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The Existential Threat to Ecommerce

By all accounts, the pandemic was a boon to ecommerce. A McKinsey Report noted that lockdown orders crammed a decade’s worth of ecommerce growth into just 10 months. More people began shopping online, and all shoppers purchased a wider range of product categories that way (Instacart turned a profit thanks to the public’s general desire for contactless shopping).

With all this positivity surrounding ecommerce, why do I see an existential threat looming on the horizon? Like a lot of sectors in the global economy, ecommerce shops are facing an extreme labor shortage, and it threatens to bring digital commerce innovation to a halt.

Open Recs Everywhere

The biggest threat we have in the ecommerce space now is a lack of talent. Every digital agency has a long list of open positions that they just can’t fill. And that, in turn, means that smaller agencies might be turning down work. 

And it’s not just agencies. The clients we serve — DTC brands, B2B companies and brands that offer a mix of online and offline sales  — are having a difficult time finding the expertise they need to take their business to the next level. 

Ecommerce brands are desperately looking for people with expertise in merchandising, customer experience, site design, conversion optimization and countless other roles, but the available talent pool simply doesn’t exist. 

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As a result, all focus is on recruiting talent from other brands and agencies. Signing bonuses and salaries are up, which will be passed along to the client, and ultimately to the end customer.

Where Did All the Talent Go?

In a digital industry, we rely upon developer talent. Open Source has fueled the past two decades of online innovation, but the focus is beginning to shift to more exciting disciplines. 10 years ago the most popular Open Source projects were web servers, encryption schemes, and programming languages; in other words, the building blocks of the web. 

Today? NFT projects, crypto, AI, and machine learning are taking the top spots and amassing the most vibrant audiences. As excitement in nascent crypto projects heats up, ecommerce begins to look less attractive by comparison. Innovation slows, and ecommerce engines slowly become legacy software.

And many skilled employees are leaving the ecosystem to become entrepreneurs themselves. These people work at a brand, learn the ins and outs of ecommerce and go off to found their own companies. So many stories abound in this regard: think Jen Rubio and Steph Korey who, after working together at Warby Parker, went on to launch Away Travel. The proliferation of the number of small and mid-sized startups give early employees a leg up: they gain supply chain, finance, capital raise and merchandising knowledge in a compressed period of time. 

But above all, they gain a network of supporters to allow them to launch their own endeavors.

I am astounded by the number of Shopify employees who have told me they have Shopify stores of their own as a side hustle (someone needs to study this trend so we can understand just how prevalent it is). They have dreams of leaving Shopify and focusing on their own brands full time. The industry is upskilling people to the point where they exit the workforce entirely to be their own boss.

Some of those Shopify alum-founded startups are achieving escape velocity. Taylor Sicard, founder of WIN Brands, has built a candle empire in Homesick, which owns the top SEO spot for DTC candles.

And it’s never been easier to launch a new brand or find an angel investor to turn a dream into a reality. AngelList has perfected the art of matching investor to entrepreneur, and it has completely streamlined every aspect of angel investing, making it more accessible for more entrepreneurs. 

Recently, the company announced that it will fund up to $100K per employee for investments they source. What’s more, the employee can earn 20% of profits from that investment. And if an employee starts a venture after leaving AngelList, the company will invest up to $100K to help him or her build the business.

Why go work for someone else when you can launch your own company and call your own shots? Of course, these newly minted entrepreneurs will soon bump into the same challenges that the rest of the ecommerce sector faces, namely finding talent to help them grow their businesses.

A lot of sectors recruit from within their own ranks when faced with labor shortages, but that’s not an option that will work for retail. Brands can’t easily redeploy in-store personnel to their ecommerce channel. Most frontline in-store staff are in low-skilled, low-wage jobs. Ecommerce jobs demand a lot more technical and retail expertise.

What will Become of Ecommerce?

Ecommerce is getting more expensive with each passing day. It used to be that the average salary for an onshore ecommerce developer fell in the $70K to $90K range. Today we see ads offering $180K plus substantial benefits. These are salaries paid to mid-level employees. Many shops are offering offshore development work, but those costs are going up as well, with offshore teams often commanding rates that the industry once paid to American firms and workers. 

Not surprisingly, the cost of building and optimizing sites is skyrocketing. No agency or brand can fully absorb these costs, which means they are passed on to the client and ultimately the consumer.

The lack of talent is just one issue facing ecommerce; there are others such rising supply chain costs. For instance, the USPS, UPS and FedEx have all said they plan to place a surcharge on packages shipped during the holiday season.  Many brands will no doubt pass that cost on to the consumer, as industry insiders recommend. If consumers don’t want to pay those surcharges, they’ll need to complete their holiday shopping by the end of September or shop in-store.

This begs the question: what will become of ecommerce if it’s no longer a place to find affordable products? Certainly shoppers can return to brick-and-mortar outlets; they can adjust to cutting back on their online spending — but what about the massive ecommerce industry that counts on those sales? For all its successes over the past 18 months, the future of ecommerce is in jeopardy.


As Chief Commerce Officer at Rightpoint, Phillip Jackson acts as head of Commerce strategy, partnerships, and evangelism. With over 15 years of experience creating unique online customer experiences, he has both built and managed ecommerce for some of the world’s most recognizable brands. Jackson also hosts the successful podcasts Future Commerce and Merchant to Merchant, with over 1 million downloads.  

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