The Impact of E-Commerce

Drawing of shopping cart on computer keyboard
Listen

As shoppers hop online in search of the perfect gift or the best deal this season, one Babson College professor has found that online shopping can hit home, lowering wages or eliminating jobs of the hourly-wage retail workers in your community.

“We looked at very granular data when looking at the wages of millions of workers so we could see how each individual worker is affected,” said Linghang Zeng, assistant professor of finance at Babson. “What we saw was that salaried workers aren’t as affected as hourly workers, and part-time workers are affected the most.”

Research also shows that the youngest and the oldest retail workers in the community face the most negative impacts.

The research on e-commerce and its short-term influence on local retail workers is featured in a paper co-authored by Zeng called “Creative Destruction? Impact of E-Commerce on the Retail Sector.” The name references an economic theory that says capitalism is ever evolving and older forms of established processes must be dismantled to make way for improved methods.

Babson Assistant Professor Linghang Zeng
Linghang Zeng, assistant professor of finance at Babson College, researched the impact of e-commerce on local retail workers.

Zeng worked with Sudheer Chava, Alexander Oettl, and Manpreet Singh from the Georgia Institute of Technology. The researchers poured over the quarterly payroll information of 2.6 million workers between 2010 to 2016, crunched consumer data provided by a major credit bureau, and identified new fulfillment centers (FC) in the counties where these workers lived.

Fulfillment centers, similar to area warehouses, are used by major e-commerce companies to deliver online orders faster.

“The establishment of a FC in a county has a negative effect on the income of retail workers in that county and neighboring counties within 100 miles,” Zeng and his co-authors state in the report.

The authors didn’t name the massive e-commerce business that’s become ubiquitous in households across the country. However, for the purposes of this article we can say the company rhymes with Shmamazon.

The paper was featured on the National Bureau of Economic Research’s website in August, and will soon be published in the highly respected Management Science, a peer-reviewed scholarly journal.

E-commerce Convenience

Zeng and his fellow researchers used data from 3.2 million stores and found that as fulfillment centers increased, employment at proximate stores decreased by 2.1%. The retail sector lost 938 jobs per county per quarter, according to the report.

Retail workers at the highest risk of losing some or all of their wages also happened to be workers with high credit card utilization, Zeng said.

“Basically, before anything even happens to their job, they’re already having trouble making ends meet. So now you’re seeing a delinquency, so it’s not just wages that are affected,” Zeng said.


“We looked at very granular data when looking at the wages of millions of workers so we could see how each individual worker is affected.”
Linghang Zeng, assistant professor of finance at Babson College

But, what about delivery jobs or other work potentially created by e-commerce? The researchers looked at aggregate data at the county level and found that while FCs did create new jobs in the transportation and warehouse sector, the job losses in the retail sector dominated the job gains.

“This may suggest that the workers who rely on brick-and-mortar stores for compensation did not find a substitute, at least not in the short run” Zeng said.

Zeng cautioned that the study only researched a short time, and it took place before the COVID-19 pandemic forced many brick-and-mortar businesses to shut down temporarily. But, the impact on brick-and-mortar stores and retail workers likely got worse over that time.

“The service that I see from e-commerce is much, much better than five or six years ago,” Zeng said.

The news wasn’t all bad, however. The one demographic that flourished as e-commerce increased, according to the study, were shoppers.

“Clearly these services are incredibly convenient and popular for consumers,” Zeng said.

Posted in Insights

More from Insights »

Latest Stories

a row of electricity meters
The Price of Power: What’s Driving Rising Electricity Rates? Electricity rates have been steadily increasing. Ryan Davies, a Babson professor of finance, unpacks the many reasons for that, including the massive data centers popping up across the country.
By
John Crawford
Senior Journalist
John Crawford
A writer for Babson Thought & Action and the Babson Magazine, John Crawford has been telling the College’s entrepreneurial story for more than 15 years. Assignments for Babson have taken him from Rwanda to El Salvador, from the sweet-smelling factory of a Pennsylvania candy maker, to the stately Atlanta headquarters of an NFL owner, to the bustling office of a New York City fashion designer. Beyond his work for Babson, he has written articles and essays for The Philadelphia Inquirer, Notre Dame Magazine, The Good Men Project, and other publications. He can be found on Twitter, @crawfordwriter, where he tweets about climate change.
September 30, 2025

Posted in Insights

The Babson community and mascot celebrate at the Roger Babson statue last year
No. 2 Again: Wall Street Journal Ranks Babson the No. 2 Best College for the Second Year in a Row For the second year in a row, The Wall Street Journal ranked Babson as the No. 2 Best College in the United States, lauding the College for its impressive student outcomes.
By
Eric Beato
Editor / Writer
Eric Beato
Eric Beato is the Editor of Babson Thought & Action and Babson Magazine. A native of Chicago and a graduate of the University of Missouri School of Journalism, Eric has worked as an editor and writer at newspapers across the country, including the Chicago Sun-Times and Boston Herald. Eric joined Babson College in 2019 after working as the communications director for a private educational travel company and as the managing editor of six regional sports publications.
September 29, 2025

Posted in Community, Entrepreneurial Leadership, Insights, Outcomes

First row (left to right): Laura Bautista ’29, Ezel Bhatty ’29, Sydney Fojas ’29; Second row (left to right): Lucas Lebrija ’29, Tia Malhotra ’29, Remy Witt ’29
Class of 2029 Blank Leadership Scholars Bring Excitement to Campus The Class of 2029 Blank Leadership Scholars arrive at Babson equipped with entrepreneurial spirit and social impact experience, from launching nonprofits and tech solutions to championing environmental education.
By
Melissa Savignano
Writer
Melissa Savignano
Melissa Savignano, a content marketing manager at Babson College, has worked in higher education for almost a decade, where she tells authentic, compelling campus and community stories. Before Babson, she managed communications for Boston University’s largest college, the College and Graduate School of Arts & Sciences. She previously worked in client relations, helping brands of various sizes launch content marketing strategies and storytelling initiatives. When not at work, you will find her in the city of Boston, probably at the movie theater.
September 25, 2025

Posted in Community