In 1995 a website called Amazon sold books from a remote corner of the internet. By 2016, it had penetrated deeply into other markets and was securing one of every two dollars spent online in United States. Amazon is a 200 pound gorilla but it’s sharing the space with many online retailers who are changing the face of business through E-commerce. With stores closing at a rapid pace (and taking thousands of jobs with them), consumers have begun to wonder what’s true expense of the internet revolution.
Below, we’ll explore some of E-commerce’s benefits and drawbacks.
E-Commerce is hurting the economy.
E-Commerce hurts small businesses.
With the ability 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 clearly favors big business, downgrading less mobile-friendly sites and allowing extended search results for brands. Small businesses without the resources or savvy to push their businesses to the top of the search engine food-chain are inevitably forced to conduct their business as third parties on online behemoths like Amazon, eBay, and Alibaba, where they incur fees and are further relegated to internet obscurity.
E-Commerce, the great American job-eater.
The migration of shoppers from brick and mortar stores to cyberspace has disrupted industries that have employed swaths of workers for decades. Large retailers like Macy’s and JCPenny’s have laid off nearly 100,000 workers. Citi has predicted that digital banking advances will induce banks to eliminate 30% of its workforce by 2025. Experts are wary that the internet does not generate new jobs at the pace it is eliminating old ones. Many those laid off workers do not have the technical skills required to pursue the kind of jobs the internet is creating a demand for, like web development and coding, and effectively locks these workers into underemployment or unemployment.
Online economy spells unsustainability for media and entertainment.
The internet seems to want to move all businesses online, but not all industries have been able to adjust gracefully or profitably. The forced transition to online economy created an insurmountable dent in the cashflow news, music, and movies industries. Online streaming platforms and newspapers have proven to be financially insolvent. 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 resort to low-budget programming like reality programs. The internet has bled the arts and media of its resources, thereby cheapening entertainment and devaluing the creative class as a whole.
E-Commerce bring 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 irrelevant, competitive prices become online businesses’ only 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. The internet’s price wars have influence beyond cyberspace – many brick and mortar stores have adopted online price-matching policies in order to stay competitive with their online counterparts.
E-Commerce is a boon for the global economy.
Turning the world into a huge forum of buyers and sellers contributed a GDP the size of Canada’s to the world’s economy. Research from McKinsey concludes that the internet has created 2.6 jobs for every job it made obsolete. The internet has helped to incorporate hundreds of thousands of workers into the global economy by enabling telecommuting and providing endless platforms for freelancers and small businesses to connect with clientele and sell their products and services. 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 store fronts 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 about the tractor which would render field workers inefficient and irrelevant. It did, but the world was not ravaged by unemployment – agricultural workers merely ended up contributing their labors 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. Technologies like the internet may eradicate some kinds of work, but ultimately advance humanity toward new professions and economic opportunities. As there will be no end to human ingenuity, there will be no end to human work.
Bottom line: The internet is the double-edged sword of the twenty-first 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?