Danae Krieger
Mr. Reuter
Economics
5 April 2016
Amazon’s Increasing Effect on the US Economy
Americans have been accustomed to shopping at the same stores, such as Walmart, J.C. Penney, Sears and Target, for their entire lives. At first they had to physically go to the store to get what they needed. Then, eventually came the luxury of making purchases from the comfort of their own homes. Despite this normality of buying the same products from the same place, Americans became eager to try a new service--Amazon--that is strictly online. It did not take long for Amazon to grow in popularity, especially since they developed the Amazon Prime membership option, which both they and the consumer benefit from. However, Amazon’s success has begun to make a negative impact on its competitors and, ultimately, America’s economy.
With an increasing demand for making purchases on Amazon, many companies are being forced to close some of their stores. Walmart, in particular, is closing 269 stores: 154 in the United States, including 4 in the Milwaukee area, and 115 overseas. This has the potential to result in the loss of up to 16,000 jobs, with 10,000 of those being in the United States. This large amount has the potential to hurt the American economy: 10,000 people being put out of their jobs means an increased unemployment rate, lower income for consumers (and therefore producers as well since the consumers can’t spend as much), resulting in the occurrence of the income effect. And this is considering Walmart’s numbers alone.
Other stores, including Macy’s, Sears, and J.C. Penney are following Walmart’s lead. Though they are not closing as many stores, they all are facing economic problems. Macy’s will close 40 locations, Sears 50 and J.C. Penney 39. These are only four of the stores on the long list of companies that have plans to close some of their doors throughout the world by the end of 2016.
In 2013 Amazon was the largest online retailer in the United States. Also, they were responsible for almost 25% of the retail sales growth in 2015. Now, the once prosperous companies that had little fear of competition are slowly getting put out of business. It seems as if Amazon is creating a monopoly, even though it will never successfully happen since monopolies are prohibited in the United States. As the illustration below depicts, Amazon was even successful in beating Apple in 2013, and by a whopping $49.6 billion. 
Amazon is gaining power, and doing so quickly. It is almost scary to imagine what these numbers will look like after at the end of the year when many of their competitors have down-sized and as the number of online shoppers is expected to continue increasing (see below). It is probable that Amazon, and any comparable services that may be developed in the future, will become the preferred method of making purchases.
In an attempt to revive themselves, Walmart has plans to “invest further in online operations and pour money into improving customers' experience” which may drag down their earnings for the fiscal year as much as 12% (Associated Press). This may provide some relief to America’s economy as they and other stores battle against the overwhelming power of Amazon.
Works Cited
Tabuchi, Hiroko. "Walmart to Close 269 Stores as Retailers Struggle." The New York Times. The New York Times, 15 Jan. 2016. Web. 04 Apr. 2016.
"Wal-Mart to Close 269 Stores, including 4 in Milwaukee Area." N.p., n.d. Web. 04 Apr. 2016.
I liked the topic you chose as online shopping is such a huge deal at this point in time. I agree with you in the fact that many jobs are being lost due to the growing of Amazon, but you can't forget that since Amazon is growing they will need more employees , so the former Walmart employees will have a chance to work for a growing company. Also since Amazon is growing, I bet that the people working for Amazon are getting paid more than the people at Walmart are currently getting paid.
ReplyDeleteI have never even thought about how big of an impact Amazon is making. Even though Walmart is getting hit, doesn’t completely correlate with Amazon’s purchases. I use Amazon and purchase items on a weekly basis. If I had the option I would go to the store and get it there so I didn’t have to wait for shipping and handling. Typically, those items you couldn’t find in a commercial store, and they are at prices no one can even get close to competing. Amazon also greatly helps the government with the heavy amount of shipping that’s being done. The government greatly benefits from all the purchases off of Amazon. Yes Amazon is looked at as a Monopoly, but it’s just one large store with a bunch of stores inside. I do realize that Amazon has the most options for goods and for prices below retail which is why everyone buys their goods off of it.
ReplyDeleteI agree, this is because I love amazon and I just have not been to any store sines using it. The only time I do is to go and get food. That is probably why Walmart is closing most of It's stores, and I's recently making stores were you can only buy food like your local Pick`N Save. Most objects that people buy off of amazon are electronics, clothing, cooking materials, etc... All of those materials you can find at Walmart but are higher in price and online shopping is going to be cheaper so people are going to want to keep buying from online shops.
ReplyDeleteI, like any other teenager, buy things from Amazon all the time. It's great for getting just about anything you want and it's one of the fastest online websites I've used for shipping. You can get things the next day if you wanted but I've never ordered anything and had it come more than 2 days after I've placed my order. It is scary how much power it seems they have and maybe they could be trying to find a loop hole around the whole monopoly thing because for all we know they may not be trying to make other businesses out of business. It's not their fault that as this generation starts to have kids that means their kids will be good in technology and prefer order things online over going to a physical store.
ReplyDeleteI love Amazon. It's simple, easy, and more importantly, it ships fast. My family is a frequent consumer of Amazon, especially my mom. But before I read this post I had no idea that Amazon was impacting our society so much. Their business tactics are well thought out and efficient. It makes sense that their competitors are struggling in the stores because purchasing online is so easy. Yes, Amazon could be viewed as a monopoly, but we can't shame them for doing so well in our economy. They're smart, and they know how to appeal to all American consumers. Shopping as we know it is soon converting to online so I believe more stores need to adapt to that. It's good that Walmart is creating a better online shopping experience because I guarantee that they will end up doing better than most companies in the long run.
ReplyDeleteThe job loss isn't likely to be nearly as bad as this post makes it seem. While Amazon does all of its business online, it still needs employees to manage the site and work in its physical warehouses. It's still something we're all going to have to prepare for though. Even if jobs don't vanish, the shift in where those jobs are will almost certainly cause an upset.
ReplyDeleteThis is great insight and I agree with you 100%
DeleteI found this article very interesting because I was not aware of how popular Amazon is. I have ordered a couple things off of Amazon, however, I find it more convenient to go to a store, such as Walmart, and receive the product immediately after purchase. However, obviously, a lot of people are starting to use online businesses more, which makes me wonder how many employees it takes to run an online company. If all stores become just online stores, the entire employment rate will decrease; which will cause our economy to become a lot less stable. In all, I found this to be very informative and gave me a lot of new insight on how increasing technology may be hurting the economy instead of helping it.
ReplyDeleteI side with Jessie in the idea that Amazon is used often in my household. However, I would like to point out that although there would be a significant job loss when stores do begin to close, more jobs will open up in maintaining a well organized and profitable online store. There will never be a time when the internet takes over all stores because a lot of people, like myself, do enjoy being able to see in person just what the product is like.
ReplyDeleteThat was great! Your statistics made everything very easy to follow. You brought up the interesting issue of virtual stores replacing physical ones in a very straightforward light. I think the effects discussed in your paper are even visible through experience. To feel these effects, I can just look around outside and see stores closing down the street, or maybe people simply talk about Amazon more than Wal-Mart. Either way, now that there are numbers here to quantify this change, it’s shocking just how great of an impact that Amazon has on the economy. In the end, I hope that physical and online stores can reach a balance so that we don’t run out of actual stores to go to, or convenient online stores.
ReplyDelete- Martin Mueller
I love using amazon prime for when I buy stuff online because it always gets here super fast and it is very convenient. I was surprised to read that Amazon is causing well known clothes stores to close like Macy's and J.C.Penny's though because I know I would rather personally order my clothes from a clothing store rather than ordering it from a store with a little bit of everything. I was also surprised to read that Amazon it out selling Apple. At the very most I expected them to be equal in sales or maybe have Apple be slightly above Amazon.
ReplyDeleteThis was a great topic to discuss and affects our economy indefinitely. It's weird to think that Amazon alone can have this affect on so many lives when unemployment rates increase as a result of many stores closing. Online shopping is continuing to take over America based on laziness to physically go to the mall and or other stores. Online shopping will continue to increase for years to come.
ReplyDeleteWierdly enough, I've also noticed the increase in consumer spending on Amazon, even my family has been adjusting to going online to their website instead of just running to the store. I agree that online stores are increasing immensely which is good and bad! I love to shop online, I don't feel rushed and I feel like there are so many more options compared to when I'm wandering through a store, but I definitely agree that stores are becoming more and more technology based. Though, I think this might help the unemployment rate- even though not everyone is thoroughly trained in technology I think that can be easily be taught. Hopefully, physically stores will still exist in the future though, I can't imagine never having the chance to walk through the mall and instead be sitting on the computer.
ReplyDeleteYou made a great point in mentioning how an increase use in online shopping increases the unemployment rate. Unemployment is a key factor in a country's real GDP; thus a decrease in jobs, will decrease the GDP. However, I would argue that there are enough positive actions occurring in the economy which balance out Amazon's impact. The food service industry is not impacted by Amazon, and is in fact increasing in popularity since the recession. This creates a greater demand for restaurants and therefore more jobs. This is just one industry example. So while Amazon is causing a closings of big name store locations, it will not have a huge impact on the economy although it is unfortunate that job loss will occur for some individuals.
ReplyDeleteAs an avid online shopper, I never realized how much it would affect businesses that strive from sales inside of stores. If online shopping is hurting stores like Walmart, I can’t imagine how badly they are hurting small local stores. I do not know if it necessarily hurts our GDP because most things from Walmart and Amazon are made in different countries so they already do not count in the U.S.’s GDP
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ReplyDeleteI never really noticed how much Amazon could affect things. Of course, it’s popularity has substantial effects and it’s simplicity only adds to this, but it’s getting to the point that it’s hurting the most popular actual businesses in the world. It truly is shocking. If the popularity of Amazon continues to increase it could, in theory, put one of the major retailers out of business which would cause a huge uproar in communities. The sad thing is, there is nothing anyone can really do to stop it from growing. Already, like you said, it’s taken thousands of jobs and is on track to take even more. While it may be helping our economy, it isn’t helping our employment rates which is just as important as anything else.
It seems like online shopping is the wave of the future for some people. Many people live in rural areas that do not have shopping centers available to them. Let's face it, in large cities, there are stores everywhere. But when you get to these outlying areas like farming communities and even up north, there are not many stores available like Boston Store or Macy's or even Walmart. They can be 50 miles from your house. In that case, I think online shopping is a huge incentive. I for one like to go in a store and see the item in person, especially clothes. I do not want to have to hassle with trying to guess what size I am and then returning the item through the mail if it doesn't fit.
ReplyDeleteI personally can side with both amazon and other businesses on this issue. While big businesses might be hurt by Amazon, they have started to implement policies that allow them to offer products for the same price as Amazon and even their other competitors so that customers continue to purchase products from them. Also, the ability for customers to purchase products cheaper online benefits the economy because people have more money left to spend and are therefore more likely to buy additional things.
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