What is E-Commerce?

 E-commerce, or transactions conducted over the internet, has rapidly gained popularity since the first online purchase in 1994. Consumers began to shift their buying experience from brick and mortar businesses to online shopping at the beginning of the century, and the majority of all retail sales are now conducted online. According to e-commerce statistics for 2020, 95 percent of retail sales are expected to be via e-commerce by 2040. Economic developers are grappling with this shift as they learn to incorporate e-commerce support for small businesses into their traditional business retention efforts.

E-Commerce and Online Consumerism During COVID-19

As storefronts faced shutdowns amid COVID-19, people across the country turned to e-commerce to fulfill their needs. Small businesses that were already struggling with these closures were then forced to compete with seasoned e-commerce giants such as Amazon, a company that facilitated 44 percent of all US e-commerce sales in 2017. 

According to a study conducted by Visual Objects, 40 percent of small businesses did not have a website in 2019, and 28 percent said they likely wouldn’t create one in the future. Relying on traditional word-of-mouth marketing techniques, these firms saw a total halt in their profits when shutdowns began in mid March. Mobile e-commerce sales are driven by Google searches and social media marketing, and without an online presence, consumers could no longer purchase from their local sources or engage in marketing of a small business. 

Not only is business-to-consumer e-commerce soaring, business-to-business e-commerce is expected to outperform consumer retail sales by the end of 2020, as stated in a market-share analysis by Finance Online. Grocery e-commerce has seen an uptick since the beginning of the pandemic as well. However, economic fears among young consumers, particularly Millenials and Gen-Z, show that consumers are spending less on non-essential retail and experiences, which will likely continue once storefronts fully reopen. 

E-commerce and Economic Development

The loss of small business in a community has a snowball effect on the regional economy, as small businesses account for half of private sector employment and 64 percent of new jobs created in the US. E-commerce can either uplift or crush small businesses within a community, and economic developers must evaluate the resources available to assist these firms in connecting with online consumers.  

Over the course of this week RestoreYourEconomy will showcase e-commerce and how economic developers can guide their local businesses to enter into this realm. Articles will feature implementable tips and real-life examples of businesses that have pivoted sales online. The trend of internet retail is only growing, and economic developers must do their best to stay informed and educated.