Impact of eCommerce on Modern Business World

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Impact of eCommerce on Modern Business World

When you think of ecommerce what’s the first picture that springs to your mind? A consumer loading his/her shopping cart online?

Very often, people assume that ecommerce is limited to consumers’ shopping online. While it’s true that the public face of e-commerce is online shopping, it has far-reaching implications beyond that.

Here, in today’s post, let’s take a look at how e-commerce has altered the very nature of businesses across the globe

A Flat World Presenting New Opportunities while Opening the Gates for Fierce Competition

Ecommerce and the never-ending array of virtual companies are today challenging long-accepted economic practices and creating hyper-competition like never before. While globalization and the internet open up newer markets for you to reach out to, it brings you a hoard of competitors who are all waiting to steal your market share.

In this era of digitalization and online shopping, businesses that don’t jump on the e-commerce bandwagon are bound to get lost in the melee. That doesn’t mean you have to reach out to the first ecommerce website design services you come across to design an online shopping portal for your company.

You need a well thought-out ecommerce strategy to outpace your competitors, expand your business, increase revenues and above all take your business to the next level.

e-Commerce – Shaking the very Foundations of Traditional Business

eCommerce is here to stay. There’s no use denying the obvious. And, the threat from e-commerce applies to all – from tiny startups to large corporations. Just because a company is an industry leader today, there’s no guarantee that it would retain its competitive edge tomorrow. The threat from e-commerce is high, especially for old-school businesses, that aren’t ready to embrace the changing commercial landscape.

There’s more to embracing e-commerce than updating your IT infrastructure. The changes have to come from a grassroots level – right from how employees function to how management plans, everything has to adapt to an e-commerce-first strategy.

Coming to the big question, who will win the war in the race to retain existing market shares while successfully expanding to new markets? Traditional organizations or new-age e-commerce firms?

Businesses have to remember that old commerce rules don’t apply in today’s era of e-markets. Age-old business practices have been rendered obsolete, just like Newtonian physics has been replaced by the laws of Quantum physics.

Here are some significant ways in which traditional business practices have been put on the backburner by ecommerce strategies.

    1. Vertical Integration is no longer Relevant

    It’s true that vertical integration was considered the best practice for several decades. The simple idea behind this concept is that – if you want to do something perfectly, get it done by yourself. As companies grew, they started doing all the processes in-house.

    Right from R&D to all other processes down the chain, including retail, everything was carried out in-house. In fact, some corporations had (or still have) their in-house legal team to help them with legal matters, even if the core expertise of the business has nothing to do with the law.

    This mentality cost businesses huge overhead, making them highly inflexible and inefficient today. Today, the economy is global. And, outsourcing specific functions to specialists is a must not only to reduce overhead costs, capital expenditure and other unnecessary expenses, but also to help businesses focus on their core product, so that they deliver the best value to their customers

    An example of vertical integration gone wrong – Just because, you’re developing an ecommerce site for your business doesn’t mean that you have to hire a team of web developers, designers, coders and other specialists to help you with the job. Instead, you’re better off outsourcing the task to a reputed Magento 2 development company, while you focus on your specialties.

    The Takeaway – Stick to your core practices. For all other functions, outsource the task to industry experts.

    2. Decreasing Returns to Scale – A Law Rendered Wrong

    In economics, a classic theory is the Decreasing Returns to Scale. According to this law, even when an increase in all inputs (inclusive of capital and labor) occurs, the output is not proportional. It states that all businesses cannot grow profitably forever.

    However, this classic economic principle doesn’t apply to the world of e-commerce. E-Businesses have proved that they can sustain incredible growth, while continuing to offer excellent returns. One of the primary reasons for this is that ecommerce doesn’t need high investments unlike traditional businesses.

    On the other hand, e-Businesses rely on communication, IT and technology. The infrastructure and inventory needs are a bare minimum. The bulk of investment is made up of client relations/support, IT infrastructure and R&D. Once the initial investments are done, the cost per unit is dramatically lower when compared to traditional business models.

    The Takeaway – The Scalability and Flexibility of ecommerce business model allow companies to grow quickly and profitably, without falling into the dreaded trap of decreasing returns to sale.

    3. Return on Intangibles

    Traditionally, while intangible assets helped businesses remain competitive in their field, other physical assets like building, equipment, IT infrastructure, proper management (HR), and customer relations helped companies to gain an edge over their competitors.

    With the growth in the internet and widespread availability of ecommerce, today businesses are able to make profits out of their intangible assets. Today, collaboration and communications between suppliers and vendors is easier and cost next to nothing. This means businesses can now leverage their intangible assets to a broader market.

    eCommerce has removed all time and space constraints that businesses faced just a few years ago. Companies no longer have to work in a particular geographical location or time zone. They have become truly global.

    An excellent example is eBay and Uber. eBay an auction site has no physical assets but is valued at nearly $2 billion. Similarly, Uber the largest ridesharing platform doesn’t own a single car. Ecommerce has made it possible for a company to become the biggest in its industry, without holding physical assets.

    The Takeaway – Today, a company’s intellectual property, brand value and perception and customer relationships matter more, thanks to ecommerce.

    4. Vast Outreach

    Vast Outreach

    Just a few years ago, it was next to impossible for businesses to reach out to other customer markets. Ecommerce has now made it a cakewalk to sell your products and services, to people located anywhere on the planet. Yes, you can now sell your wares not just to your local market but to people in any corner of the world.

    What more, marketing your products to other markets is also a cakewalk. This means, the playing field has leveled like never before, and small businesses too can target the audience of large corporate.

    The Takeaway – Today, any business can reach customers from any corner of the world, thanks to the internet and ecommerce.

    5. Low Cost of Initial Business Setup

    Just a few decades back, to set up a business, you required massive capital costs. However, ecommerce changed all this. Today, it’s possible to set up a company out of one’s garage with minimal investments. You know the story of Indian eCommerce giant Flipkart? It was started in a 2 BHK apartment and Walmart recently bought it for $16 billion

    With online selling, business owners need not carry an extensive inventory. They can add products to their inventory based on customer demand. What more, ecommerce has vastly reduced the overhead costs of running a business.

    The Takeaway – Ecommerce has made businesses affordable to all.

    6. Bigger and Better Collaborations

    Traditionally, small business owners who specialized in a particular niche were restricted to specific markets. Even though their niche was customized and distinct, they couldn’t make higher profits due to the unavailability of bigger markets.

    An excellent example of this is the emergence of marketplaces like Amazon, Flipkart and others. Today, small business owners sign up on these platforms and pay a small fee for every product sold on the platform. In return, they get access to bigger and broader markets than ever before, thereby creating a win-win situation for all.

    The Takeaway – Today, small business owners can now collaborate with major online companies, thereby boosting their profits and returns.

    7. Elimination of Middlemen

    Today, businesses can directly sell to customers without the need for any middlemen. Say, you’re a small business owner selling local fabric. Earlier, you had to depend on vendors and brokers to distribute your fabrics to geographical locations beyond your immediate vicinity.

    Ecommerce has put an end to all these middlemen. Now, all you have to do is approach a Magento or Woocommerce development company and design an online store for your business. With it, you’re directly connected to your customers sans any middlemen.

    The Takeaway – Since, middlemen are removed from the distribution equation, small business owners are able to earn higher profits, thereby offering their products to the customers at better rates

    8. Businesses are now Open 24 x 7

    Businesses are now Open 24 x 7
    In the world of ecommerce there is no downtime. Businesses are open 24 x 7, 365 days of the year. And, sales can happen at any time of the day. Traditionally, businesses had to close shop at the end of the day. This means shoppers were restricted and had to complete their purchases within a particular time.

    Today, with the emergence of ecommerce platforms, shoppers can shop at any time convenient for them. Be it in the middle of the night or while lounging on their couches over the weekend.

    The Takeaway – This is a big benefit for both consumers and business owners, as the online shop is open 24 x 7.

    9. The Size of the Company no longer Matters

    Whether you run your online business solo-handed or with the help of a hundred-member team, it makes no difference to the end consumer. This means as mentioned before, a small business owner can compete even with the large players in the market.

    Traditionally, small business owners faced major drawbacks due to their lack of staff. They couldn’t match the customer service provided by massive brick and mortar stores. Today, the situation has altered. The positives of running a small business far outweigh big, clunky corporations in the online world.

    The Takeaway – The Size of your company or team doesn’t matter today as before.

    10. Ecommerce has changed the Way Businesses Advertise

    Ecommerce has radically changed the way people purchase. With changes in the purchase tactics, it’s only right that advertising techniques also vary accordingly. Today, even consumers who shop at a brick and mortar store, look up products online, read reviews and compare prices before they make the decision to buy.

    So, businesses today no longer can depend on traditional marketing techniques alone. They must consider digital marketing to meet the demands of the tech-savvy consumers of today. search engine optimization, paid ads, email marketing, social media optimization are some of the tactics that business owners employ to reach out to millions of potential customers online.

    The Takeaway – With the rise in ecommerce, Digital marketing has slowly replaced conventional marketing


Ecommerce has rapidly changed the way in which businesses operate. Whether you run a B2C business or a B2B company, there’s no escaping the reaches of ecommerce. Today, when a customer wants to shop for a particular product or service, the first thing he/she does is fire up a Google search. The customer does his/her research – right from analyzing the pros of your product to comparing the prices of your competitors, the new-age consumer is savvy and well-informed.

And, one of the best ecommerce tips for businesses is to “Adapt and Evolve.” In today’s dynamic and hyper-competitive market spaces, it isn’t sufficient for businesses to remain stable. They have to keep on evolving, introducing new technologies and other facilities to woo customers.

Are you ready to embrace the dizzying speeds of ecommerce to take your business to further growth? Please write in the comments section below

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