Impact of E-Commerce on Employees at Brick-and-Mortar Retailers

59 Pages Posted: 20 Jun 2018 Last revised: 20 Oct 2018

See all articles by Sudheer Chava

Sudheer Chava

Georgia Institute of Technology - Scheller College of Business

Alex Oettl

Georgia Institute of Technology

Manpreet Singh

Georgia Institute of Technology

Linghang Zeng

Georgia Institute of Technology - Scheller College of Business

Date Written: June 15, 2018

Abstract

Using an employer-employee payroll dataset for approximately 2.6 million retail workers, we analyze the impact of the staggered rollout of a major e-commerce retailer's fulfillment centers on the income and employment of workers at geographically proximate brick-and-mortar retail stores. We find that the establishment of an e-commerce fulfillment center in a county has a negative effect on the income of retail workers in that county and in neighboring counties within 100 miles. Wages of hourly workers, especially part-time hourly workers, decrease significantly. This decrease is 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, in these counties, there is a decrease in credit scores and an increase in delinquency for retail workers that have higher prior credit utilization. Using sales and employment data for 3.2 million stores, we find that retail stores in counties around fulfillment centers experience a reduction in sales and in their number of employees. Further, there is a decrease in entry and an increase in exits for stores in the retail sector, with small and young retail stores exiting at a higher rate. Our robustness tests show that our results are unlikely to be driven by prevailing local economic conditions. Overall, our results highlight the extent to which a dramatic increase in e-commerce retail sales can have some adverse consequences for workers at traditional brick-and-mortar stores.

Keywords: Technology, Labour Market, E-commerce, Retail, Product Market

JEL Classification: J00, J30, L81, G39

Suggested Citation

Chava, Sudheer and Oettl, Alex and Singh, Manpreet and Zeng, Linghang, Impact of E-Commerce on Employees at Brick-and-Mortar Retailers (June 15, 2018). Georgia Tech Scheller College of Business Research Paper No. 18-23; 29th Annual Conference on Financial Economics & Accounting 2018. Available at SSRN: https://ssrn.com/abstract=3197326 or http://dx.doi.org/10.2139/ssrn.3197326

Sudheer Chava

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

HOME PAGE: http://www.prism.gatech.edu/~schava6/

Alex Oettl

Georgia Institute of Technology ( email )

Atlanta, GA 30332
United States

Manpreet Singh (Contact Author)

Georgia Institute of Technology ( email )

800 W Peachtree St NW
Room 4162
Atlanta, GA 30308
United States
+14043855330 (Phone)

HOME PAGE: http://www.manpreets.com

Linghang Zeng

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

HOME PAGE: http://sites.google.com/view/linghang-zeng

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