Global Impact of Online Shopping


Online shopping refers to the process of buying goods from the manufacturer through Internet. It is also called electronic commerce and is widely spread globally. Sometimes it is also referred to as the e-store, the e-shop, and business to consumer or business to business shopping, depending on the scenario of the shopping process. Several custom-made applications for specific goods and services have been developed to help facilitate online shopping. This paper will analyze the effects of online shopping on the economy of the world and discuss the benefits that the economy has realized as a result of online shopping.

Effects on Innovation

To begin with, online shopping uses the social media as the platform of gathering and disseminating demographic data. There is also exchange of information and data between different business entities during online shopping. The customers are contacted and communicated to through fax and e-mail (Chuan et al. 17). Usually, business related purchases and sales are used to ensure that the transactions of the business are safe and bear a high integrity. Online shopping also involves the application of automation of documents and data in logistics and supply chain division during the procurement procedures. International payment systems are also used to complement the domestic systems of monetary payment through the use of forex bureau for the purposes of foreign currency (Peitz and Waldfogel 37). All these have contributed to economic development.


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Effects on Customer Care

The customer care sector has also witnessed some changes as a result of online shopping. The management of the content available in the enterprise is given priority, making most customers to opt for group purchases. There are online assistants who are automated to generate the end results of the daily transactions. Newsgroups are usually created to help streamline the tracking of orders made online and the online shopping activities. Since payments are done online, most customers use online banking to ease the flow of financial information. The use of such software as shopping carts has made it a necessity to have virtual online office suites, thus enabling them to make teleconferencing an alternative to daily meetings in the boardrooms.

Through social networking, the customers have the ability to exchange instant messages, and this facilitates the use of electronic tickets (Chuan et al. 48). With the invention of the Internet and further innovation of the World Wide Web, the online shopping became the order of the day, with the nature of business transactions shifting to technologies such as processing transactions online, mobile commerce, systems for inventory management, marketing via Internet, supply and chain management, electronic data interchange and transfer of funds. All this led to the introduction of online shopping, that has brought great effects on the global economy. Some of these effects are negative, while others are very positive to the world’s economy.

Environmental Effects

Another change that online shopping has brought to the world is a contribution to environmental conservation, that has a direct impact on economic growth. With the increase in a number of online shops, the negative impacts that befell the environment have greatly reduced. This has led to the realization of a green economy, that has greatly contributed towards the sustainable development of the nations. The pollution that was caused to the environment due to packaging and advertisements has greatly reduced. This has led to reduction in the amount of resources spend on environmental protection and awareness campaigns. Other costs that are related to shipment have also been proven to decrease in online shopping comparing to the analogue way of shopping (Peitzand and Waldfogel 53).

Effects on Customers and the Market

The effects of online shopping on marketing and customer care have also led to very stiff price competitions among manufacturers. This is because online shopping has helped the consumers gain a lot of information about prices of various products from different manufactures. This has created a significant revenue earned by the government. The structure of the industry has also grown, given the fact that the online shopping has led to the growth in the number of online-based agencies dealing with business transactions. Economies of scale, therefore, play a major role in the economic growth of the country concerned, since the larger firms in the online-based business have the ability to offer lower prices for their customers. The number of employees has also been on the decrease, and all the parties have to rely on Internet-based technologies to accomplish the online transactions, leading to more capital being saved for the investment; thus, economic growth is realized.

Transactions in the online shopping process can be effected from anywhere and anytime. This means that they are very efficient and thus contribute to the growth of the economy through the facilitation of circulation of currency in the economy. The geographical barriers that deter economic growth and development are removed, and this has made everybody in the world to be in a position to contribute to the growth of the world’s economy (Reinert et al. 28).

Effects on Distribution Channels

The distribution channels have also witnessed a lot of revolution as a result of online shopping. For instance, the middle men that existed between the consumer and the manufacturer have been eliminated, since the consumer now deals directly with the manufacturers. Although this has denied the governments of the affected parties certain amount of revenue and, at the same time, forced a significant number of people out of employment, the advantages that have fallen to the consumers and the manufacturers are very great and have contributed to the economic development in another way. The consumers now enjoy a fast delivery of goods, while the manufacturers get to know their consumers’ preferences, given the fact that they are in a direct contact. Companies have embraced the idea of a pure click, also known as the brick-and-click channels of distribution. Websites have been created even in the absence of the actual firms owning the websites. Others that are existing have brought in the use of the website for the online shopping business. Sometimes, physical buildings are opened to help the manufacturers reach the consumer well (Flint, Hoyt, and Swift 38).

Effects on Transactions

The modes of payment that have been employed by online shopping have also revolutionized currency circulation in the economy. It has become very easy and fast to transact online payments with any currency, given the fact that all the exchange rates and services are also available online. Efficiency in transacting payments in online shopping has been facilitated by credit cards. This has earned the government revenue that contributes immensely to the economic development. The PayPal has also earned governments a lot of revenue that contributes towards economic development. Alternative means have been developed to ensure that the economy grows, notwithstanding the means of payment used to accomplish online transactions. The use of mobile banking has become very common, contributing greatly to the flow of currency, the creation of jobs, and earning the government of the concerned country a lot of revenue in a form of taxes. Debit cards and electronic money are just a few of the payment methods that greatly contribute to the development of the world economy. Other methods include money order, bitcoins, wire transfer, and gift cards. This has, however, been met by several challenges, as long as not all manufacturers and businessmen accept foreign credit cards. Others restrict the location of sending and receiving the gifts. Real-time of processing the transactions in online shopping has also enhanced the economic, which is being on the rise steadily. This is because the currency is not static but flows continuously.

Effect on Market Segmentation

The market segmentation is not left behind since online shopping has revolutionized the actions of consumers in the global market. Not every product that a consumer needs can be bought online. Instead, the market players have come up with an idea of separating the market share to ensure that the economy is not hurt but kept on toes at all times. Virtual marketer, who prefers the use of online shopping, will prefer to buy things like tangible products. For the sake of spare parts and other services that need an appeal before the payment is done, online shopping may not be preferred. The goods that are suitable for ordering online are those that do not need prior stocking at the store.  Exact information that is reliable should be provided to the consumers to enable them to transact the online purchases promptly (Reinert et al. 67).

Cybercrime and Internet Fraud

On the contrary, the economy has also faced some negative challenges that come as a result of online shopping. These challenges have led to the establishment of several agencies that will deal with anything that comes along with the online shopping. Regulations and laws have also been created to help curb these situations. Challenges that online shopping has faced, like privacy, have been a very critical issue in economic growth. This is because the security and stability of the currency of a given country determine how its economy grows. Telemarketing poses a great threat to the privacy, security, and stability of the currencies in the global trade, and this finally affects the economic status. This has led to some consumers shying away from these online processes that expose them to a lot of publicity that does not have any defined boundaries. Some websites keep track of very crucial information of their customers and end up sharing it with other clients on the Internet. This has led to a lot of fraud and crime, commonly referred to as Internet crime (Shaw 84).

A lot of money has been lost as a result, and this has led to a decline in the economy of the affected countries significantly. Banks and financial institutions have also lost a lot of money due to online fraudsters. Online sites are also prone to risks relating to Internet hackers. All these nuances affect the economy negatively, as a lot of resources are invested in ensuring that normalcy is maintained.


To conclude, this paper has clearly discussed the effects that online shopping has on the global economy. Clear details and examples have been used to illustrate the effects, and an elaborate analysis has been drawn. It is now clear that online shopping has made the world be reduced to a global village, thus creating a lot of economic development. It has created more interaction that has facilitated the free flow of knowledge from one geographical area to another, leading to faster economic growth. Despite the few challenges that online shopping has faced and the negative effects it has caused to the economy, the positive results outweigh the negative effects. For this, we should embrace and continue to encourage the use of the Internet for online shopping, so that more development projects and infrastructures could be realized. The government of any country should, therefore, strive to encourage its citizens to use online shopping to continue enjoying the available opportunities.

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