From Pixels to Packages!
- Economics and Business Club NPSi
- Dec 17, 2023
- 2 min read
The increase in online shopping in the modern world
Online shopping officially began 41 years ago when the Boston Computer Exchange started selling products via the internet. In the past, shoppers would invariably visit physical stores, ready to make immediate purchases. One of the few alternatives was browsing catalogs and then placing orders through the mail. Today, many consumers prefer the convenience of online shopping. Virtually all major retailers have e-commerce websites, some even offering free shipping and returns. Moreover, the method of payment has also drastically changed. Decades ago, purchasing an item involved writing a check or counting out bills and coins. Nowadays, the majority of consumers pay by swiping or inserting a credit card. According to a 2014 Bankrate survey, 40 percent of consumers carry less than $20 on a daily basis. Over the last 10 years, the number of digital buyers has rapidly increased from 1.32 billion to 2.64 billion. Furthermore, shoppers have turned to mobile shopping, with 72.9% of e-commerce sales occurring via mobile devices in 2020. These changes underscore how technology and shifting consumer preferences have fundamentally altered the shopping landscape, from the advent of online sales to the dominance of e-commerce and the rise of mobile purchasing. These shifts extend beyond mere convenience, significantly impacting the retail and payment industries.
Impact Of Online Shopping On Firms
The Covid-19 pandemic, in 2020, led to a sharp increase in the share of e-commerce sales, nudging a number of firms into the direction of online shopping. However, post-pandemic, a number of firms have observed, and come to realize that the pros of online shopping outweigh the cons, resulting in the projected continuous increase in E-commerce sales.
The evolution of online shopping in recent years has had a profound impact on firms across various industries, transforming the way they interact and communicate with consumers.Primarily,online shopping has allowed firms to significantly widen their market base,due to the emergence of technology, enabling them to expand their reach on a global level.For example, the advent of E-commerce has allowed Amazon to account for 5% of the
retail sales in America, and even holds approximately 50% of e-commerce sales across the nation, generating roughly 126 billion dollars of revenue
Moreover, E-commerce has allowed firms to increase their net profits, through an improvement in cost efficiency. For instance, Amazon maintains a vast inventory in centralized warehouses, reducing the need for costly rental of stores, and gives rise to more efficient inventory management, resulting in noticeably higher net profits.
Firms, such as Amazon, have revolutionized the e-commerce experience, via means of user-friendly interfaces, one-click ordering, and extensive user support. Also,they provide a more personalized shopping experience, by generating data about customer preferences and activity. Amazon makes use of this information, in order to personalize recommendations,optimize pricing for maximum profit, and even to determine the supply at which profits are optimum, leading to a more pleasant customer experience, and provides firms with higher profits
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Written by- Arjun Batra, Shloka Satish
Edited by- Tanuj Waghray
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