Saturday, February 18, 2012

Shop Online and Save a Barrel of Oil...E-Commerce helps solve Climate Change--The Unseen (positive) effects of Creative Destruction...

Shopping on the internet is still in its infant stages but it appears it has a disproportionate negative effect on some business/industries compared to others.  A nice example of elasticities across industies and how they change over time.

As shown in the graph below, e-commerce has enjoyed high growth in a short period of time (Green line).  Not to suggest correlation is causation, but if you look at the other two lines representing the other two categories of goods (Orange and Less Orange(?) line), and look at your own changing buying habits, I think the relationship is quite clear---online shopping is slowly destroying the "brick and mortar" (real physical stores) in some industries.
Source: Wall Street Journal
It also has a positive impact on the environment too:
"But there are still some brick-and-mortar retailers who have little to fear from the Internet. In the fourth quarter of 2011, gas stations represented 11% of all retail sales, up from 10% during the recession and 7% in 1999. Part of that is due to rising prices at the pump, but gas also is something you still have to go out to purchase.Of course, the more people can do from home the less use they will have for their cars. So maybe gas stations aren’t totally immune after all."" (source: WSJ)

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