Why Does Online Shopping Hurt Your Local Economy?

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Experts disagree on the net effect of shopping online, but people who buy products online send money out of the community instead of keeping it within the community. As a result, local businesses don't bring in as much money and may not be able to hire as many employees.

Shopping online can also deprive state, county and city governments of tax revenue. While the laws regarding paying local taxes on products bought online are murky as of 2015, city and county governments lack the ability to enforce relevant tax laws. This lost revenue can lead to fewer municipal jobs.

On a national scale, the effects of online shopping are difficult to determine. Companies can often provide lower prices due to local advantages; regions where labor is cheaper can produce products at a lower cost. These savings allow people to save money that they may spend locally on other products or services.

Online shopping can benefit some communities, especially those with people who engage in online sales. While they may not collect sales taxes, businesses that operate online still pay income taxes in areas that collect them. Due to affordable shipping options for many products, businesses in small, isolated towns can market to a larger customer base than is possible locally. This process injects money into the community, which can boost the local economy.