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Creative Destruction? Impact of E-Commerce on the Retail Sector

Author

Listed:
  • Sudheer Chava

    (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Alexander Oettl

    (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Manpreet Singh

    (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Linghang Zeng

    (Babson College, Babson Park, Massachusetts 02457)

Abstract

Using an administrative payroll data set for 2.6 million retail workers, we find that the staggered rollout of a major e-commerce firm’s fulfillment centers reduces traditional retail workers’ income in geographically proximate counties by 2.4%. Wages of hourly workers, especially part-time hourly workers, decrease significantly driven by a drop in the number of hours worked. We observe a U-shaped pattern in which both young and old workers experience a sharper decrease in wage income. Consequently, some workers experience an increase in credit card delinquency. Using data for 3.2 million stores, we find that sales (employment) at proximate stores decrease by 4% (2.1%). Exits, especially of young and small stores, increase, and entry decreases. Our results highlight how creative destruction led by e-commerce impacts local labor markets.

Suggested Citation

  • Sudheer Chava & Alexander Oettl & Manpreet Singh & Linghang Zeng, 2024. "Creative Destruction? Impact of E-Commerce on the Retail Sector," Management Science, INFORMS, vol. 70(4), pages 2168-2187, April.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2168-2187
    DOI: 10.1287/mnsc.2023.4795
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    Cited by:

    1. Chung, Jamie, 2023. "The spillover effect of E-commerce on local retail real estate markets," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    2. Díaz de Astarloa, Bernardo & Lotitto, Estefanía, 2023. "The landscape of B2C e-commerce marketplaces in Latin America and the Caribbean," Desarrollo Productivo 48583, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    Keywords

    creative destruction; e-commerce; labor; retail; product market competition;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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