The New E-Conomy

There is one thing that both our former president and the current occupant of the White House agree on…Amazon is bad for retail.

From President Obama:

Amazon and online sales is killing traditional retail, and what’s true there is going to be true throughout our economy.

From President Trump :

Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!

Beware the idealization of small-town charm. The classic example we always hear is that WalMart came to town and put the Mom&Pop Store out of business. There’s a lot of truth to that. The story that rarely gets told though is about the Mom&Pop Makers that never got a good product to the mass market because they couldn’t break into the retail chains. So they sold a few items at the Mom&Pop Shop, until Walmart put them out of business, and then Mom&Pop Makers went out of business too.

Amazon (and many other emerging players in the E-marketing space) are changing this dynamic completely. From Wired magazine:

And while online distribution and automation may present certain challenges to traditional retailers, they also create significant opportunities. In fact,almost half of retail sales on Amazon’s platform are from third-party merchants who have chosen to sell their wares online instead of (or often, in addition to) through brick-and-mortar stores.

Indeed, the democratizing effect of online platforms (and of technology writ large) should not be underestimated. While many are quick to disparage Amazon’s effect on local communities, these arguments fail to recognize that by reducing the costs associated with physical distance between sellers and consumers, e-commerce enables even the smallest merchant on Main Street, and the entrepreneur in her garage, to compete in the global marketplace.

President Obama, recognizing the advance of technology and how it will affect the economy, asks some questions that definitely make my conservative spidey-sense ping:

Which means we’re going to have to start thinking about where the jobs come from, and how much government involvement is there in the marketplace, and do we have a job-sharing economy so that everybody has work, because it turns out that work is not just about finances, but it’s about dignity and feeling like you’ve got a place in the world? How do you pay for that? If more and more people are working in the service sector, how do we make sure that they’re getting paid enough? In addition to making an argument that, “If you want a better deal, then you better start unionizing and organizing, ‘cause otherwise you’re going to get screwed,” in addition to making the argument that if you’re in the service sector right now, you should be fighting for a higher minimum wage ‘cause across the board, everybody in the service sector is going to be better off ….

I absolutely hate any language that encourages workers to put their heads in the sand and hope someone will save them. In my own workplace, I work on a large hi-tech account that is trying to navigate a rapidly-changing market. The 400 employees that staff the account mostly seem to be hoping for the best. I gently tell my team to continue to develop their skills, to look for new internal opportunities and to not let optimism lead them to bad decisions. My mantra is, “Don’t let your career just happen to you…”

Where I always seem to diverge with liberals is on the level of government intervention they are ready to undertake on any given issue. I’m fairly progressive on things like job skills programs, Pell grants and WPA-style infrastructure programs but I’m rabidly conservative when it comes to unionization, make-work policies and living wages. My biggest fear is that liberal worries over a changing economy will cause them to interfere with an emerging e-commerce market that gives small-time creators the power to access global markets and grow their businesses in ways that were never dreamed of even 10 years ago.

Again from Wired:

Of course, technological and organizational change can disrupt people’s lives and livelihoods in unwelcome ways. But hasty regulatory “fixes,” which are among the most significant causes of sluggish growth (and thus job loss), are not the answer. Imposing laws and regulations to punish innovators and protect traditional jobs from the perceived threats of the future would stifle productivity, mandate inefficiency, and restrain progress…

It’s actually an amazing time to be in the business world, if you aren’t scared to look forward. Here’s hoping that our leaders start to figure out that preparing workers for this reality by arming them with solid choices and the necessary skills, is the best thing we can do for the future.