THE EFFECTS OF E-COMMERCE ON THE

LOCAL RETAIL MARKET: CHALLENGES AND OPPORTUNITIES IN

ALCALA COMMERCIAL MARKET

A Thesis Presented to the

Faculty of Economics Program,
Department of Social Science, College of Arts and Sciences,
Cagayan State University, Carig, Tuguegarao City

In Partial Fulfillment
of the Requirements for the Degree
Bachelor of Arts in Economics
School Year 2022 -2023

By:

DE LEON, MARK ALVIN C.

MARCH 2023

STATEMENT OF THE PROBLEM:

 This study aimed to assess the effects of e-commerce on the local retail market: challenges and
opportunities in alcala commercial market.
1. What are the key challenges faced by local retailers in the face of the growing popularity of e-commerce
platforms?

Local retailers are facing a number of challenges as e-commerce platforms continue to grow in popularity.
Some of the key challenges include:
 Competition: E-commerce platforms offer consumers a wider range of products at competitive prices,
which can make it difficult for local retailers to compete.
 Cost of operation: E-commerce platforms can often offer products at lower prices than local retailers
because they have lower overhead costs. Local retailers need to consider the cost of rent, utilities, and
staff wages when setting their prices, which can make it difficult to compete with online retailers
2. How has the emergence of e-commerce impacted the consumer behavior of local shoppers?
The emergence of e-commerce has had a significant impact on the consumer behavior of local shoppers. Here are some of
the ways in which e-commerce has impacted local shopping:

 Increased convenience: E-commerce has made it easier for local shoppers to buy products from the comfort of
their own homes. This has led to an increase in online shopping and a decrease in foot traffic to physical stores.
 Increased price transparency: Online shopping has made it easier for local shoppers to compare prices across
different retailers. This has put pressure on local retailers to offer competitive prices and has led to a greater
emphasis on value for money.
 Increased product variety: E-commerce has made it easier for local shoppers to access a wider range of products
than what is available in their local stores. This has led to increased consumer choice and has put pressure on local
retailers to stock a wider range of products.
 Increased competition: E-commerce has made it easier for new players to enter the market and compete with
established retailers. This has led to increased competition and has put pressure on local retailers to offer better
products, prices, and services.
 Increased emphasis on customer experience: With e-commerce, local shoppers have come to expect a seamless
shopping experience that is fast, easy, and convenient. This has put pressure on local retailers to offer better
customer service and to provide a more personalized shopping experience.
Overall, the emergence of e-commerce has had a significant impact on the way local shoppers behave. It has created new
opportunities for retailers, but it has also created new challenges. To stay competitive, local retailers need to adapt to the
changing market and find new ways to meet the needs of their customers.
3. What is the current state of the local retail market in the face of increased competition from e-commerce
platforms?
The local retail market is facing significant competition from e-commerce platforms, and the current state of the
market depends on a variety of factors, including the specific industry and location.
Overall, e-commerce platforms have had a significant impact on the retail market, with many consumers preferring the
convenience of online shopping and the ability to compare prices easily. This has led to some traditional brick-and-mortar
retailers struggling to compete and even closing down their physical stores.
However, some local retailers have been able to adapt and thrive by offering unique products or experiences that cannot
be replicated online. Additionally, some retailers have implemented omnichannel strategies, such as offering online
ordering with in-store pickup, to provide customers with a seamless shopping experience.
Another factor affecting the retail market is the COVID-19 pandemic, which has accelerated the shift to online shopping
as consumers prioritize safety and convenience. However, with the ongoing vaccine rollout and the reopening of physical
stores, it remains to be seen how the market will continue to evolve.
In summary, the local retail market is facing increased competition from e-commerce platforms, but some retailers are
adapting and finding ways to thrive in this changing landscape. The market continues to evolve, and retailers who are able
to offer unique value propositions and seamless omnichannel experiences may be better positioned for success.
4. What are the most effective strategies for local retailers to compete with e-commerce platforms?
Local retailers face a tough competition from e-commerce platforms due to their convenience, variety, and often lower
prices. However, there are several effective strategies that local retailers can implement to compete with e-commerce
platforms:

 Offer exceptional customer service: Providing a personalized shopping experience, excellent customer service,
and expert advice can be a significant advantage over e-commerce platforms.
 Embrace technology: Utilize technology to create a seamless shopping experience for your customers, such as
implementing mobile payments, offering online reservations, or providing in-store Wi-Fi.
 Create an online presence: Develop a strong online presence through social media, an e-commerce website, or a
Google My Business listing. This way, you can reach more customers and make it easier for them to find and
purchase from your store.
 Use local marketing strategies: Build brand awareness and attract customers with local marketing strategies, such
as sponsoring community events or offering discounts to local customers.
 Collaborate with other local businesses: Form partnerships with other local businesses to create a stronger local
economy, cross-promote each other's products or services, and leverage each other's customer bases.
 Offer exclusive products or services: Provide unique and exclusive products or services that cannot be found on e-
commerce platforms.
 Focus on your store's ambiance: Create a welcoming and comfortable shopping environment with comfortable
seating, good lighting, and pleasant music to encourage customers to stay longer and make purchases.
By implementing these strategies, local retailers can differentiate themselves from e-commerce platforms and create a
competitive edge.
5. How has the COVID-19 pandemic accelerated the shift towards e-commerce and impacted the local retail market?
The COVID-19 pandemic has had a profound impact on the retail industry, accelerating the shift towards e-
commerce and drastically altering consumer behavior. With lockdowns, social distancing measures, and fear of infection,
more people turned to online shopping as a way to meet their needs while minimizing their exposure to the virus.
As a result, e-commerce has experienced explosive growth, with online sales increasing by 44% in 2020 compared to the
previous year. Many brick-and-mortar retailers were forced to pivot to online sales to survive, while others struggled to
adapt, leading to store closures and bankruptcies.
The pandemic has also highlighted the importance of contactless payments, curbside pickup, and delivery options, all of
which have become essential for retailers to offer to meet consumer demand. Retailers that were able to adapt quickly and
provide these options saw increased sales, while those that were slow to respond lost out.
Local retail markets have been particularly hard hit by the pandemic, with many small businesses struggling to compete
with larger e-commerce retailers. Many have had to close their doors permanently due to reduced foot traffic and limited
in-store capacity, as well as the increased competition from online retailers.
Overall, the COVID-19 pandemic has accelerated the shift towards e-commerce, changing the retail landscape
permanently. While some retailers have thrived, others have struggled to adapt, and local retail markets have been hit
hard. It is likely that the trend towards online shopping will continue even after the pandemic ends, highlighting the need
for retailers to embrace digital transformation to stay competitive.
6. What are the effects of e-commerce on the pricing strategies of local retailers?
The effects of e-commerce on the pricing strategies of local retailers can be both positive and negative. Here are a few
ways in which e-commerce can impact local retailers' pricing strategies:
  Increased competition: E-commerce has opened up the market for local retailers, allowing them to compete with
larger, national and international retailers. However, this also means that local retailers face increased competition
from online retailers who may offer lower prices due to lower overhead costs.
 Price transparency: E-commerce has made price comparisons much easier for consumers. Local retailers need to
be mindful of their pricing strategies and make sure they are competitive with online retailers.
 Cost savings: E-commerce can help local retailers reduce their costs by eliminating the need for a physical
storefront and reducing overhead costs such as rent and utilities. This can allow local retailers to offer lower
prices to consumers.
 Increased sales volume: E-commerce can also increase sales volume for local retailers. By offering online
ordering and delivery, local retailers can reach a wider audience and increase their sales. This increased volume
can allow local retailers to offer lower prices to consumers.
Overall, the effects of e-commerce on local retailers' pricing strategies will depend on a variety of factors such as the type
of product, the competition in the market, and the local retailer's own cost structure. However, it is clear that e-commerce
has had a significant impact on the retail industry and local retailers must adapt their pricing strategies to remain
competitive.
7. What is the impact of e-commerce on the employment opportunities in the local retail market?
The impact of e-commerce on employment opportunities in the local retail market can be significant. As more
consumers shift their shopping habits to online platforms, the demand for brick-and-mortar retail stores may decrease.
This can lead to a decline in job opportunities in the local retail market as fewer employees are needed to operate physical
stores. Additionally, e-commerce platforms often require fewer employees to operate, relying more on automation and
technology to streamline operations.
However, it is important to note that e-commerce can also create new job opportunities in the local market. For example,
e-commerce companies require employees to manage online sales, logistics, and customer service. Additionally, the
growth of e-commerce can lead to an increase in demand for IT and technical support positions.
Overall, the impact of e-commerce on employment opportunities in the local retail market can be both positive and
negative. While it may lead to a decrease in traditional retail jobs, it also creates new opportunities in related fields. It is
important for policymakers and business leaders to consider these trends and find ways to adapt to the changing retail
landscape to ensure that local economies can continue to provide adequate employment opportunities for their residents.
8. How has the emergence of e-commerce impacted the overall economic growth of the local retail market?
The emergence of e-commerce has had a significant impact on the overall economic growth of the local retail
market. E-commerce has allowed consumers to shop online from anywhere, at any time, which has led to increased
competition and disrupted the traditional brick-and-mortar retail model. As a result, many local retailers have had to adapt
to the changing retail landscape by integrating e-commerce platforms into their business models or by offering unique in-
store experiences.
One of the main benefits of e-commerce for the local retail market is that it has opened up new markets for small and
medium-sized businesses, allowing them to reach customers beyond their physical locations. E-commerce has also made
it easier for local retailers to expand their reach globally, increasing their revenue streams and overall economic growth.
However, the emergence of e-commerce has also brought about challenges for local retailers. As online sales continue to
grow, traditional brick-and-mortar retailers may see a decline in foot traffic, which can impact their bottom line.
Additionally, local retailers may need to invest in e-commerce infrastructure, such as website development, online
marketing, and logistics, which can be costly.
Overall, the impact of e-commerce on the overall economic growth of the local retail market has been both positive and
negative. While e-commerce has disrupted traditional retail models, it has also created new opportunities for growth and
expanded markets for small and medium-sized businesses. To adapt to these changes, local retailers must find ways to
incorporate e-commerce into their business models and offer unique in-store experiences to remain competitive in the
changing retail landscape.
9. What are the opportunities presented by e-commerce for local retailers to expand their reach and grow their
businesses?
E-commerce presents several opportunities for local retailers to expand their reach and grow their businesses. Here are
some of the key opportunities:

 Global Market Reach: E-commerce allows local retailers to expand their customer base beyond their physical
location. By selling online, local retailers can reach customers across the globe, increasing their revenue streams
and potential for growth.
 Increased Sales: E-commerce provides local retailers with a 24/7 sales channel, allowing them to generate
revenue outside of regular business hours. Online sales can also increase a retailer's overall sales volume, as
customers can easily compare prices, products, and reviews, and make purchases with just a few clicks.
 Reduced Overhead Costs: Operating a physical store can be costly due to rent, utilities, and other overhead
expenses. E-commerce can reduce these costs by allowing local retailers to operate with smaller physical
footprints, lower staffing levels, and more efficient inventory management.
 Data-Driven Insights: E-commerce platforms provide local retailers with valuable customer data and insights that
can inform marketing strategies and improve customer experiences. Retailers can use this data to analyze
customer behavior, preferences, and buying patterns, allowing them to optimize their marketing efforts and
personalize their customer interactions.
 Diversification of Sales Channels: By integrating e-commerce into their business models, local retailers can
diversify their sales channels, reducing their reliance on physical stores and creating new revenue streams. This
can help retailers’ weather economic downturns or unexpected disruptions in the retail market.
Overall, e-commerce presents significant opportunities for local retailers to expand their reach and grow their businesses.
By embracing the opportunities presented by e-commerce and developing a strong online presence, local retailers can
reach new customers, increase their sales, and improve their overall competitiveness in the retail market.
10. What role can policymakers play in supporting the local retail market in the face of increased competition from e-
commerce?
Policymakers can play a significant role in supporting the local retail market in the face of increased competition from e-
commerce. Here are some ways policymakers can support local retailers:

 Develop a Comprehensive E-commerce Strategy: Policymakers can work with local retailers to develop a
comprehensive e-commerce strategy that helps them integrate online platforms into their business models. This
can include providing training, resources, and support to help local retailers improve their online presence and
better compete in the e-commerce market.
 Provide Financial Assistance: Policymakers can provide financial assistance to local retailers to help them invest
in e-commerce infrastructure, such as website development, online marketing, and logistics. This can include
grants, loans, or tax incentives that can help offset the costs of transitioning to an e-commerce model.
 Foster Collaboration: Policymakers can foster collaboration between local retailers and e-commerce companies to
help them better compete in the e-commerce market. This can include creating partnerships that allow local
retailers to sell their products on established e-commerce platforms or providing support for local e-commerce
startups.
 Improve Physical Infrastructure: Policymakers can improve the physical infrastructure of local retail areas to
make them more attractive to shoppers. This can include investing in public transportation, parking, and other
amenities that make it easier for shoppers to access local retailers.
 Develop Marketing Campaigns: Policymakers can develop marketing campaigns to promote the benefits of
shopping locally and encourage consumers to support local retailers. This can include social media campaigns,
public relations initiatives, and other outreach efforts that raise awareness of the importance of supporting local
retailers.
Overall, policymakers can play a critical role in supporting the local retail market in the face of increased competition
from e-commerce. By developing comprehensive strategies, providing financial assistance, fostering collaboration,
improving physical infrastructure, and developing marketing campaigns, policymakers can help local retailers adapt to the
changing retail landscape and remain competitive in the e-commerce market.
OBJECTIVES:

This study aimed to assess the effects of e-commerce on the local retail market: challenges and
opportunities in alcala commercial market.
1. To identify the main challenges faced by local retailers due to the rise of e-commerce platforms.
2. To analyze the impact of e-commerce on the consumer behavior of local shoppers.
3. To compare the market share and sales performance of local retailers with that of e-commerce platforms in the
local market.
4. To explore the most effective strategies that local retailers can employ to compete with e-commerce platforms.
5. To examine the effects of the COVID-19 pandemic on the growth and development of e-commerce and the local
retail market.
6. To evaluate the impact of e-commerce on the pricing strategies and profit margins of local retailers.
7. To investigate the employment opportunities and job growth potential in the local retail market in the context of
e-commerce.
8. To assess the economic impact of e-commerce on the local retail market and the overall economy of the area.
9. To identify the opportunities and potential benefits for local retailers presented by e-commerce platforms.
10. To recommend policy measures and initiatives that can support the growth and development of the local retail
market in the face of increased competition from e-commerce.