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Is E-Commerce Pushing Us Forward or Holding Us Back?

By Chaya Benyamin
 Getty / Sean Gallup
*Updated 2023
In 1995, a website called Amazon sold books from a remote corner of the internet. Over the years, it has penetrated deeply into countless other markets. Today, is a 200-pound gorilla, accounting for almost 40% of online retail in the US. But it’s sharing cyberspace with many online retailers who have changed the face of business through e-commerce. In 2022, e-commerce retail sales surpassed $1 trillion, for the first time in history.


Pre-pandemic, brick-and-mortar stores in the US were already closing at a rapid pace. Back then, consumers were beginning to wonder what the true expense of the internet revolution was. However, in 2020, when the pandemic helped shutter additional retail stores, e-commerce provided house-bound, quarantined consumers with much-needed supplies, inspiring critics to look differently at e-commerce. Today, it seems that 80% of US consumers are shopping online and will continue to do so.


Below, we’ll explore three of e-commerce’s drawbacks and three of its benefits.


E-commerce Is Hurting the Economy


E-commerce hurts small businesses

With the ability to have anything and everything sent to your doorstep, mom-and-pop businesses are less able to rely upon their local communities for clientele and must digitize to survive. Unfortunately, the online environment is rather unhospitable to small businesses. Google and Facebook make it extremely hard if not impossible for small businesses to compete against big brands. Historically, Google has favored big business, downgrading less mobile-friendly sites. Not to mention that, in the past, it has been accused of favoring its own search ads and services over those of competitors. Small businesses without the resources or savvy to push their businesses to the top of Google’s search engine food chain are inevitably relegated to the bottom of the search list. They may consequently feel forced to conduct their business as third parties on online behemoths like Amazon, eBay, and AliExpress, where they incur fees and are further relegated to internet obscurity.


E-commerce, the great American job-eater

Even before the pandemic drove consumers online en masse, the migration of shoppers from brick-and-mortar stores to cyberspace was disrupting industries that had employed swaths of workers for decades. In recent years, pre-pandemic, large retailers like Macy’s and JCPenney’s laid off nearly 100,000 workers. In 2018, Toys ‘R’ Us was forced to close its doors due to many reasons, including e-commerce (though, after a painful bankruptcy, it has reopened two stores in the US). Experts have been wary that the internet and e-commerce sectors are not generating new retail jobs at the pace that they’re eliminating old ones. Many of those laid-off workers don’t have the technical skills required to pursue the kind of jobs the internet is creating a demand for, like blockchain, AI, data science, and UX design. As such, these workers are effectively locked into underemployment or unemployment.


Online economy spells unsustainability for media and entertainment

Pre-pandemic, the internet seemed to want to move all businesses online. However, not all industries have been able to adjust gracefully or profitably. The forced transition to an online economy has created an insurmountable dent in the cash flow, news, music, and movie industries. While many of these industries have made do – or even blossomed – because of the pandemic, many online streaming platforms and newspapers were financially insolvent before the pandemic. The abundance of free information and free content stymies news outlets and broadcasters from being able to request payment at all. Dwindling newsroom staff means less investigative journalism. Without lucrative advertising deals, broadcasters were resorting to low-budget programming. Before the pandemic, many argued that the internet was bleeding the arts and media of its resources, thereby cheapening entertainment services and devaluing creativity as a whole.


E-commerce Brings Power Back to the Consumer


E-commerce keeps prices down

Online commerce virtually (and literally) guarantees shoppers more bang for their buck. The internet endows users the privilege to swiftly compare prices. With in-store shopping experiences becoming increasingly irrelevant, especially during the pandemic, competitive prices become online businesses’ key playing card. Large online retailers like Amazon know this and respond by offering the lowest market prices on their most popular and most viewed items. During recent holiday shopping seasons, sales were offered earlier in the year and for an extended period of time, which has seemingly become the norm. The internet’s price wars have an influence beyond cyberspace – many brick-and-mortar stores have adopted online price-matching policies in order to stay competitive with their online counterparts. Not to mention that swift “on-demand” order and delivery has changed consumer expectations (supply-chain problems aside), making convenience and comfort an ideal they can take for granted.


E-commerce is a boon for the global economy

Turning the world into a huge forum of buyers and sellers has contributed to the world’s economy and has provided a lifeline to consumers and small businesses during times of uncertainty. According to Stanley Morgan, e-commerce as a percentage of retail sales will only continue to grow across all regions in the world. The internet has helped to incorporate hundreds of thousands of workers into the global economy by enabling telecommuting and providing endless platforms for freelancers, creative entrepreneurs, and small businesses to connect with clientele and sell their products and services globally. In addition to the growth of the Gig Economy, the internet has also been linked to improved rates of direct foreign investments in developing countries, a sign of the internet’s broad positive impact on economies across the globe.


Humanity marches forward

The drudgery of empty storefronts is by no means a sign of impending doom for the economy. In every economic system, old jobs are replaced by new ones, and the anxiety that accompanies these changes is as ancient as the bazaar. Agricultural workers were once worried that the tractor would render field workers inefficient and irrelevant. It did, but the world was not ravaged by unemployment – agricultural workers merely ended up contributing their labor to innumerable other industries. Similarly, the ATM, feared as the death knell of bank work, ended up generating hordes of new jobs related to ATMs. The internet and e-commerce may eradicate some kinds of work but will ultimately advance humanity toward new professional and economic opportunities. As there will be no end to human ingenuity, there will be no end to human work.


The Bottom Line: The internet is the double-edged sword of the 21st century. It destroys as it creates, it constructs monopolies as it invites competition. E-commerce seems to be dictating entirely new terms for global and local economies. What do you think? Will these new terms benefit the economy in the long run, or is the internet merely helping us to construct a palace on quicksand?

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