The convenience of online shopping often leads to increased consumer spending. With the ability to browse and purchase products at any time, consumers may be more inclined to make impulse purchases, contributing to overall economic productivity. For most people, money is tighter than ever these days, with many families struggling to make ends meet from month to month. The current economic situation has many entrepreneurs wondering if it’s even worth starting an online business anymore, especially if the business owner has no solid capital to work with at the outset. However, there are still ways to begin your eCommerce business and have it grow into something profitable and sustainable over time so that it can be not just an income stream but a means of rebuilding our economy and getting back on our feet once again. We have summarised a few reasons why online business is important for economic recovery:
How does online shopping affect the economy?
In the endemic era, many companies are still struggling. Consumer confidence is low and this has led to high unemployment rates and a slow recovery. However, some industries are starting to show promising signs of recovery. One industry that is showing signs of improvement is the online retail industry. Recent years have seen an increase in sales for online retailers, suggesting that consumers are beginning to spend more money again – which is encouraging news for the economy as a whole. This also explains why online business is popular nowadays, and also another reason why businesses can’t survive without a presence in the digital space.
For the past decade, the economy has been struggling to grow and businesses have been shutting down. Now, in one of the most pivotal moments in our world history, many people are wondering what can be done. As it turns out, the biggest advantage of having an online business may be being able to help rebuild the economy by creating jobs and cutting expenses for both consumers and retailers.
The shift towards online shopping has not only facilitated economic growth from consumer consumer spending but has also contributed to job creation in various sectors. E-commerce platforms require skilled professionals in areas such as digital marketing, web development, and logistics. As online retailers expand their operations, they often hire employees to manage tasks ranging from order fulfilment to customer service. This job creation can have a positive ripple effect, providing opportunities for workers in a range of fields.
Moreover, the online business model often allows for cost-cutting measures, benefiting both consumers and retailers. Online transactions frequently involve reduced overhead costs for retailers compared to maintaining physical storefronts. This efficiency can lead to lower prices for consumers, stimulating further spending and contributing to overall economic growth.
Capitalism and economic growth as twin factors
To understand how online shopping affects the economy, it is important to acknowledge that capitalism and economic growth are inseparable entities. Capitalism is the economic system in which prices and production are determined mainly by competition in a free market. Though capitalism has its downsides, it provides incentives for economic growth. In fact, with increased competition comes increased innovation and productivity. Capitalism also incentivises consumers to be more thoughtful about their spending habits by providing them with an array of choices from which they can select what best suits their needs. From this perspective, capitalism appears very beneficial for our economy.
Entrepreneurs have always been the key players in capitalism. They’re the ones that drive innovation, create jobs, and make money. These days, they’re also on the front lines of rebuilding our economy. They are leading us out of this recession by creating new products and services and selling them online – without spending a lot of money on marketing or advertising. In the post-pandemic era where the whole world is taking more precautions, it is not difficult to understand the importance of online business as a significant contributor to economic recovery.
Should you start an online business?
In 2022, the e-commerce sector in Malaysia was projected to make a substantial contribution of over 239 billion Malaysian ringgit to the nation’s gross domestic product (GDP). Demonstrating a consistent upward trajectory, the Malaysian e-commerce industry has witnessed a progressive expansion over the recent years, with the value added by this sector more than doubling since the year 2017. Knowing why online business is popular nowadays, starting a business can be one of the most challenging yet rewarding things you will ever do. Entrepreneurship is not for everyone, but if you are looking for an opportunity where your efforts can make an economic impact and where you can find satisfaction in a job well done, then online entrepreneurship may be right for you.
If you already have an offline business, then it is indeed a good idea to venture into online platforms as it is blooming amidst the endemic. While people can already roam freely to get what they need, many still appreciate the convenience of purchasing things online. Not sure where to start? Read on to see what we have to share.
What are the steps to starting an online business?
From a conceptual point of view, you should start with a plan. A proper business plan consists of the business objectives, vision and mission, your list of products and services, and your various marketing strategies, among others. Once you have a plan, you will need to research and choose the online selling platform(s) you want to leverage. In Malaysia, giants like Shopee and Lazada will never fail you. It all depends on the budget you have.
Meanwhile, from a legal perspective, you will need to register with various entities for your business to be legitimate (and to avoid getting fined)! Here are the important steps:
- Register with the Companies Commission of Malaysia (CCM) within 30 days of starting your online business.
- If your business deals with the telecommunications industry, you will also have to register with the Malaysian Communications & Multimedia Commission (MCMC).
- Register and declare your annual business income with the Inland Revenue Board of Malaysia/Lembaga Hasil Dalam Negeri, just like you would if you were a salaried employee.
- Register for a corporate/business banking account to use. Never use your banking account to store and keep track of your revenue, because it will be regarded as personal income (and may affect your loan applications in the future).
From the perspective of online branding, you need to decide and reserve a domain name (website name) and secure a hosting account. After that, you will need to ensure the website is properly designed, both in terms of aesthetics and information. Even after you market your products via online shopping platforms, you still need to work on your online presence by creating your own website and social media pages. You can even take it a step further by allocating a budget for digital campaigns, which includes efforts with Paid Media via Google, and long-term website enhancement in the form of Search Engine Optimisation (SEO).
Understanding the effects of online shopping on the economy now is the time to invest in online businesses as a way of rebuilding the economy. Today’s recession has brought about many new opportunities for entrepreneurs. A huge advantage of having an online business is that as long as you have an idea, know how to create a website, and are willing to take risks, many potential success stories are waiting for you on the Internet.