Can e-commerce help save the “Rust Belt”?
In this post we’ll:
- Explore the current state of the E-commerce Union;
- Review news items that could affect the vertical; and
- Close with further reading links for people thinking of starting an online retail business.
Is E-commerce is the New Investment Banking? Growth Estimates Are Astounding.
Pundits have posited: Brick-and-mortar stores are going the way of the horse-and-buggy; barring a catastrophic event, online retail will be with us forever, in some form or another.
Binny Bansal, co-founder of Flipkart.com, painted the prosperous picture, explaining, “Times have changed. Today, the biggest recruiters in the premier institutions aren’t consultancy or financial firms but the e-commerce companies.”
— Kelly / Warner Law (@KellyWarnerLaw) January 23, 2017
Sound like an exaggeration? Check out these facts and figures:
- Analysts predict that online retail will be a $523-billion-dollar market — in the U.S. alone— by 2020.
- In 2016, third-party sellers on Amazon shipped over 2 billion items to 185 countries.
- 71% of shoppers believe they will get a better deal online than in a store (which means buyers are flocking to online retail platforms).
Societal and Marketplace Shifts Effecting E-commerce
One Million Jobs?
During the presidential transition, business luminary Jack Ma, Alibaba’s founder, tucked behind Trump’s doors. He emerged pledging to “create 1 million American jobs.”
Media outlets asked: Would Alibaba be hiring a million Americans?
In a statement, Ma clarified:
“We specifically talked about … supporting 1 million small businesses, especially in the Midwest of America. Small businesses on the platform selling products — agriculture products and America services — to China and Asia, because we’re pretty big in Asia.”
In other words, Alibaba isn’t hiring a million U.S. workers in the heartland. Instead, the company wants American businesses to sell directly to Chinese citizens via Alibaba.
Debate: Is that really the same thing as “creating 1 million American jobs”? Furthermore, will it work?
Arguments stack up on both sides.
China is home to over a billion people (compared to about 320 million in the U.S.), and its e-commerce market is expected to reach $840 billion by 2021 (almost double the estimates for the United States). Moreover, the Chinese middle class is growing — and in the market for American goods; the conditions are ripe for small American businesses looking to expand their markets. Theoretically, there’s enormous growth potential.
Of course, there’s a counter argument.
Several analysts scoffed at Ma’s economic seduction. For starters, China’s laws prevent over-profiting by foreign entities. So, let’s say a small U.S. business takes off in China. At some point, when the profits surpassed a certain threshold (high, no doubt), that small U.S. business would be forced to partner with a Chinese entity — and relinquish a certain amount of control — to keep expanding in the region. (That said, many people think the tradeoff is worth it.)
Automation: The True Job Thief?
President Trump promised to reinvigorate the American heartland by reviving factory jobs lost overseas, and a lot of people voted for that pledge.
But, (politics aside), the pink elephant in the room is braying: U.S. manufacturing output hasn’t rapidly decreased over the past 30 years; the number of U.S. manufacturing jobs has. And that loss isn’t solely the fault of overseas plants (they do play a small roll, but not enough to fix the decline). Over the past two decades, companies invested in technology. Because of automation, a task that once took five people, may now only take two.
It’s a tough pill to swallow, but those factory jobs probably aren’t coming back — at least not the same way and in the same volume. So the question becomes: What can fill the gap? And right now, e-commerce looks like a profitable bet.
Starting An E-Commerce Business
Starting an e-commerce business may be easier than you think. It doesn’t require a trust fund’s worth of capital, nor copious amounts of official paperwork. Just create an account with an online retail platform that allows third-party sellers (Amazon, eBay, Etsy, Jet, Walmart, et cetera) and start selling.
Of course, you’ll need to procure and promote your wares, which takes times and skill — and yes, a bit of startup capital. Also, to avoid a liability disaster, it’s wise to create a business entity for your e-commerce business. The good news: People regularly accomplish all these things on a $1,500 budget. In fact, one e-commerce legend started his company with $300; today it’s a multi-million dollar operation.
Further reading links
- Amazon FBA FAQ
- Buying An E-commerce Business
- Recent E-commerce News
- Tips For Shaking Product Counterfeiters
- Information About Online Review Legalities
Questions For An E-commerce Business Attorney?
Our firm, Kelly / Warner, regularly works with online sellers and marketers. We assist with everything from account suspension to product counterfeiting to online payment processing issues. Additionally, our team performs marketing compliance audits and handles the business formation process, step-by-step. Whatever your e-commerce legal needs, we’re here to help.