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Is the Internet Directly Responsible for Our Economic Problems?


I was going to ask you this but I posted on Yahoo Answers and got a stupid response. Brick and mortar stores and restaurants are dropping like flies. I was actually referring to Radio Shack at first. Well, today, Quiznos just filed for bankruptcy. The only one near me was turned into a Little Caesar’s. So I’m asking you anyway if this depression is caused by the internet with the web and people buying things online instead of real stores with real workers and across the country instead of a central location called Amazon?

You’re basically asking  “Is the internet directly responsible for our economic problems?”

In my opinion: absolutely not! Things are certainly changing, but that’s nothing new. Things have been changing well before the internet came along.

I’m no economist, but as you can tell, I do have a few opinions and I can go on about this for quite some time. I’ll try and control myself.

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The changing role of brick-and-mortar

You said that brick and mortar stores are “dropping like flies”. You know, I sure don’t see that. Yes, there is the traditional churn of stores closing, typically followed by new stores opening. And yea, there are particularly depressed economic areas where things are pretty bad.

But there are also thriving areas where things are going quite well.

This all is nothing new.

Let’s take a look at the largest examples that people point at all the time: the auto or steel industries. There are areas that have been seriously hurt because of their previous dependence on those specific industries. When those markets changed, for any number of reasons (reasons which we can argue about all day long but are essentially beside the point), those areas got hurt, big time. This has nothing to do with the internet and like I keep saying, this is nothing really new.

I’m sure that horse-drawn buggy manufacturers went through something similar as they saw the underlying technologies of transportation change. That some industries might be impacted by the internet doesn’t surprise me in the least.

Radio Shack was wonderful, but …

I’m not surprised, for example, that stores like Radio Shack might be having problems. As a consumer, I can get a much better selection at better prices with better service in less time by going online.

Businesses have always needed to deal with new forms of competition. They either improved such that that gave their customers something worth paying for or driving to; or those businesses went out of business.

I know I’m a broken record on this, but this isn’t anything new.

Coffee ShopEmail me a sandwich?

Now, I’m not really sure how you think the internet might have impacted Quiznos. It’s not yet possible to email me a sandwich1, so I don’t see how they suffered from the technology. There used to be one nearby and I do miss them, but my guess is their demise was due to other factors; traditional competition or who knows what else.

You mentioned Amazon. I will tell you that Amazon employs real people across the country. In fact, I read just the other day that they’re opening yet another distribution center not that far from me. While there may be an important discussion to be had around how they might treat some of those employees, don’t for a second think that you aren’t contributing directly to someone’s paycheck when you buy online. Regardless of you buy it from; you absolutely are.

It’s all about value

Business – online or off – is all about providing what your customers and potential customers want at a price they’re willing to pay. If people want the prices and convenience associated with online shopping (and from the volume of sales, I would say that they do) then that’s great. What that means for brick and mortar stores is they need to offer something to differentiate themselves that people can value, something that competes against these other online offerings.

When my wife and I had a doll shop2, it meant exceptional customer service both in-store and online, and a comfortable place for doll enthusiasts to come and see what it was they were buying in person. We didn’t close because of the internet. In reality I believe we managed to stay in business longer because of the internet and our ability to compete well on it.

As you can imagine, we did pretty well online. We closed due to the overall economy; business conditions and the fact that the popularity of luxury items like collectibles tends to be somewhat cyclical .

It’s also about opportunities

Rather than bemoaning the fact that things are changing and blaming this new communication medium for the problems, look for the opportunities that it brings.

I really believe that the internet can be just as large a force for success as for failure. New businesses are springing up all the time – online and off. Many are brick and mortar, and are not only doing whatever it is they do very well, but they’re using the internet to help them do it.

In fact, completely coincidental to your question coming in, I found the other day that a local community coffee shop had initiated an Indiegogo campaign to raise funds for their expansion. Now I have no idea whether it will succeed, although I did contribute some. I just thought it was a great way to reach out and connect with their customers and potential customers. What a great example of using the internet to build community and your business!

Let’s face it, even when they succeed, you still need to walk into that brick and mortar location to grab your lunch.

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Footnotes & references

1: I’d be all over that if they could. :-)

2: And yes, as the in-house IT person, bookkeeper, fill-in sales clerk, on-site maintenance person and “lifter of heavy things”, among other things, I can confidently say I know much more about collectible dolls than I ever envisioned. More importantly I know first-hand what it means to run a brick-and-mortar store competing with online alternatives.

4 comments on “Is the Internet Directly Responsible for Our Economic Problems?”

  1. I understand online shopping is easy, especially when otherwise you got to drive 20 miles to the first mall, because all the local shop have been killed by the competition.
    In my opinion the economic problems as now are a result of greedy bankers and the destruction of capital due to warfare.
    The Internet can make you a better informed customer if you take the time to investigate.
    Except for a few bargains the prices in the local stores are more or less the same, no handling costs etc.
    BTW I don’t live in Northern America, so your situation may be different.
    It’s better to support your local shop than someone somewhere on the 32nd floor with an catalog.
    (Apart from that, I prefer to pay cash in hand, whether it’s a taco or a house. Prevents debt problems.)
    You actually see the trend , online shops opening B&M outlets. Very convenient.
    The advantage of an online shop can be that you don’t get an annoying “tail” .
    The disadvantage is, they often try to force you to open an account. That’s a tail as well.

  2. I mentioned restaurants and Quiznos, because I see a lot of people near me going out less, than in the past, the Idea is that they spend most of their time in front of a computer online.


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