The Effect of E-Commerce on Sales


This research was conducted for the purpose of investigating the effect of e-commerce on sales by organizations. E-commerce is the incorporation of the internet in business transactions with the goods ranging from consumable products to electronic equipment. Besides, it allows for the transaction of goods and services between the consumers and the suppliers without being barred by time or the distance between them (Mayhew & Bias, 2005). E-commerce has grown rapidly over the past few years since most businesses have adopted online sales and promotions of products. The world has become a digital place with the internet usage growing rapidly and attracting the attention of organizations. The paper will entail answering the research questions such as how e-commerce affects sales, the difference between sales before and after e-commerce and advantages and disadvantages of e-commerce. Similarly, it will analyze the consumer and firm’s benefits from e-commerce, the impact of e-commerce on the market, role of e-commerce on the firm’s profits and quality, and the future of e-commerce.



E-commerce is the type of business where the transaction processes are done through the internet.  E-commerce at a broader scope entails four major types of market segments; business to consumer, business to business, consumer to consumer and consumer to business. E-commerce revolves around sales and purchases of goods and services; this research paper has focus directed on the impacts of e-commerce on the sales of a firm. With the growth of the business world and increased competition from all around the globe, businesses need to enhance their means for making sales to increase profitability and retain their competitive advantage. Therefore, this research paper has directed its emphasis on several factors that relate to e-commerce and sales, for instance the advantages that accrue to both the sellers and buyers using e-commerce, the benefits and the benefits that the two parties enjoy among other topics as illustrated in the research paper.

Thesis Statement

Unlike the use of traditional commerce that involves physical transactions, the increase in the company’s sales is affected by the electronic commerce.

E-commerce and its Effect on Business

Effect of E-commerce on Sales

E-commerce has had a considerable effect on businesses and the sales volume as well. The effects of e-commerce have been greatly positive; according to Mayhew and Bias (2005), e-commerce sales have resulted to a relatively higher volume than sales under retail outlets. This is because e-commerce has a wider coverage of demography through online sources. A producer or a supplier has the ability to reach out to many clients through the internet who are in different and distant places since online information is shared faster and efficiently. With the shipment services that are currently easily available, the business is in a position to make bulk sales in a short period to many customers saving on time and other resources. Online sales are conducted on the click of a button where products have their specifications written and this avoids the long enquiries about products to the supplier. This acts as an important aspect that enables the seller to attend to many customers in a given time (Mayhew & Bias, 2005).

E-commerce has enhanced the sales and transactional procedure between the seller and the buyer; according to Mayhew and Bias (2005), this has enabled businesses to avoid unnecessary costs such as cost for renting the premises since they can operate from the storage facilities and make direct deliveries to the clients. Moreover, it is a positive aspect for the business since the opportunity cost can be deviated to other services promoting sales for instance advertisement and further price cuts. This is the capacity utilization where the sales volume per square foot has tremendously increased in the retail premises. Since e-commerce has covered all sectors of the business, Mayhew and Bias (2005), stated that it has contributed to the improvement in sales through business investment. Some companies have found means to diversify their products from tangible to virtual products, for instance the newspaper industry. They can now provide online copies that have the same content as the hard copies. Co-currently, business productivity has increased since labor-intensive products can now be accessed alternatively because low value items that require a lot of labor input can be easily put on sale through e-commerce.

Difference in Sales before and after E-commerce

Before e-commerce, the sales of a business relied on the usual retail purchases made by their clients. This meant that businesses relied on their competitive advantage and influence on the social corporate platform thus implying large capital investments. According to Lin and Huang (2011), marketing is an essential factor input that determines the volume of sales for a business and equally an expensive venture. Sales were relatively lower for businesses since not most would manage to reach out to the broad customer base. Also transportation and holding costs equally discourage large sales volume as they cut on the opportunity cost and bigger profit margins (Lin & Huang, 2011). With e-commerce, sales have skyrocketed as businesses have collectively joined in the quest for the bigger profits and the opportunity cost   that has been created through e-commerce. Plant (2000), stated that before e-commerce sales were stagnating at normal levels but after the development and integration of the social media and digital equipment in businesses, most have grown their sales to become competitive giants.

The sales and income elasticity for businesses has improved with the incorporation of e-commerce unlike before. This is an argument based on an empirical finding that examined the retail businesses that used e-commerce and those that used the non-ecommerce sales. The business that used e-commerce sales proved to have higher income elasticity with stable sales and a high competitive advantage (Bidgoli, 2002). Income elasticity is the perfect tool to show the difference between the sales since it explains the variation in the long-run variation in sales in a better manner than the price differential in showing the growth in sales proportion through e-commerce sales. Through e-commerce, it is easier to understand the demand side factors that determine and businesses levels of income and thus after e-commerce better management and planning has evolved and thus the universal growth in the business sector.

Advantages and Disadvantages of E-commerce

According to Bidgoli (2002), the advantages of e-commerce include; increased accessibility to customers where businesses have direct online link to the clients thus faster transactional processes. The goods are available for comparison to the customers, when customers want to compare between products that are closely related in features they can easily do it online. There is improvement of the customer service as businesses can deliver on or attend to the customer’s needs immediately. Bidgoli (2002) stated that the process of making sales and purchases is available 24 hours a week where people can access the internet freely at a time of the convenience and make an order at any time of the day or night. E-commerce does not need a lot of skill input, it is easy to use and straight forward provided one has basic knowledge on internet usage. Thus, this makes it easy for the establishment of an e-commerce service in a business. E-commerce has made it economical for businesses in establishment, as they require no physical address and location to carry out transactions (Thanasankit, 2002). Precisely, purchases and negotiations are done online and thus no need for physical set-up as online addresses the same purpose and in an effective manner. There is also the fact that operational costs become greatly subsidized and there is a faster buying and selling procedure for goods and services.

According to Bidgoli (2002), the disadvantages are lesser compared to the advantages of e-commerce, the disadvantages are that it is easy to be defrauded online as anyone can establish an online firm. There are no restrictions on opening social or e-commerce accounts online and thus one can create a false personality with the intent of defrauding people. He goes ahead and states that there is no guarantee for the quality of the product quality as the goods are bought virtually without any physical contact of the buyer and the seller. Customer loyalty cannot be guaranteed, as there is no direct link between the buyer and the seller. Vulkan (2003), argued that the e-commerce services handle large amounts of transactions and are thus always on the target by hackers. Therefore, most customers fear for the privacy and security of their information. Finally, mechanical failure may result to serious transactional misunderstandings leading to numerous losses or even customer loss.

Benefits of E-commerce to a Consumer

The consumer benefits from participating in e-commerce in the following ways. The first thing is convenience where all the products are arrayed online and the customers can thus choose their preferred products comfortably and fast enough (Vulkan, 2003). Time saving is also another benefit that accrues to the customer; there is no need for driving around while looking for the product instead products can easily be checked and evaluated online. If the customers are not sure of the product they can go through the reviews of the product on the links provided adjacent to the respective products. Finally, Gitman & McDaniel (2008) stated that customers can get the goods at the best price possible with coupons and deals as online sites are always competing for customers.

Benefits of E-commerce to a Firm

Benefits that may accrue to firms from e-commerce may include the following. The firm will experience increased customer base since products are accessible all over the world. This can act as a tool to get the company’s name out in the world and especially when attached to the provision of quality goods (Gitman & McDaniel, 2008). Firms may also expand their reach to vast regions around the world, the internet currently has the translation option and thus any language can be changed into the preference of ones’ option. Therefore, if a firm observes the right marketing tools then all consumers around the world would find the firm’s website and the products they offer. Firms can also enjoy the benefit of instant transactions; e-commerce foregoes the checks options and runs on a cash basis and cleared on a time span of two or three days. In cases where there are recurring payments then an appropriate billing provider should be found for the payments to be made in a consistent manner. E-commerce acts as a perfect tool for the evaluation of the performance of the firm (Gitman & McDaniel, 2008). Since online competition against other firms is fair then firms can be in a position to set profit margins and compare their performance with other firms.

What E-commerce Provides for the Market

The act of exchange is slowly transforming under e-commerce, there are innovations every day to accommodate the growing size of the business environment. According to Lin and Huang (2011), newer advertising techniques are being unveiled for instance mobile advertising to accommodate the small upcoming firms that cannot hold the challenge posed by the bigger and already established organizations. The technology on advertisement equipment is also facing transformation to allow for more efficient and fast adverts like wearable devices for instance watches and glasses. Establishment of long-term and long-form content; Google has developed a red eye service that will allow the e-commerce marketers to develop information that is more specific and targeted and that will last for a longer period.

Bidgoli (2002) argued that more ads that are social are also being developed under the social media. It is meant to broaden the platform for the adverts and the growing market. Google is enhancing the Authorship branding for smaller firms where firms will create high quality blogs and communities for the purpose of marketing.

Role of E-commerce on Improving the Quality of Products and Increasing Profits

The role of e-commerce on improving the quality of products and increasing the profits is that as seen in the article, e-commerce opens the doors to more competition in the provision of goods and services. Competition ensures that there is quality in the products and services provided or else the firm will risk being faced out by other quality and competitive products (Bidgoli, 2002). Therefore, competition ensures that there is quality in the goods and services provided from the online firms as a means to seek customer loyalty. Profits co-currently increase with respect to the role of the e-commerce in the ability to reach out to more clients. E-commerce as we have seen increases the customer base for firm as well as geographical coverage. This leads to an increase in the number of the customers and the sales respectively increase. The main objective for a business is profit making and thus high profit attract investments, which is the main role that e-commerce has incorporated into the online global world with growing online businesses and consultancy firms.

The Future of E-commerce

With the industrial revolution and technological growth, e-commerce has taken a substantial portion of the retail market. People have continually embraced technology and everything is turning to the social media and technological world. According to Vulkan (2003), soon the e-commerce world will be faced with the problem of consumer fragmentation. Where consumers will have more options to buy from and large companies will face the threat of gaining market share. Besides, small retail shops will have minimal barriers to gaining market share and obtaining customer loyalty since they have more close contact individually with the clients.

According to Gitman & McDaniel (2008), the transformation in the marketing strategies has become more granular as inscribed messages and slogans are becoming obsolete in e-commerce. Companies have thus diverted their attention to moments during the purchase of good, decisions meant to solve problems instantly, pursuing the necessary goals without hesitation and trying out new things routinely. All these are referred to as micro-moments, which companies are currently using to optimize their competitive advantage. E-commerce has taken all the above into consideration and is currently utilizing mobile notifications on purchases made, shipping confirmations and purchase status of the customers. Such notifications have helped to promote continued sales and get the customers highly engaged. The customers easily access information through links to mobile apps, videos and cross-sells that are based on seasonality of purchases.


The research paper has analyzed the most important aspects of e-commerce from the advantages that accrue to the benefits to both the consumers and the retailers. The effect of e-commerce on sales has been precisely analyzed with the important factors being granted priority as the e-commerce field is broad and in exhaustible since it is a department that faces regular transformations and improvements. The research paper covered the positive effects on the sales, which definitely outweigh the disadvantages in this case.



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Gitman, L. J., & McDaniel, C. D. (2008). The future of business: The essentials. Mason, OH:         Thomson South-Western.

Lin, S., & Huang, X. (Eds.). (2011). Advances in Computer Science, Environment, Ecoinformatics, and Education, Part III: International Conference, CSEE 2011, Wuhan, China, August 21-22, 2011. Proceedings (Vol. 216). Springer.

Mayhew, D. J., & Bias, R. G. (2005). Cost-justifying usability: An update for an Internet age.        San Francisco, Calif: Morgan Kaufman.

Plant, R. T. (2000). ECommerce: Formulation of strategy. Upper Saddle River, NJ: Financial        Times/Prentice Hall.

Thanasankit, T. (2002). E-commerce and cultural values. Hershey, Pa: Idea Group Publishing.

Vulkan, N. (2003). The economics of e-commerce: a strategic guide to understanding and designing the online marketplace. Princeton, NJ: Princeton University Press.