How eCommerce is changing the world

Chapter from my latest book how technology is eating society.

The retail sectors fading

Ever since we were children and got our hands on the first coins or bills and were in the possession of money, we strayed into the streets. Running by the tailors, florists, hairdressers, dry cleaners, photographers, and bookstores, and by the undertakers and plumbers and electronic stores to the next ice cream store or candy shops.

As we grew older, we spent our dates in mall cafeterias or in the urban centers where people met during lunchbreaks and floods of tourists roamed the streets in search for fashion, gifts and restaurants.

All those stores we passed and enters were filled with friendly people who fed their families with the small margins that all those products eventually charged that paid for real estate rentals, shelves and inventory and that allowed us to move out of the house and experience the glories of the global production economy. All those stores were full of people who enjoyed having a good conversation, a friendly relationship with their customers. And who enjoyed being part of a community. People who could not imagine sitting all day behind a desk or mobile screen. But enjoyed the hard work of carrying goods around, placing them nicely in a decorated window. Making careful choices about their sortiment. People who were not equipped to write code. Or construct buildings.

But all that is seemingly fading away. So what is happening?

When we look at Amazon, we think of convenient home shopping. We spent our days in front of the screen browsing inventories of nicely photographed stock photos, joined by well crafted stories and narratives of the product, its purpose, functioning and quality. We compare prices and think of us possessing these nice gadgets. And we read about the experience of other shoppers and their ratings of the qualities and disfunctions and whether those goods were ordered and delivered as expected.

We seemingly forget, that by moving to these type of shopping concepts, all those friendly faces and people we met in all those stores, they are losing their means of subsistence. Forced to consider learning things they never desired to learn. Or are not even capable to learn. People who will see their spirit, derived from all those customer interactions, crushed. And people who soon will hide in office buildings, behind screens; or in warehouses, watching robots; or people at home, staring at screens; or people at home, without a job. And soon, people without a home. Without a family to provide for or with families they cannot provide for. Or without home or family or anything except their miserable self to provide for, failing to make ends meet.

The glory of disruptive business models destroys the complexity and variety of activities in the economy. And more importantly, destroys production and activity in itself. Without the storefronts, there is no need for all those service workers that build, monitor and maintain the buildings. There is no need for shelf-builders and decorators. No need for all the equipment going into cooling, lighting and securing the small warehouses. No need for in-store payment systems. No need for local banks to offer credit to all these connected businesses.

On can say, this disruption is indeed disrupting entire economic structures and the ability of an economy to carry the livelihood of so many people. We have an erosion of the capacity of the economy to feed the people being part of it.

If we look at businesses such as Amazon, they reduce this all down to one bank account. That of Amazon. One large massive-scale and robot-powered system of warehouses. A closed system of logistics solutions increasingly employing robotic and autonomous delivery vehicles. And unlocking massive amounts of cost savings in the entire process.

But where do all these people go? What are they going to do?

The end of inner city blues

Imagine a world without all those shopping opportunities in the city. Where no tourists, no lunch goers, no school children, no holiday shoppers, no housemen or housewifes are meeting and mingling, because there are simply no shops any more.

In such an environment, any restaurant, candy store, ice cream maker and café would have enough street traffic to still run a volume of sales that makes them profitable. So beyond the shopping sites, we see the fading of all things food and meet and greet. We see the fading of all the rest of elements of urban life that make it worthwhile to leave the office building. And yet another million of people that made a living as waiters, cooks, restaurant owners and all the people that supplied those stores with fresh market groceries, fish, meat and foods are vanishing and lose their means of subsitence. All the cleaners and inspectors are losing their subsistence.

And more importantly, there is truly no reason for anyone anymore to leave their houses and go on a stroll to meet in the urban centers. There will be nobody there any more. No officer workers flooding out at lunch. No window shoppers. No households out for bargains or moving about to meet their short term shopping needs. No children hunting ice cream and candy store owners. Just empty streets. In empty roads full of offices and decaying urban real estate.

Among all this, the museums and theatres and centers of culture and art also start losing their customers. The Jazz bars, the street musicians, the art exhibitors, they all fade, too. And recede. Having no platform in neither the urban centers. Nor in the living areas that cannot spend all their days in the art galleries and museums to keep those businesses afloat. Everyone can go virtual. But that is changing art and culture in itself.

The infrastructure built to move people to the centers becomes irrelevant, running mostly ghost trains until they stop operations. And start decaying. All those systems that transport water to the centers and used water out of the centers. They are collapsing and cause a certain smell to develop before they are sealed and forgotten. All those trash collectors and trash bins become useless, too. And lose their jobs. And all those people working in public service and transportation, they all become irrelevant, too. Becoming a useless overhang of public administration cost. From a system that no longer earns any business tax from all those once thriving businesses. And city budgets and finances collapse.

The investment into schools and new buildings is collapsing. And all that is left is rain and wind and snow ploughing through the urban centers. Because the office buildings are not sufficient to finance all these structures. And the companies that host all those people in these office buildings, they pay their taxes elsewhere.

Remote Work to the rescue

One can say and wonder if, in all these economic scenarios playing out, why people should still go to these offices. When all they do is work. And they no longer can meet outside. And it is terrible to meet outside in the empty streets with no coffee store around the corner any more.

And the question is raised, if those offices should still be kept. It goes without saying, that the cost of operating offices and the benefit they give to their inhabitors is fading as well. And suddenly, people work at home. They spent their days from the mornings to the evenings at home. Because there are no restaurants, no offices, no shopping malls, no cultural venues. All that is left is computer screens. And furniture. And walls. And the ability to order things. Than can be used and thrown away and picked up yet again.

All while suddenly millions of people are aiming at finding a new job. All those city workers, artists, restaurant and store clerks. That all suddenly have no means to subsistence.

It appears impossible for such an economy that is disrupting everything and everyone away can build the capacity to provide regular jobs for all those people. Now that everyone works from home. Nobody meets. With so many people unable to be trained remotely. Not accustomed to self-start in the morning to learn something new. Not having any way to escape their misery.

With lower wages, rental prices become unmanageable. And while the urban centers and all their buildings and infrastructure are falling apart and cities go bankrupt and no longer can finance schools, hospitals and basic services to their citizens, everyone is leaving town. Destroying trillions in value in real estate assets both in commercial and rental. Thereby destroying what is left in assets to pay out pensions and retirement plans. And what once was an insurance and savings industry.

It goes without saying that such a society is de-industrializing and un-developing itself back into a state of a developing country. But even more so, the issue of city bankruptcy is spilling over to districts, over to states, and over to national states. The feeding of all those unable to find new jobs and now requiring the care of the state will finally bankrupt the state. And lead to either civil war or a massive amount of suicides.

And meanwhile as everybody flees the urban centers, all those relationships built and maintained in the hotspots of the urban melting pot are breaking up. Leaving behind lonely people spread over in different villages that now sit at home in their tiny appartments that stare at the computer screen. Ready to shop to reduce, at least for a moment, their misery.

It all erodes

But even then. With companies learning how to perform their function remotely and with the local economy no longer carrying any meaningful wealth and consumption power, the remote jobs are slowly moving away to countries that are even worse off than the now collapsing developing countries. Finally destroying the subsistence of anyone that was left. Where nobody can afford to raise children and no life exists outside of the cubicle that now is called the home office.

Until, maybe, and that is just a maybe, everyone starts to turn off the computer screen. And stops buying online. And starts building gardens again. And local markets. And people are owning stores again and restaurants and ice cream shops. And the world starts to rebuild itself.

Amazon

Now if there is any company that has perfected the way to profit from this decline, it has been Amazon. With its market reach and market share, it collects and holds the data that allows to predict any trend in shopping or consumer demand just far better than any company in the retail industry. They sit on the best data to earn better margins on any product and they are poised to increase their financial performance against their competitors and use this to slowly and strategically drive out their competitors. By building their own brands for high-in demand products and winning the price war. And by hiding their competitor’s products. And showcasing products whose owners are willing to pay for it. Collecting more profit margins from their competitors. And thereby overly profiting from their success and positioning — with their data — to slowly attack those competitors, too.

Amazon has built its own warehouse infrastructure and logistics networks, moving to one day to same day to within hours delivery. Always moving towards automation and using less humans in the process. And thereby controlling retail, logistics and distribution, and increasingly manufacturing and the entire supply chain of products.

All this requires substantial amounts of investments into data and computing infrastructure. And they can spread those costs to yet again their competitors and others by offering the web services as a stand-alone product.

Amazon is the behemoth that pays almost no taxes in any country, thereby bleeding out the national governments and their ability to use this funding to build re-education and training programs that would help all those people who lose their jobs find new ones; the ability to fund all those infrastructure investments that would be needed to reshape the urban landscape. Amazon takes away the income and tax income from all this business activity, pays absolutely nothing for it, and continues to grow aggressively in dominating the retail industry in an abundance of nations.

And it all is possible because of broken tax regimes, broken monopoly regulation and a complete absence of awareness of or desire to regulate and protect industries. All because of the blind faith that disruptive technologies and economic efficiency is something we can all never be against.

Amazon. The killer of markets. Cities. And societies.