functions and skills will be redefined. …
- The catalytic role
Electronic commerce has a catalytic effect. E-commerce will serve to accelerate and diffuse more widely changes that are already underway in the economy, such as the reform of regulations, the establishment of electronic links between businesses (EDI), the globalization of economic activity, and the demand for higher-skilled workers. Likewise, many sectoral trends already underway, such as electronic banking, direct booking of travel, and one-to-one marketing, will be accelerated because of electronic commerce.
- The impact on interactivity
E-commerce over the Internet vastly increases interactivity in the economy. These linkages now extend down to small businesses and households and reach out to the world at large. Access will shift away from relatively expensive personal computers to cheap and easy-to-use TVs and telephones to devices yet to be invented. People will increasingly have the ability to communicate and transact business anywhere, anytime. This will have a profound impact, not the least of which will be the erosion of economic and geographic boundaries.
The widespread adoption of the Internet as a platform for business is due to its non-proprietary standards and open nature as well as to the huge industry that has evolved to support it. More importantly, openness has emerged as a strategy, with many of the most successful e-commerce ventures granting business partners and consumers unparalleled access to their inner workings, databases, and personnel. This has led to a shift in the role of consumers, who are increasingly implicated as partners in product design and creation. An expectation of openness is building on the part of consumers/ citizens, which will cause transformations, for better (e.g. increased transparency, competition) or for worse (e.g. potential invasion of privacy), in the economy and society
When we consider the impact of e-commerce on the global economy it is said to be very influential and far-reaching. Ecommerce is one that has a profound and radical effect for businesses that is located all over the world. It is more powerful than the traditional resources that were adopted by businesses all over the world. With the aid of ecommerce, it is possible for people to shop online from the comforts of their home irrespective of the geographical location. Ecommerce has been able to remove the geographical barriers successfully and helped customers to come into contact with vendors without hassles. The impact of eCommerce is one that has bought in a drastic change in the traditional market. It is one that has been welcomed with open arms as it has clicked immensely for many businesses and now most of the businesses that exist without commerce cannot exist. Ecommerce has also helped many small businesses as they no longer require to have a physical office that caters to a particular geographical location.
The impact of e-commerce on the global economy is so immense that the targeted audience can be reached without wasting time and economic resources. The target market is easily reached with the aid of effective internet marketing techniques. The impact of e-commerce on the global economy has influenced everything right from the production to the service levels that many companies are able to do business with. This change is a very significant one and it is here to stay. With ecommerce, these businesses are faced with the main challenge of having to stay ahead of their market competitors with the shifts in technology. They should be able to embrace and wield the power of marketing successfully to their advantage so that have the edge in market competition.
The impact of e-commerce on the global economy has also affected countries that are not so economically sound and it has acted to take them to the forefront on international trade and commerce. Ecommerce crosses all economic and political barriers and this, in turn, gives rise to more effective marketing techniques that have the ability to penetrate all barriers. Ecommerce carries with it a number of benefits and it has worked wonders for both small and big businesses alike. With e-commerce techniques, companies have enhanced sales and increased profits. It is a technological boom and here to stay for a very long time.
Besides the other impact on the economy are listed below:
- E-commerce presents unique opportunities for less developed countries to greatly expand their markets, both internally and externally. Externally, the Internet and other technologies may allow for low-cost international trade, even for small, local businesses. Internally, many groups of citizens who had been considered “marginalized” and “unbanked” may gain affordable access to financial services, and may thus participate more readily in all aspects of the economy.
- Rural areas considered too costly or unprofitable for business development might increasingly become a focus for investment and market expansion, and also for relocating corporate offices.
- Development of microfinance institutions to provide financial services to the semi-urban and rural areas.
- E-learning and M-learning enhance the access of the educational institutions in remote areas.
- E-governance initiatives increase access to information and thereby reducing corruption.
- M-banking (Mobile banking) reduces the transaction cost of banking industry thereby increasing access to financial services through a rapidly growing mobile market.
- Micro, small and medium enterprises can leverage the technology to market their products globally.
The rapid growth of Information and Communication technologies especially the Internet and e-commerce have affected most parts of human society and its dominance over the other technology is clearly visible. There are various things that can be done by the use of the web to make a difference, whether it is donating money to charities via click-through, educating people, reducing poverty, generating employment opportunities helping the local community, improving access to healthcare, signing the online petition or accessing the information. Further, e-commerce is also helpful in reducing the gender gap and leads to empowerment and participation of women in economic activities. With the rapidly expanding reach of internet and e-commerce technologies into most aspects of everyday life, it is imperative to understand the social impact and the behavior leading to this impact
Positive Effects of E-Commerce on Society
- Convenience Shopping
Online can be a lot more convenient than heading out to a shopping center to find what you want. Instead, you can simply sit at home with access to the internet and order away.
Ordering an item online through an e-commerce site takes a lot less time when compared to traveling to your nearest store.
- Information Availability & Price Comparison
The internet is filled with information and with the use of search engines like Google almost anything can be found out rather quickly. When you involve online shopping with these abilities you can easily find the best price for the product you are searching for without having to travel from retailer to retailer. Google Shopping is an example of a product search engine that finds the best price at the selling stores.
Website’s that run online are constantly available at all hours providing there are no technical difficulties. This is a great advantage for those who finish work late and don’t have the time to run down to their nearest outlet to find the product they desire as they can know simply order online
- Greater Choice
When going out shopping you usually only have the availability of the products that are there. This differs when compared to shopping online. Firstly, it is highly likely that you can find the product you want to from multiple different sites. Also, when purchasing from a bricks and clicks organization it is possible that the product you are after isn’t available at your nearest store but instead it can be delivered from a store-based elsewhere.
- Advertising Online
The internet today is a very popular place and this makes it ideal for advertising. Businesses who run their own e-commerce site often advertise for other non-competitors while generating additional revenue and building a partnership with that business which could do both companies a great of good.
Negative Effects of E-Commerce on Society
- Some organizations or businesses move from being a brick organization, where they are based in a store, and move to become an online, more globally available company and therefore have no need for the staff they have employed in their stores.
- As there are some websites out there with the purpose to scam some people are afraid of entering their credentials online and they can’t be blamed. There are trusted sites out there and there are multiple ways to detect whether they are official sites or not. PayPal is an online payment method that people can use that keeps your credential information private from the trader. The online trade will then work with PayPal meaning that none of your payment details are shared with the company you a buying from.
- Security Issues & Customer Trust
- It is important to provide a safe and secure online shop for a customer when they are trying to buy products from you. This helps create greater customer trust and ensure them that they can place an order without any worries to help encourage additional business with that customer in the future. The business will need to make sure that a safe gateway is available and that the information is secured when the customer makes the payment
- Returns & Complaints
- If there is a product malfunction then the customer is going to want a replacement or refund giving that it was not their fault if it arrived damaged for example. With a business that is solely based online, it can be a lot of hassle for the customer to sort out a return or a refund as they can’t simply walk into their nearest corresponding store. This can also create a bad experience for the customer and it is likely they will not be coming back to your shop again.
- When you order a product or service online you have to wait for the product to arrive. Usually, these e-commerce sites offer different options for delivery which will range from faster delivery times at a higher price to slower delivery times at a lower price or in some cases free. But sometimes the product can take a good duration to come due to many issues and this can cause problems if the product or service you ordered is for an event that is coming up, like a birthday or Christmas present.
The speed with which information technology is transforming the economy and society makes it difficult to determine with absolute confidence the full range of social impacts and the net balance of social benefits and costs. It is clear, however, that fundamental changes are taking place at virtually every level of society, prompted by the growth of the Internet, electronic commerce and other applications of information networks. The main way in which e-commerce will affect the economy, in general, is its impact on productivity and inflation. The continued expansion of electronic commerce could also lead to downward pressure on inflation through increased competition, cost savings and changes in sellers’ pricing behavior.
E-commerce is emerging as an important tool to ensure inclusive growth. The traditional model of business is undergoing a sea change to reduce the prominence of the physical infrastructure of big cities as an essential condition for the smooth functioning of the business. The emergence of international shipping options creates the opportunity to reach online consumers around the globe. Emerging economies with a rapidly growing internet penetration offer an attractive option for retailers to expand. China with the world’s largest online population provides a great opportunity for retailers.
The concept of virtual companies is taking concrete shape and will usher into an era of the boundary-less world. The micro, small, and medium-sized companies will get the advantages of low-cost operations, and opportunity to market the products globally on the click of a mouse. Hitherto neglected remote villages and states will get a chance to grow economically, socially and also contribute to the empowerment of women, and minority classes. E-commerce has the scope to lead India into an economic superpower.
E-commerce is emerging as an important tool to ensure inclusive growth. The traditional model of business is undergoing a sea change to reduce the prominence of the physical infrastructure of big cities as an essential condition for the smooth functioning of the business. The emergence of international shipping options creates the opportunity to reach online consumers around the globe. Emerging economies with a rapidly growing internet penetration offer an attractive option for retailers to expand. China with the world’s largest online population provides a great opportunity for retailers. The concept of virtual companies is taking concrete shape and will usher into an era of the boundary-less world. The micro, small, and medium-sized companies will get the advantages of low-cost operations, and opportunity to market the products globally on the click of a mouse. Hitherto neglected remote villages and states will get a chance to grow economically, socially and also contribute to the empowerment of women, and minority classes. E-commerce has the scope to lead India into an economic superpower.