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Will Online Shopping End the American Economy?

Updated on October 2, 2013

Opportunity or Defeat?

With new online marketplaces opening up to sellers and shoppers alike more rapidly to compete with ecommerce giants such as eBay and Amazon, has the thought crossed your mind as to whether online shopping hurts or helps the American economy?

What do you know about free trade and protectionism?

August 13, 2011, Professor Don Boudreaux stated in a video that free trade treats foreign goods and services no differently than domestic goods and services. Protectionism is a system of trade that discriminates against foreign goods and services in an attempt to favor domestic goods and services. Professor Bourdreaux went on to explain that free trade brings lower cost goods and services to consumers. Therefore, the benefits of free trade can be seen in American and Asian economies. Countries that have a relatively high degree of free trade, consequently, have experienced an explosion of wealth.

Yet, what are the negative consequences?

eBay's headquarters are in San Jose, California.

Source

To understand, we first must go back to basics.

That old saying, "don't forget where you came from", rings more truer for this situation.

eBay, for instance, was founded in 1995 by Pierre Omidyar, a French-born Iranian-American computer programmer, who wanted a side hobby.

The first item auctioned on eBay was for a broken laser pointer. The buyer, a collector of broken laser pointers.

Omidyar, eBay's founder, was forced to upgrade to a commercial internet account due to a high volume of traffic on his website. The price increase between the internet accounts ($220 difference) forced Omidyar to start charging sellers who were using eBay's marketplace platform.

Three years later, Omidyar hired eBay's first President and CEO. At that time, in 1998, the company had 500,000 registered users and revenues just short of reaching $5,000,000.00 dollars!


The economy of the United States of America.

  • The United States is one of the largest trading nations in the world, second to China.
  • The United States has been the world's largest economy since the late 1800s.
  • Out of the 500 world's top largest companies, over 100 are located in the United States. That represents twice the amount as any other country.
  • Currently, in 2013, consumer spending represents 71% of the United States economy.

The United States still feels aftershocks from an economic downturn that started in 2007.

In 2011, extreme poverty doubled in the United States to over one million households with almost three million children living on less than $2.00 per day (not counting government assistance).

The wealthiest top 10% of the United States population possess 80% of all financial assets.

The United States is home to approximately three million small businesses.

Source
Source

The top three sectors of United States employment.

  1. Service sector makes up 78.6 percent of United States employment.
  2. Industry sector makes up 19.9 percent of United States employment.
  3. Agriculture sector makes up 1.5 percent of United States employment.

Employment By Sector

Industry
Percent of total employment
Retail Trade
10%
Food Services
8%
Professional and Technical Services
6%
Education
5%
Finance
4%
Construction
4%
Wholesale Trade
4%
Manufacturing
3%

Have you ever started your own company?

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Entrepreneurship in the United States.

An entrepreneur is one who transforms innovations in to economic goods or starts a new business.

It is estimated that half of all working men in the United States have been self-employed for one or more years, or up to as many as six years.

The goal to drive economical growth is shared by many who venture in starting their own business.

(No statistics on women were provided.)

Amazon, the marketplace, started out with a business plan in 1994.

Beginning as a bookstore, it diversified. It is the largest United States online retailer!

The climate change in eBay.

When I first started using eBay for personal purchasing online after I had my children, I found the massive website easy to use and the sellers extremely friendly.

I made friends instantly with almost every one I bought something from. A new conversation would develop the minute I won an auction. "How would you like this shipped, first-class or priority"? "Would you like gift wrap, is it a gift?"

Endless conversations made long-lasting friends. I recall a particular seller around 2007 when I made a purchase of a few hard-to-find vintage collectibles. She told me that times were increasingly harder to make a living on eBay. When her and her husband left their full-time jobs at a factory in Rhode Island, they started selling things around the house and made enough in the first month to pay their mortgage. Soon they became what was known then as a power seller and enlisted with eBay's health insurance program. Their dream was to retire on eBay.

Their dream came to a screeching halt when they started noticing yard sales weren't offering the same deals that offered them a chance of buying to resell in the eBay marketplace. While at one time they could flip a used dish for $20 profit, the used dishes were no longer easy to find. Those used dishes were ending up in consignment stores and antique shops that priced them far exceeding the 25 cent days at yard sales.

In addition, the local Goodwill store started raising prices to reflect a more eBay mindset. The managers caught on that the very customers hauling away deal after deal were also making a fortune flipping the donated wares on eBay to make a full-time living!

The dream was over for many back then.

Today, their are those who strongly urge never placing everything in eBay. What worked for Pierre Omidyar once upon a time is not the same dream that is being sought after today.

Omidyar brought imagination, envision, risk, and determination to an age where online shopping was just beginning.

The Etsy experience.

Etsy was founded in 2005 as an online website suited for handmade items. It soon grew to expand in to vintage categories (for items 20 years or older), as well as art and craft supplies.

The concept took off for handmade work. Especially for artists and crafters that worked from home. It gave them a place to showcase their one-of-a-kind talents and earn money for their hard work.

Etsy had a setback in 2007 when it's records showed it was not a profitable company.

After receiving an infusion of funding, in 2008 some eBay sellers switched to Etsy after feeling dissatisfied with eBay's latest policies toward sellers. Etsy also had an employee overturn and hired a former Yahoo Technology Officer to be their own Chief Technology Officer.

In 2009, with the help of Twitter, Etsy received more attention and gained more buyers, possibly due to the downturn of the United States Economy and more promotional use of social media.

By December 2010, Etsy had seven million registered users and vowed to focus on a more personal community feel as it grew larger, to stand out from massive competitor eBay.

But, in 2012, it was validated that Etsy was inconsistently applying its rules about items having to be handmade. While some sellers would be penalized for not providing evidence such as photos of their art studio to independently prove their items were handmade, other sellers were not creating one-of-a-kind items per the terms of use and allowed to sell their items.

With small insertion fees and final value fees charged on items listed and sold on its site, Etsy is still very popular among sellers and buyers alike.

What has changed?

Etsy made USA Today headlines on October 1, 2013, as it beefs up it's competitive edge and allows sellers to list items that are not just handmade but also produced by manufacturing partners.

Etsy created this new policy recently to give sellers more flexibility. They want sellers to have the opportunity to increase supply quicker and generate more sales. However, this may come as an unwelcome invitation to those who have been with Etsy since the beginning and like the fact that Etsy has always been about the unique, handmade good, that is not produced on a massive scale.

Many Etsy sellers have proven their worth well with handmade items created in make-shift basement art studios that they have literally created from the ground up! There's something to be said about that first sale when you get the encouragement and praise you need to boost your confidence and list more.

Now that Etsy is allowing competition with items produced in volume, Etsy's CEO explained that some sellers felt punished working longer hours to maintain a shop that they single-handedly had to work at and manage because of strict Etsy user policies. Etsy sellers didn't feel they could hire help because all items were supposed to be made by the seller and one-of-a-kind. Some sellers left because Etsy's rules were too strict.

I personally know of one stay-at-home mom that started designing children's dresses from home. I bought one of her ruffled dresses in farm-print. It took six weeks to receive. After leaving her terrific feedback, I noticed not everyone was so patient or excited about the wait it took to receive their items. Perhaps this new policy will help someone like this Etsy seller who sells customized handmade dresses out of her family living room by allowing her to enlist help to sell her items. Does Etsy really intend for these new policies to make it more user-friendly?

Will this new policy help the individual small seller?


An ongoing dilemma.

One side of eBay are sellers who believe that diversifying wares will make an easier time transitioning in case something goes wrong. They pro-actively advocate to spread out and never place a full carton of eggs in just one marketplace.

There are Etsy sellers now looking to leave. They feel Etsy is now more like eBay. Many Etsy sellers first started on eBay, transitioning to Etsy which they now feel will be nothing more than mass produced items which eBay has become instead of the auction site it once was.

The upside to Etsy's latest policy change as I see are crafters who make a lot of items at a time and want to list them. It was previously told to those sellers that they must limit the amount of listings to a few a day of the same item. If they were to list 10 of the same handmade item, Etsy might perceive this as being mass produced and might disallow the listings.

On the other hand, as sellers already know about eBay, many small sellers have been pushed out of the marketplace all together because of the influx of mass produced items that are now listed on their site.

I noticed while searching Etsy for some craft items this past spring to use in a school project for my daughter, it was no longer the unique, one-of-a-kind shopping experience I had become fond of in the beginning. In fact, it was terribly frustrating to me because there were so many items that weren't unique and were listed in mass quantities that I eventually gave up and bought them somewhere else. So, it's as equally frustrating for a buyer as a seller when a marketplace becomes flooded with items that have to be searched through tediously in order to find what you want. (I still love Etsy because it is still a fascinating place to shop.)

However, as I look out at all of the empty American mill buildings along the East Coast, I have to wonder, at what point did Americans start wanting faster and cheaper products?

The old saying, "you can't have your cake and eat it too".

A country this size, despite surviving a Great Depression and an economic downturn six years ago is still thriving. As evidence has shown, retail is still the top number one industry and employs the largest percent of American workers.

Reflections of old mills haunt memories as they now sit vacant across America.

Penny Mayes, Creative Commons Attribution-ShareAlike 2.0 license
Penny Mayes, Creative Commons Attribution-ShareAlike 2.0 license | Source

The difference with Walmart.

Stores like Walmart, Target, Cosco, BJ's Wholesale Club, and so forth are all positioned in America to make profits! They want business from American shoppers.

So why is that online marketplaces get so much gruff about globalizing their venues? After all, brick and mortar stores often buy from oversea suppliers.

As many folks have answered in commentaries across the web, Walmart buys directly from overseas and offers goods to American consumers. The difference is with online shopping, buyers can buy directly from overseas, eliminating the middle store all together.

While some people still prefer to shop in a store instead of online, mobile shopping with cell phones has further opened opportunities for online shopping experiences.

Walmart is the largest retailer in America, employing many workers.


Conclusion.

While the American economy is still digging out from under the downturn of 2007, internet entrepreneurs are trying to spread out more. Isn't that the advice small smellers are given entering the eBay arena the first time? Diversify! Don't put all of your eggs in one basket to have something to fall back on.

Some will say that the American Economy is holding its own with consumer spending representing over 70% of the American Economy.

Many sellers on eBay are small sellers, working from their home. Likewise, many Etsy sellers are people pursuing a dream of working from home creating unique handmade items. Yet these very people who made these online marketplaces as gigantic as they are today are now feeling a downturn of their own in sales. Many eBay sellers report much lower volume of sales, forcing some out of business.

However, if buyers are now shopping for faster and cheaper, utilizing the ever-expanding online marketplaces for ways not thought possible just a few years ago, and buying from overseas directly, one must think about how that will eventually impact the American Economy.

For better or worse?

I'd love to hear from you. Please leave your comments below and tell me how you think globalization of internet marketplaces will help or hurt the America economy.

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    • billybuc profile image

      Bill Holland 3 years ago from Olympia, WA

      Great research and it is an interesting question that you have posed. We are a convenience society; everything is fast-paced and everyone is in a hurry. Still, I believe that the economy is going to force society to make changes, and self-sufficiency is one of them and buying locally is another. I could be all wrong but I believe online shopping has peaked or will soon.....I hope I'm right. :)

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Billy! Thank you for your wonderful insight in to this. I believe you are right. Change is coming. And from what I can see, not many are fond of change.

    • billybuc profile image

      Bill Holland 3 years ago from Olympia, WA

      I think most Americans hate change, but they will be forced to change anyway or fall by the wayside.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      You are right Billy!

    • hawaiianodysseus profile image

      Hawaiian Odysseus 3 years ago from Southeast Washington state

      As you know, Brandi, I am very dependent on the success of online retailing. My stance is that the presence of online venues such as eBay, Amazon, Etsy, and the rest have actually saved or at least healed the ailing American economy. I don't have the numbers in front of me. However, when our economy tanked (and as it still remains topsy turvy and may never fully recover), many Americans were compelled to find alternative measures. Thank God for eBay's presence. Whatever we feel about online venues, they've certainly done their part to resuscitate and stimulate the American AND global economies.

      Well written and presented hub, Brandi! 'Congratulations! Aloha, my friend!

      ~Joe

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Joe, I was thinking of you when I wrote this article. You are among my friends of eBay sellers. Thank you for your comments!

    • DDE profile image

      Devika Primić 3 years ago from Dubrovnik, Croatia

      Will Online Shopping End the American Economy an interesting question and so well thought of information however change is a problem and I agree with billybuc

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi DDE! Thank you so much for your valuable input here.

    • Monis Mas profile image

      Aga 3 years ago

      Great hub. I sure hope that will never happen!

    • profile image

      Deb Welch 3 years ago

      Truthfully - I hope these on-line shopping sites don't take over in-store purchasing. Shipping & Handling fees are high and most importantly I learned at long last that you can actually find these products locally with alittle research. I have had problems with two of the most popular sites and no longer shop with them. Etsy seems interesting and worth a try. If one is disabled or has a problem dealing with the public or crowds then on-line shopping is apropo. Very useful - a good read.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Me too Monis Mas! Thank you for commenting!

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Thank you for your comments and thoughtful insight Deb!

    • epbooks profile image

      Elizabeth Parker 3 years ago from Las Vegas, NV

      Very interesting hub, Crafty! I sell my jewelry on Storenvy, but I haven't really tried Etsy yet. I've used eBay quite a few times, so this was useful to me. Voted up and shared!

    • kidscrafts profile image

      kidscrafts 3 years ago from Ottawa, Canada

      Interesting hub, Crafty! As an artist, I decided to go on the web; it's not an easy choice. I thought of Etsy but I heard horror story as well. I never tried eBay. The web is an ever changing world and we have to adapt to it constantly. A long time ago, I had books published and that experience was great at the beginning but not so great later because that company kept exclusivity of the books they published and I could not have my books in other book stores.

      We are for sure at a turning point in the way we are doing things. I don't know what is the best. I suppose time will tell!

      Voted up and interesting!

    • wetnosedogs profile image

      wetnosedogs 3 years ago from Alabama

      I don't like shopping at brick and mortar, so I would hope online shopping succeeds. The money moves, but not locally.

      I don't know the right answer.

      I did enjoy this hub.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi EP! I have never known of Storenvy. I'll have to check it out! Thank you.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi kidscrafts! Very interesting. I joined Etsy years ago and it was very difficult selling my work. I would put up dozens of items and get one sale maybe every six months. Then a couple of years ago someone asked me to sell vintage post cards for them on Etsy. I tried it again, and this time I found out it was a little easier to sell things but truth be known I spent over $40 in fees and only sold $20 worth of post cards.

      Some people are very successful at it. I don't have that talent. LOL

      I'm sorry to hear about your book publishing issues. That's awful. I know how much goes in to a book.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Wetnose! Thank you. I like shopping online too. Sometimes I've found some really great buys on things I've purchased in bulk.

    • bravewarrior profile image

      Shauna L Bowling 3 years ago from Central Florida

      You did a great job of this hub, Crafty. I only search eBay when I want to find a vintage item that I haven't found by going 'junking' to my local antique shops or thrift stores. I do very little online purchasing. That wasn't true once upon a time ago. Online shopping was convenient. But with shipping, wait time and products possibly being damaged by UPS or FedEx, it's not worth it. I do, however, use the Internet to read reviews of products I'm considering purchasing. You have no idea how many dollars I've saved in reading consumer reviews. When I do buy something online I always leave a review, whether good or bad. We consumers need to be informed, not stumped or taken for fools.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Thank you for your input Brave! I purchased a glass dish once and it arrived in a thin box, smashed. I was very disappointed. But normally I have good luck buying online.

    • FlourishAnyway profile image

      FlourishAnyway 3 years ago from USA

      I purchase online because I cannot stand crowds, especially during holiday seasons. Otherwise, when there is time to shop, linger, look and items personally it is much more enjoyable to do so in person. It's also better for the local economy, and you save on shipping fees. Interesting history on how eBay started. I had no idea!

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Flourish! I do not do crowds either. No way! I know people who prepare for the day after Thanksgiving for weeks. I just can't do it. I'd rather pay full price or shop online. Thank you for your comments!

    • PegCole17 profile image

      Peg Cole 3 years ago from Dallas, Texas

      This was article was thought provoking, informative and well researched. I learned a lot about the reasons for ebay losing market share. A few years back I was selling quite a few collectibles and household items out there until the changes to the site became too discouraging.

      Last year I did most of my Christmas shopping on line (eBay and Amazon) and it was so much less stressful than battling the traffic, packing up the gifts and taking the boxes to the Post Office.

    • Dee aka Nonna profile image

      Dee aka Nonna 3 years ago

      You know, I don't really know what to think. I do enjoy, to a point, shopping on line, but there are items that I would rather not purchase online. I am just old enough to remember shopping at stores that were locally owned and operated. I remember them doing a good job of taking care of their customers. Giants like Walmart have made it near impossible for small locally owned businesses to stay afloat. Progress can be both a blessing and a curse.

      Great article giving the reader lots to think about.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi PegCole! Thank you so much for commenting. I too have done Christmas shopping online in the past to avoid heavy shopping traffic, especially during December.

      At one time, I shopped for Barbie items on eBay. Now, when I search for Barbie, the first items to come up are all knock off stuff. It seems like the vintage and unique markets are purging off of eBay. I haven't searched as thoroughly on ETSY yet.

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Dee! Thanks so much for commenting here. When I was growing up, we had mostly small variety stores. One of my favorite was a little gift shop with cards and party items. Now, it's just Walmart and big chain stores.

    • kikalina profile image

      kikalina 3 years ago from Europe

      Online shopping is way too convenient and I only visit the stores when I need shoes!

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Kikalina! Thank you so much for your comment. It's nice to see you today.

    • Suzanne Day profile image

      Suzanne Day 3 years ago from Melbourne, Victoria, Australia

      Unfortunately, people will buy what they want to buy. At the cheapest price. Whether it's on Etsy or Ebay or in Walmart is only a small factor. If you can offer it cheaper, you'll get more interest. I always believe that if your product is good enough, you can market it, make people aware that it is there and they will buy. Often people won't buy because the product isn't useful, practical, priced right or they don't want it. So my main advice is to focus all of the attention on what people want to buy - then get in front of those particular people with it. Globalisation has stopped sellers making easy $$$ and now requires them to work hard for money. But unique ideas are still out there and can still be profitable!

    • CraftytotheCore profile image
      Author

      CraftytotheCore 3 years ago

      Hi Suzanne! Thanks so much for your comments here. Such great advice.

    • profile image

      Sanxuary 2 years ago

      It will find its limitations and kill its self at some point. If you can not see the product its only a matter of time before they deliver you garbage. Like GMO crops its only a matter of time before the super weeds defeat there dumb ideas. You only get to cheat for so long before you get to cheap or greedy to sustain a market that can purchase your goods. Like employers who pay low wages, if everyone does it, who is going to buy your crap. Life eventually finds a balance and non-sustainable ideas kill themselves eventually.

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