The Impact Of E-Business On The Economy

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Economy refers to all activities involving production and distribution of products and services in a country.E-business is described as any form of business transaction or exchange of information that is done via the internet and any other form of information and communication technology. Some define it as the use of ICT by organizations in the conduct of business. E-business therefore is not only limited to buying and selling or products on the internet but also the exchange of services and other associations with business partners that is done through the internet. E-business has been categorized into three different forms i.e. between organizations and the government, between organizations and customers and lastly between two organizations. Given the rapid growth rate that E-business is taking it is definitely having both positive and negative impacts on the economy as we shall be seeing in this post.


  • Improved interaction among organizations

E-business has overly improved the interaction among firms and organizations and this is all because of the way it eases purchase of goods, services and all other transactions between different firms. With e-business there has been quicker transfer of information, auctions and all other exchanges are now much faster simply because they are now done via internet. Research shows that more than 80 percent of organizations and firms today perform their businesses through internet and even those that are still in their early stages are quickly adapting to the trend. This is a clear indication of how great the economy is improving through the use of e-business method of selling and buying goods and services.

  • Better interaction between organizations and consumers

E-commerce has created better connection between consumers and organizations from which they receive all the necessary products and services. There are so many search tools on the internet, retail auction sites such as Amazon and eBay, websites for buyers and shop bots through which customers can receive products without facing the high costs of looking for the best products and compare all the different prices. On these internet sites consumers can search for as long as they want and look at as many products as they want since companies deliver all the necessary details on the internet which is of great advantage to the consumers of the products. Accessing products today is not as hard as it used to be in the early centuries when internet was non-existent.

  • Better interaction between firms and the labor market

Because it is now easy and cheap to pass on information to individuals – firms no longer go through the trouble of finding the right personnel and individuals too can apply for jobs when they a well versed about the characteristics of the job. With the rise in e-business face to face interviews are fading our slowly by slowly as people can have interviews online and also submit whatever is required of them there. The costs of getting into the labor market and finding the ideal personnel for the job are greatly being reduced due to the drastic rise in e-business. Lately the chances of getting jobs online than walking around from one company to another are much higher.

  • Cheap communication between employees and employers

Passing on important messages to employees had to be through meetings which is quite tiring time wasting but e-business has put an end to this trend as employers have faster and more convenient ways of delivering any important messages to their workers. Through emails and sharing information on company websites it is extremely to make any important communication with employees. Today employers are even interested in telecommuting where employees stay home and work while using company equipment. This system is very cheap, very comfortable but it is only efficient because of e-business.

  • Lower procurement costs

E-business has done a very great job in lowering costs of procurement and this is through the way it cuts down on costs of that would have been spent on extra labor and also eliminates the very long, tiring and expensive procedure of conducting business in person instead of electronically. From the internet is much easier to find out about prices and the vendors for different products. According to Philip and Meeker (2000), manually conducting a purchase order is over 8-18times more costly compared to conducting the purchase through the internet. With all those costs reduces, businesses can make more profits within a shorter period of time and thus give business owners better control of their economies.

  • Improvement of the banking sector

There is absolutely no economy that develops with a poor banking sector and with the way e-business is developing the banking sector there has also a very large improvement in the economies of different countries all over the world. The banking sector has began to adopt to the culture of e-banking where by customers deposit and withdraw their money through the internet instead of those queues in banks. Many of the banking services can now be done online as a result of the e-business evolution.

  • Easy linkage to larger markets

Through e-business the whole process of getting to the best and largest markets has become less complicated. Business professionals of all types such as contractors, exchangers, auctioneers, brokers and dealers among others with the help of electronic systems can easily and efficiently conduct their business deals. With the whole lot of information that is provided about various markets all over the internet firms now engage with ease and thus improve their production process to deliver to the best of the economy.

  • Reduces prices of goods and services

With the rise in e-commerce, prices of production have been reduced and in turn companies deliver their services and goods since they don’t spend too much on manufacturing the products and delivering the services they deliver. With e-business firms display their rates and prices increasing competition in the various industries and thus causing the fall in prices in the various markets. E-business has eliminated the use middlemen who would increase the process and cost of production and gotten rid of all that extra labor, it is very logical that individuals can now receive products at lowers costs.

  • Development of the retail sector

E-business has greatly developed the retail sector, one of the most important sectors in any economy because it employs very big numbers of people and is at the same time responsible for satisfactions of consumers. While e-business improves communications and interactions between suppliers and consumers, makes great significance to inter-business exchanges and greatly reduces the costs of supply it brings about the outstanding development of the retail sector which is very important to the growth of any economy.

  • Improvement in the travel and tourism industry

Considering how broad the travel and tourism industry is e-business has been of great help in increasing its market since many of the consumers of their services come from the internet. Tourists and travelers find it easy to connect with different airlines through the internet thus burying the need of travel agents who would rather increase the costs, still on the internet one can book and pay for their ticket. Besides booking air tickets, customers also have the chance to make reservations at hotels, inns, villas and so many other hospitality facilities all via the internet. And such quick and hassle free transactions have made a very great contribution to the development of the travel and tourism industry

  • Globalization

Globalization can in the simplest terms be defined as transfer of capital, services and products beyond national boarders and as of today there is a great increase in globalization as sparked off by e-business. E-business in conjunction with different technological advancements has created an environment where companies in different countries can get into contact with ease and in the lease possible time. Technology has also brought about improvement in the transport system which is why it is now quite simple and fast to move goods from country to another. This therefore means that all countries all over the world have a chance to improve their economies resulting from globalization that has come about due to e-business.

  • Removal of organizational boundaries

E-business gets rid of all barriers that would rather slow down development of the country’s economy, today businesses are no longer confined to any sort of boundaries for the simple reason that internet cuts across all of them, be it time, currency, culture, language or geographical locations. Take for example a person in one of the developing countries can make orders for products from any country that is more developed without necessarily having to travel there and that is all as a result of e-business. With online purchases there I absolutely no limit since you can easily reach out to consumers, suppliers, business and make exchanges with various companies as you may wish. Without the internet all of this would be extremely costly and time wasting.

  • Increased productivity and GDP level

E-business has been responsible for the overall increase of a nation’s GDP level through increasing the capital stock and increases productivity of the labor market. The increase in technological innovations makes the production process faster, more efficient and thus enhancing the productivity of high quality goods and services in the nation. In addition e-business promotes specialization as it greatly reduces the costs of performing transactions among firms and in various countries which is in turn accountable for increasing the country’s GDP.

  • Speedy comparisons

Besides the internet making it very easy for customers to find the best products they can also find the best products very quickly instead of having to spare a full day going to different stores to compare form there. Instead they use the different search engines like, and so many others and from their they will access a very wide variety of products that they can look at, compare prices and eventually choose what works best for them. This also gives competitive advantage to the companies that perform businesses online which is very good for the economy.

  • Superior customer service

Because of the competition created by e-business each internet operating company is now struggling to offer users the best care in order to increase their market. Customer service from large companies like eBay and Amazon is supreme simply because all these companies want consumers to be completely satisfied. They deliver customer’s products in the right time and ensure that products are received in the best conditions.

  • Personalization and customization

This simply gives customers to order for exactly what they need or prefer through the internet without any limits. Customers of late can receive products that love the most from any company of the internet which is very important for customers as well as the service and product providers.

  • Lack of information privacy

Business owners, advertisers and salesmen these days have the ability to access consumer’s information through e-business without the consumers having any knowledge about it and this is termed as invasion of privacy. Customer’s behavior can be tracked with cookies and these cookies capture buyer’s data from the products they purchase, the pages they visit while looking for the best products plus the websites and this way sellers can reach the best market for their products. With e-business it is very easy to predict a customer’s next move and also learn about their preferences. Much as this is good for the sellers, it is causing too much damage to the consumers as they have completely run out of privacy.


In conclusion, e-business has brought such a huge development to the economy and this is both in developed and developing countries. As years keeping going by, e-business keeps creating new methods and techniques in which sellers can avail their products and services and for buyers to purchase products and services. E-business has accounted for development of not just individual sectors but also the country’s economy. There is increased productivity and an unbelievable rise in economic growth as a whole.


Vanilla Farmer, Amazon Retailer & Tech Researcher. Yosaki is my personal blog but I'm working on some big tech project back doors. I will keep on posting various topics on things I have knowledge about.

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