Effects of Online Shopping on Economy of United States: 2000-2017

As technology continues to ameliorate in the modern world, so are its daily usages. One broad example would be e-commerce, and further would lead to online shopping. Online shopping has been a global service for more than 50 years aimed at additional convenience, with day-to-day transactions being made and an increasing number of products being retailed. While it has provided expediency and assistance to many, there are several drawbacks that have affected several aspects of the economy in the United States. In recent years of e-commerce expansion from 2000-2017, online shopping has initiated a decrease in brick and mortar store sales, redirected consumers buying decisions, and partly reduced the income gap for employment rates.To start off, retailing has been around for more than a century, but e-commerce started in the 1990s as a shift from real-time market to a digital market.

Online shopping has brought down physical and ideological barriers for people worldwide to have an equal playing ground for their market, allowing more to access more while also gaining momentum. However, with a new business startup, a significant number of customers are attracted to online retailing. By this, multiple people would contemplate the idea that the business of brick and mortar to be “dying” with rapid speed. Yet, since brick and mortar has been the foundation of the consumer economy, online shopping has not risen to the point where it could materially affect brick and mortar sales. Figure 1 depicts brick and mortar sales compared to e-commerce sales in billions from 2000 to 2017 in the U.S. It would take online retail transactions numerous years to catch up to brick and mortar sales. Since it started to form when brick and mortar stores have already been developed well, their sales were up to 800 billion dollars in 2000 when e-commerce was just barely commencing. By comparing the two trends, brick and mortar sales have a faster rise than e-commerce ones, although it fluctuates slightly and a slight dip is shown in 2009 where online retail was just starting its climb. In 2017, the sales of brick and mortar were around 13 times those of e-commerce sales, with an overall increase of 500 billion dollars and e-commerce of 100 billion.

The reason behind this is that there are still large brick and mortar stores that would be considered as e-commerce resistant because of their “merchandise, state franchise laws that protect dealers, ingrained consumer preferences, and other factors” (Richter). In order for online shopping to catch up to offline sales, they would need to find an appealing way of promoting products in order for the United States to catch up to other countries. This would be improved “by increased online sales in categories with low penetrations… Online shopping could reach 20% of all retail sales by 2025” (Burleson). It would take a while in order for the two main forms of retailing to be balanced in sales. With online shopping evolving, consumers are heavily influenced as well.

Secondly, consumer behavioural decisions have been altered with the constantly changing ways of purchasing products. Customers have been using online shopping ever since its emergence, and “by 2015, Americans were spending nearly $350 billion annually online – or roughly 10% of all retail purchases, excluding automobiles and fuel” (Smith et. al). An increase in sales represents an up rise in popularity. There are several advantages that attract customers, and disadvantages that make them favour brick and mortar stores over online shopping. For those inept to travel around as easily, online shopping is the prior choice. This option also limits the amount of contact for those who prefer privacy and also provides everyone to have a chance to be the supplier or the consumer. Having an online market means for it to be available globally 24/7 which would be handy for emergencies and can be less time-consuming. Returns are relatively trustworthy in order to make up for the fact that customers are unable to experience or be intact with the item before purchase, but they are not available for every store. One main contrast between online and brick and mortar stores are the prices.

When shoppers were asked for their virtual preferences for online and in-store shopping, 65% of online shoppers denoted that they would likely “compare the price they could get online with…physical stores and choose whichever one offered them the best deal”. This highlights that differing prices for online stores drive Americans to focus more benefiting from both options. The business of online stores would be able to increase with lower prices, but still unable to take over brick and mortar stores as there could be special sales for a greater audience. Focusing on consumer’s demographic characteristics, most would still go to physical stores as they prefer to be safe for a first time product. As research shows, “thirteen percent of shoppers use the ‘buy online, pick up in store’ (or BOPUS) method to purchase and pay for their items” (Deloitte). Using a combined version, customers would be able to guarantee the quality of their purchases while also be more efficient. There are negative and positive features for each side that customers consider to to establish their options.Lastly, the job market of the United States has been critically reformed, as multiple job opportunities have opened up following the development of online work bases. However, that also draws away retail workers from brick and mortar stores as less labor work is needed for online management and fewer job spaces are needed to fulfill customer needs.

By having an online base, unpaid hours formed by consumers waking along aisles, etc. are actually being turned into paid work hours for numerous job positions such as packaging, choosing the products to send, and delivery services that require a whole workforce of people. Fulfillment centers are similar to warehouses, where goods are prepared to be sent away, but to different points. Fulfillment centers answer to individual customer orders, combining multiple different salespeople and giving the opportunity for more workers even if they require hard work. Research depicts “that ecommerce created 400,000 jobs from December 2007…to June 2017, while brick-and-mortar retail has lost 140,000 full-time-equivalent jobs” (Mandel). Online has actually reduced the income gap between brick and mortar and online shopping, as multiple new jobs are required to completely regulate orders from all the customers.

From Figure 2, it shows the percentage in retail jobs over the last 15 years for 4 different retailing types: e-commerce, warehouse clubs and others, the retail industry overall, and the department stores. E-commerce jobs have evidently risen the most, with a rapid boost from 0 percentage points in 2002 to 334 percentage in 2016. This is more than four times the overall change for “warehouse clubs and others” which rose to 80% in 2016. The retail jobs remained levelled out for the overall retail industry, and department stores decreased by 25 percentage points. This chart strongly supports the idea of how e-commerce has opened up an enormous amount of jobs for people.

All in all, online shopping has not yet impacted brick and mortar stores enough to create a large difference. It would take a few years for them to take over the predominant brick and mortar stores. However, it has created a convenient but slightly faulty platform for consumers which also changes their decisions for their ways of shopping. New jobs also provided chances for everyone to earn a living. This marketing firm would be further enhanced and broadened throughout the next few years and would have a lasting impact on multiple aspects of the economic society.

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