Whether you are an aspiring marketing manager or a nascent online business owner, it is important to understand the effects of globalization on internet commerce. Coupled with technological advancement, globalization has created a new, never-before-seen global digital economy that is fueled by information and lead by knowledge. This is commonly referred to as the information economy, and encompasses all businesses who generate sales online. This information economy is not only about information as a resource (for example, an eBook or song can be endlessly copied for free), but also about the weakening of regulatory control as more and more businesses move online. With that in mind, here’s how globalization has upended global commerce.
All Marketing is Global Marketing
Although you may not realize it, you are always being marketed to online. While all businesses used to advertise to specific segments of the population based on location, either through radio, print, or television ads, digital ads can now be seen with anyone with internet access. Although you can certainly target specific demographics using ads on Facebook and Instagram, all marketing is essentially global marketing these days. Anything that is posted on your website, from a piece of content to a promotion, can be seen by anyone in the world as long as they have the URL of your website. Additionally, any website can rank on any version of Google – for example, American sites commonly rank on Australia’s Google. This means that companies no longer have to have multiple websites to rank for specific search terms around the world, and their content can appear in front of any person at any time, regardless of where they are located.
The Effects of Ecommerce on Global Trade
The ability to reach anyone in the world at any time has significantly altered commerce, particularly commerce that happens online. Ecommerce now accounts for 10% of all retail sales, and is expected to double by 2021. This represents a fundamental shift in the way that trade occurs, and shows that consumers are not nearly as interested in buying things in brick-and-mortar stores. As a result, the US government (as well as other governments) have moved to tax online retailers on a state level, which many online retails are understandably against. The problem with this, of course, is that people often shop online to avoid state taxes, as well as the convenience of getting better prices in general, As a result, “69% of retailers have that said collecting online sales tax would have a ‘very negative’ effect on their business, and 36% of US internet users have said they would shop less online if they had to pay sales tax.” This shows that the US government is taking steps to curb the effects that globalization has had on trade, and are looking to gain a cut of trade that occurs online.
Online trade has impacted trade in general, and globalization has had a real effect on how consumers both buy and trade. Everything from Airbnb to eBay to Amazon has its roots in globalization. As such, governments need to figure out the best way forward to create a fair and equitable trading environment while also understanding the impact that the Internet has had on the way people do business and the way that people choose to spend and invest their capital.