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Module One

8. Effects of eCommerce on Global Economy – What You Need to Know

Role and Scope of ECommerce in the Global Economy 

 

In this module, we were introduced to eCommerce. In our journey from the start to here, we came across different aspects of shopping. From seeing how shopping evolved all these years to the birth of online shopping or e-commerce. 

 

We also explored different e-commerce business models and saw how one can find the right model that suits their business. In totality, we understood the relevance, advantages, and challenges of e-commerce today. 

 

However, before concluding this module, we will see the role and scope of e-commerce in the global economy. We are going to learn in detail about some aspects that are going to help you analyze things from numerical and statistical perspectives. By the end of this chapter, you will be able to:

 

  • Understand the role of e-commerce in the global economy.
  • Know facts about total retail sales v/s online sales compared to 10 years before and now.
  • Find out the top countries in terms of online penetration.
  • And see how India is performing in terms of numbers in e-commerce.

 

So, let’s start this journey of the final chapter of this module and predict what e-commerce has in store for us in the years ahead. 

 

What is the Role of ECommerce in the Global Economy?

Today, if we see around the world, technology and internet connectivity have reached almost every corner of the world. The number of people who have mobile phones is much higher than ever before in history. 

 

From our learnings in the previous chapters, we came to find out that technology has a direct correlation with e-commerce. Hence, when we are talking about the global economy today, e-commerce has a significant role to play. 

 

Simply take your example. 10 years ago if you wanted a grocery item, you would have to go to the local shop from your home, purchase the item, and then bring it back home. Moreover, if you are already busy somewhere, you have to stop your important work and then go. Are things similar today? No. All you have to do is open an application on your smartphone, order, and get the item delivered in 10 minutes. How is this possible? All thanks to the phenomenal power and presence of e-commerce. 

 

E-commerce has made shopping easier and more convenient for everyone today. Thus, it has a strong global presence. In simple words, eCommerce plays a decisive role in terms of bringing together individuals, businesses, government institutions, and even industries. 

 

With the help of e-commerce, new opportunities develop for businesses, expanding their target market and enhancing their sales as they reach more customers globally. Today, e-commerce has developed new opportunities for small and medium businesses too to establish themselves in international commerce. 

 

Thus, when we observe, we are going to find out that e-commerce has a drastic role to play in the global economy. By facilitating new businesses to reach millions of customers worldwide, it helps them boost their sales. Ultimately, e-commerce has set a new pace for the global economy.

 

Total Retail Sales v/s Online Sales 10 Years Before and Now – A Comparison

Online sales are on the rise. We all know that. However, when supported by numbers and statistics, facts are easily understood. So, let us find out and compare total retail sales v/s online sales 10 years before and now (2014 and 2024). We will be comparing stats for both India and the US. 

Stats for US

2014

 

2024

What Did We Observe?

Growth

  • Retail sales grew from $4.63 trillion in 2014 to an estimated $7.21 trillion in 2024, marking a significant increase of about 55.7%​.
  • Online sales saw a dramatic rise from $0.38 trillion in 2014 to approximately $1.82 trillion in 2024, representing a growth of over 379%.

 

Share of Total Retail Sales

  • In 2014, online sales accounted for around 8.2% of total retail sales​.
  • By 2024, this share is projected to reach about 25.2%.

 

Pandemic Impact

  • The COVID-19 pandemic in 2020 accelerated the shift towards online shopping, with a notable 33% increase in e-commerce during Q2 2020 alone. 

 

Even globally, retail e-commerce sales went from $1336 billion in 2014 to $6338 billion in 2024. 

Summary of Our Observation

The last decade has seen substantial growth in both total retail sales and online sales, with online sales expanding at a much faster rate. The share of online sales in total retail sales has more than tripled, reflecting changing consumer behaviors and the increasing significance of eCommerce.

 

Online sales have grown significantly, driven by increased internet penetration, smartphone usage, and digital payment systems. Major players like Amazon, Flipkart, and Reliance’s JioMart have driven the online market expansion. Moreover, categories such as electronics, fashion, and groceries have seen substantial online growth.

 

Top Countries in Terms of Online Penetration 

As we saw above, internet connectivity, technology, and online penetration directly impact e-commerce growth in any country. So, the better the infrastructure for e-commerce to prosper in any region, the more rapid the growth of e-commerce there. 

 

So, here are the top countries in terms of online penetration:

 

  • The first country in this list is China. It has a population of about 1.412 billion. Among the population, 1.05 billion people use the internet. 
  • The second country in this list is India. India has a population of about 1.408 billion people. Out of them, 692 million people use the internet. 
  • After that, the countries that follow are the US, Indonesia, Brazil, Russia, Nigeria, and Japan in the same order. 

 

What are the Numbers Saying for the Indian E-Commerce Sector?

While learning about the e-commerce industry, we are sure that you also must be curious to know about how the sector is performing in the country. Well, credit to the infrastructural development and internet penetration, India is doing well in the sector. 

 

Here is what numbers have to say when we consider the Indian ECommerce sector:

 

 

Know more facts for the year 2024 here.

 

So, prosperous times are coming ahead for e-commerce, especially in the Indian sector. As an entrepreneur, it is your opportunity to seize. Why wait?

 

Key Takeaways from this Chapter

  • E-commerce plays a pivotal role in the global economy, significantly boosting convenience and connectivity.
  • Over the past decade, online sales have grown dramatically, now comprising a substantial share of total retail sales.
  • Countries with high internet penetration, like China and India, are leading in eCommerce growth.
  • The Indian e-commerce sector is set to grow from $38.5 billion in 2017 to $300 billion by 2030.
  • E-commerce presents significant opportunities for businesses to reach a global market and drive economic growth.