Thesis Statement
Introduction
In the recent economic times, the advanced technology has been able to facilitate innovative online business platform where consumers can easily purchase products over the internet. However, this has developed various impacts with regards to the economy due to the increased online shopping by a majority of the modern consumer. It is believed that online shopping will continue to present tremendous impacts to the economy due to its acceptance by the majority of consumers in the global markets. This study will therefore, seek to reveal the impacts of online shopping to the economy by taking an in depth scrutiny of the past literature.
Discussion
Online shopping has been rapidly increasing in its use by many consumers all over the world. Most of these consumers have developed a preference for the digital platform of shopping as compared to the traditional retail shopping. However, this idea has been received whole heartedly by a majority of the buyers and for this reason it has had various impacts to the economy. Foremost, online shopping is enhanced by the fact that it offers convenience to the consumers. Hence, it would be prudent for investors in the market to take note on value addition for their products so as to ensure convenience to the customers. It is believed that the modern day consumers would forego brand loyalty just to take advantage of a good deal offered to them (Alm & Mikhail, 225). As a result, online shopping is encouraging a situation whereby the consumer is the king of the market and thus must be pursued tactically by the investor so as to capture their needs and preferences.
Previous studies have also revealed that online shopping has brought about a loss in taxes from the local providers of goods and services. This is due to the fact that most consumers have opted to acquire their products and services from the online shopping sites thereby rendering the local firms obsolete. This would pose to have gravitating problems in the economy since the beneficiary agents who receive tax from the local firms would count losses on tax due to low sales recorded by local firms. Therefore, this creates a challenge to the government and other authorities who benefit from taxes accrued by local business units. Thus, there would emerge a deficit in the amount of funds available to finance public projects and development projects due to reduced income from taxes. However, the issue of tax use liabilities which is an obligation of the buyer has been found to be losing track given that online shopping is not efficient at collecting these taxes.
However, studies have revealed that the amount of sales tax that is accrued from online sellers is enough to counter the effects of reduced use tax liability. Conversely, it is expected that as the online shopping business expands there will be formulation of proper policies to capture all taxes accruing from online shopping transactions (Sprano & Zakak, 172). Consequently, the issue of online shopping is also thought to be an active driver of improved productivity in the economy. To begin with, studies have proved that online shopping would greatly reduce the transactional costs related to the value chain, that is, distribution and delivery costs. Secondly, online shopping has also been found to have a positive impact on management efficiency. It has enabled managers in organizations to ensure that the value chain is well maintained and the fact that the management can sustain close relation and contact with the clients.
Thirdly, online shopping has also led to an increase in the levels of competition in the market therefore ensuring improved productivity (Europe Economics, 32). Lastly, online marketing has strengthened the consumer sovereignty thereby making it possible for consumers to make informed choices as well as enhancing efficient customer satisfaction. It is all these attributes of online shopping that have been stimulating the growth in productivity in the economy. Conversely, online shopping is enhanced by the familiarity of products by consumers. Thus, it would be very possible for the consumer to return and shop back from the internet due to the level of trust that they have established with online traders. This is especially possible if the utility of the consumer is maximized by the particular website used for online shopping (Afshan & Fu, 16). Therefore, online shopping will present an economy where consumers are guided by their habits as well as their accrued utility and the uncertainty that prevails in the market.
Online shopping has also developed an economy where the consumer’s decision is not influenced by uncertainty since the individuals are not afraid of undergoing losses over the digital shopping platform (Gefen, 731). Hence, online shopping shall dictate that the vendors in the business must exhibit excellent levels of competence and be accountable to their consumers. This shall mean that the economy will be driven by the individual efforts applied on the product due to consumer choice. However, online shopping has also been significant in providing consumers with very important information regarding the economy. For instance, online shoppers have full access to the product’s information including the prevailing prices of a given product brands. As a result, all the market agents in the economy have access to perfect information about the products thus this facilitates the rise of competitive markets in the economy.
Consequently, online shopping has also presented an economy’s whose market is characterized by enormous price dispersion of products. This is indicated by the various prices offered for the same type of products; however, this price dispersion is backed up by the issue of reduced costs of transaction. Therefore, consumers will still be willing to purchase at the existing price levels given that they do not incur costs on acquisition and shipment of products. Finally, online shopping especially in the United States has been revealed to be encouraging cross border trade amongst the sellers and consumers in the marketplace (James & Mikhail, 21). Thus, this will be expected to expand the economy and also utilize cross border business hence paving way for increased globalization which is set to improve the shape of the economy.
Conclusion
Online shopping has been proliferating in the marketing and in the present shopping trends a majority of buyers prefer the digital platform in undertaking their shopping needs. However, online shopping has offered convenience to the buyers and hence its rapid adoption by a majority of the people. However, it has had various impacts to the economy and from the study conducted it is quite a beneficial idea which would promote various agents of the global economy. Online shopping has offered the buyers with an opportunity to have access to complete information about the market. This element of online shopping has further encouraged competition in the market and as a result the economy has experienced increased productivity due to the active participation of the market agents. It has also been noted that online shopping has reduced use tax liability which is an obligation of the buyer. Hence, the government and other authorities have experienced difficulties in tracking the tax use from the buyers thus reducing the tax revenue; this will have an implication to the economy due to reduced budget receipts. Online shopping has also enhanced cross border trade amongst various marketplaces thus improving globalization which consequently improves the economic situations. It is thought that online shopping will continue to have tremendous impacts on the economy due to its increased use by a majority of consumers, thus time will tell how the levels of economic stimulation by online shopping will behave.
Work Cited
Afshan, Azam and Fu, Qiang. An Economic Model of the Consumers’ Online Shopping Utility and Factors Affecting on Online Shopping. International Journal of Computer Applications, Vol. 52(1), 2012.
Alm, James, and Mikhail, Melnik. Do eBay Sellers comply with state sales taxes. The National
Tax Journal 62, 2010: 214-237.
Europe Economics. Economic Literature Review: Internet Shopping. Crown, 2007.
Gefen, David. E-commerce: the role of familiarity and trust. Omega: The International Journal of Management Science, 29, 2000, 725–737.
James, Alms and Mikhail, Melnik. Does Online Cross-border Shopping Affect State Use Tax Liabilities? Working paper 1206, Tulane economics working paper series, 2012.
Sprano, Ernst, and Zakak, Albert. E-Commerce capable: competitive advantage for countries in the world e-conomy. Vol. 11, (2). 2000, 167-189.
