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Will The Creative Destruction By E-Commerce In Retail Create More Jobs?

Michael McGrady
|
July 17, 2017
e-commerce, retail, business, capitalism, creative destruction

The retail industry faces a major change as e-commerce retail takes over omnichannel sales solutions.

And fear of losing jobs to automation and digital sales is widespread. But will this creative destruction actually hurt the economy, or help it?

Michael Mandel, an economist and the chief economic strategist at the Washington D.C.-based Progressive Policy Institute, argues that an influx of jobs will be created in direct and indirect industries related to retail e-commerce.

Considering his stats, Mandel believes that during the time span of December 2007 to May 2017, more than 397,000 jobs related to retail e-commerce have been created. He concludes that a large portion of these numbers was found in the fulfillment, logistics and warehousing sectors.

In the report on his findings, Mandel coupled the growth in sales to the shipping requirements for online platforms like Amazon and Walmart.com. However, the data does have a broad-based generalization that all warehousing jobs are somehow linked to the retail e-commerce industry.

Ultimately, Mandel's belief has flown off the handle a bit and is considered highly unconventional.

John Challenger, the president of Challenger, Gray & Christmas, believes Mandel's theory is one that is very misguided. In a report by the New York Times on Mandel's projections, Challenger said that he is "highly dubious... It does sound crazy to me."

Plus one fact that Mandel missed, Challenger said, is that warehouses and fulfillment centers are also being automated like the shopping experiences of customers.

Using Challenger's sentiment as well, it remains highly unlikely that every job created in the retail e-commerce industry, or related ones, equally replaces for every job lost in the traditional retail industry. Automation and technological advances in POS technology, shipping, and data analytics can result in only a small group of people maintaining supply lines rather than the large workforces that were needed for fulfillment in decades prior.

If anything, the job growth that the e-commerce industry is witnessing is not the traditional warehouse worker or salesperson. They're computer scientists, web designers, data scientists, software engineers, and developers of all sorts.

Plus, traditional retail job functions are witnessing 21st-century upgrades with social media savvy brand ambassadors, marketing managers and coordinators, digital merchandisers, brand managers, department managers, and customer support personnel. In fact, Business Insider released an analysis that revealed that most e-retailers want to rely on customer relations management platforms and processes like live text and video chat to address matters of returns, billing, and tech support.

Mandel does paint an overly optimistic picture for the future of the industry; however, to use his logic—he didn't pay attention to the right fields.

Growth in next-gen retail jobs will be very STEM and computer based. From coding to developing virtual POS systems, retail is changing, yes, however, the growth and automation will develop a new workforce that has yet to be fully realized on the mass scales warehousing and traditional sales jobs were in the past decades.

As Retail Choice highlighted, every aspect of retail—shopping experience, customer service, and delivery of product—is changing.

"The scope for e-commerce is limitless and could encompass anything. This will include portals and smartphone applications which will help customers through the whole shopping experience. From showing stock availability and product information in their nearest shop, these applications will also give online payment options and provide delivery tracking systems so they can keep an eye on their products."

This is nothing but the truth. Retail e-commerce is about to see a massive growth in sales over the next five years. In fact, some projections expect these numbers to exceed $450 billion by the end of 2021.

So, you either be realistic or you keep doing the same old thing. Mandel's projections are clear examples of the "same old" economic projections.

Will you be returning your clothes to a robot in the next 10 years? If you think so, let us know why.

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