The Impact of eCommerce on Business: The Good & Bad

The internet has changed people’s lives in many ways: our social interaction and communication, access to information, and business activities. And these changes perfectly embody the coin analogy, in that there are two sides: the good and the bad.

The internet has made shopping exponentially more convenient for tech-savvy consumers. Online shopping has become the norm for many people over the last few years, especially during the pandemic.

Unfortunately, the impact of eCommerce on businesses has made many mom-and-pop stores close down due to the steep competition with eCommerce options. The failure to adapt to technological changes has been a common letdown in failed small businesses.

What Is eCommerce?

Internet eCommerce, electronic commerce, or simply eCommerce, is the buying and selling of goods and services through the internet. The transmission of funds or data is also done over an electronic network.

In the digital age, nearly anything can be done through online transactions, which explains its growing popularity. The convenience of shopping online is unparalleled—with just a few taps of a smartphone screen, you can purchase a product and receive it within 24 hours.

The growth of eCommerce is linked to the growth of huge enterprises like Amazon and eBay. Their successes paved the way for smaller eCommerce platforms like Alibaba, Etsy, and Rakuten, among others. There are 6 eCommerce Model Options:

  1. Business-to-Business (B2B) - The electronic exchange of products, services, or information between two or more businesses.
  2. Business-to-Consumer (B2C) - The retail element of eCommerce is most commonly referred to as online shopping.
  3. Customer-to-Consumer (C2C) - Transactions are between two consumers, common on sites such as eBay and Craigslist.
  4. Consumer-to-Business (C2B) - One person makes their products or services available online, and businesses openly bid for them. Most C2B cases involve a consumer’s creativity, such as photographs, design, or video.
  5. Business-to-Administration (B2A) - Transactions are between companies and any government body.
  6. Consumer-to-Administration (C2A) - Online transactions between consumers and a government body or administration.

When Did eCommerce Start?

It’s hard to pinpoint the actual start of eCommerce because of contradicting accounts. According to one report, CompuServe, an American online service provider, was the first eCommerce website launched in 1969. Other historians say it was Boston Computer Exchange, an online store selling used computers that launched in 1982.

English inventor Michael Aldrich is credited for the concept of eCommerce transactions in 1979. All of these innovators contributed to what eCommerce is today. But when did online shopping become popular? It can be traced back to 1994 when Amazon was launched as an online marketplace for books. Its market slowly expanded to music and videos and eventually became the eCommerce retailing giant that we know today.

Amazon has even earned the moniker “The Everything Store” because just about every item you can think of is sold on Amazon. Today, Amazon is the biggest player, but it has no monopoly over the large and thriving industry.

Here are the top 10 online stores worldwide, according to Statista, and their revenues:

  1. Amazon - $121 billion
  2. JD Business - $83 billion
  3. Walmart - $41 billion
  4. Apple - $33 billion
  5. Suning - $21 billion
  6. Best Buy - $19 billion
  7. Amazon Germany - $18 billion
  8. Home Depot $17 billion
  9. Target - $16 billion
  10. Amazon UK - $16 billion

What Is the Impact of eCommerce on Business?

Aside from the large eCommerce enterprises, there are hundreds of other global platforms and tens and thousands of domestic ones in different parts of the world. Many small brick-and-mortar stores were negatively impacted by the rise of eCommerce retailing over the years.

But in terms of entrepreneurship and business organizations as a whole, commerce on the internet has heralded many important benefits:


One of the biggest advantages of eCommerce is the competitive spirit of entrepreneurs, which leads to innovation. The exponential growth of eCommerce has introduced new ideas to make transactions smoother or make supply chain management processes simpler and more efficient.

Payment systems, logistics, warehousing, and delivery operations have improved significantly because eCommerce merchants always strive to serve consumers better. Businesses that run on old-fashioned thinking and don’t want to adapt to adding their business online will eventually be left behind.

Business Collaboration

eCommerce in business follows a chain: a consumer purchases products online, the transaction is processed, payment is made, and the product is delivered to the customer’s doorstep.

Each step in the process is handled by a different entity—there’s a supplier, the e-retailer, and the logistics and delivery team. The entire process is a collaboration among such integrated companies that leads to tremendous growth and advancement.


Going to a physical store takes a lot of time and effort—you have to drive or walk to the store during business hours, carry the items in your shopping cart, and wait for the cashier to ring them all up.

E-selling occurs 24/7, and it is easier than ever to shop for products you want to buy. You can purchase products anytime and from anywhere. You don’t have to deal with crowds either.

Consumers that need certain items but don’t know where to buy them only need to Google what they need. The search results will point them to online stores with that item, and completing a purchase only takes a few clicks.

Wide Audience

supply chain management

eCommerce businesses have a vast global market—anybody in the world with an internet connection can easily access their products. There are no longer limits to what consumers can buy and from where.

Niche businesses now have a chance to reach an audience of billions, especially if the eCommerce business takes advantage of online marketing and search engine optimization. There may be unique products that may be unheard of by some online users, but the internet is a treasure trove of a variety of things.

Omnichannel Presence

Businesses don’t need to give up their brick-and-mortar stores because some consumers still prefer going to physical shops. An omnichannel approach to business will help retailers capture audiences online and in person.

Lower Cost

Even if an eCommerce company pursues an omnichannel setup, overheads are still much lower. Because not all revenue depends on a brick-and-mortar store, it can be a smaller setup with fewer employees and limited operational costs.

One of the best assets of eCommerce is fulfillment centers that take care of storing and packing items for distribution. Marketing, too, is much more affordable. Instead of paying for full pages of ads in newspapers and magazines that only a limited number of people will see, eCommerce businesses can send out blasts on social media and other online channels.

Online marketing campaigns can reach an audience of millions with very little monetary investment.

How Does eCommerce Impact a Business Negatively?

One of the biggest disadvantages of eCommerce falls on businesses that don’t adapt to technological advancements. During the pandemic, many mom-and-pop stores had to close because of the lack of customers. By the time lockdowns were lifted, smaller businesses could not recover.

However, the current eCommerce ecosystem also has many challenges, even for businesses that have adapted to online operations. The following are the most common disadvantages:

Customer Service Is Not Instant

Consumers dissatisfied with a product or service from a brick-and-mortar store can easily communicate their complaints to employees and managers. If customers need help, they can just approach any available staff, and they will be tended to instantly.

With eCommerce sites, it’s not nearly this simple. Customer service queries take time to be answered, and while most large online enterprises have their own customer support division, smaller ones don’t. Many eCommerce companies offer chat support, but not all of them are available 24/7. Some also have automated chatbots, but they aren’t the same as talking to a real person who can answer specific inquiries.

In many ways, eCommerce is very limited in providing timely and truly helpful customer service.

Product Experience Is Not the Same

Product experience is one of the reasons brick-and-mortar stores will never go away. Consumers shopping for new clothes still want to visit the store, try on the clothes and see how they look and purchase those that fit perfectly. This experience cannot be replicated in the eCommerce space. Product photos and sample fits on models don’t come close to the real thing.

Most eCommerce businesses allow the return and exchange of products that don’t meet customer expectations, but the process can be quite a hassle.

Waiting Time

The convenience of the online business landscape can be offset by the waiting time for delivery. The items must be processed, packed, and loaded onto delivery vehicles.

Big eCommerce platforms like Amazon offer same-day deliveries because it has thousands of fulfillment centers and warehouses worldwide. Smaller eCommerce stores don’t have the capability, so customers must wait several days to receive the items they ordered.


Security is a widespread internet issue in the digital age, and not just in the world of eCommerce. Online data can be compromised in many ways, so eCommerce customers are incredibly vulnerable to such breaches.

What Is the Future of eCommerce?

The pandemic hastened the growth of online shopping. According to the latest U.S. Annual Retail Trade Survey (ARTS), 2020 eCommerce sales reached $800 billion. It was just $5 billion in 1998, when ARTS started charting online retail sales, and $571.2 billion in 2019, before the pandemic.

The 43% increase from 2019 to 2020 will likely be the new normal, as it heralded a seemingly permanent change in consumer behavior. After all, eCommerce ticks several boxes, including convenience and safety. Many people no longer want to shop amid big crowds if they don’t have to. Multinational eCommerce giant Shopify projects eCommerce sales will reach $5 trillion at the end of 2022 and $6 trillion by 2024.

eCommerce is a massive market with space for all types of businesses. The space is so vast, with so many audience segments, that entrepreneurs should be able to find their niche. There are 12 to 24 million online stores worldwide, and hundreds or thousands are opening daily.

Marketing Costs Will Increase

“As more businesses are online, it’s harder and harder to be found by new customers,” Shopify senior product marketing lead Mel Ho said of the future of eCommerce. “Because it’s so easy to start online now, there are rising costs of customer acquisition.

Paid ads are getting really expensive.” One of the many advantages of eCommerce is supposed to be the low cost of advertising. After all, signing up for a social media account is free, and search engine optimization is a low-cost strategy.

However, businesses that want to compete with large posts may find it challenging to get ahead with these simple endeavors. They need to invest in paid ads and sponsored posts to get a leg up.

Businesses Need to Evolve with eCommerce

impact of ecommerce

Amazon is the perfect example of the growth of eCommerce. It began as an online bookstore that quickly transformed into an everything store for billions of customers.

Not all businesses can be Amazon, but the most crucial thing to emulate is innovation and flexibility. Businesses must adapt to new eCommerce technologies and maintain a forward-thinking mindset to stay ahead of the competition.

Contact us at elk marketing today to help grow your eCommerce business with SEO, Paid Search, Website Development, Content Marketing, and much more!