According to reports, there were 42K retail jobs lost in the United States in January and February of this year. This is an increase of over 90% from a year earlier.
This is interesting since the United States economy is reported to be on firm footing with growth being over 2%.
The retail sector getting killed is nothing new. For the past 5 years, physical retailers suffered. A number of traditional companies such as Toys R Us filed for bankruptcy and went away. Others like Sears are just holding on by a thread. We now see Payless, a footwear retailer, closing over 2,500 stores. In short, the carnage is astounding.
What is the cause of all of this? One word: AMAZON
The online retailer flew under the radar for more than a decade. What started out as online bookstore now is swallowing up most of the retail sector. Every major store is worried about Amazon and trying to determine how to combat them.
Certainly, Amazon is taking the lion's share of all that is out there.
There is, however, a twist. Can you guess what the percentage of retail sales that take place online?
Is it 90%? 75%? 50%?
The answer is 10%.
That is right. Only about 10% of all retail sales occur online. To put another way, 90% still take place in stores. In fact, estimates are that ecommerce will reach only 20% of all sales in the next 5-10 years.
If this is the case, how can there be so much carnage?
That is the reason for this post and the lesson that I want to share.
The situation with Amazon shows how little it takes to cause major disruption. It does not require 90% or even 60% for the implications to be felt. Amazon is outpacing every other retailer yet has only a small part of the total retail pie.
This is a big lesson for those of us involved in the world of blockchain and cryptocurrency. It is not going to take the majority of people adopting these technologies to really instill some real chaos on the existing structures. A conversion of 10% of the people to decentralized applications and using crypto based technologies will impact the traditional companies in a fashion that mirrors what Amazon did.
We see this becoming a bigger impact on those entities which are publicly traded. Wall Street rewards one thing: growth. Companies that exhibit this consistently get rewarded while those that do not get slammed. They also look at things such as margins which, in many industries, are tight. For this reason, a shift of even a couple percent causes major problems for companies.
Now you can see how a 10% change could cause mass chaos for some.
Of course, we will not see a shift of this magnitude happen overnight. It is highly unlikely that one day the world will wake up and 10% of the people will suddenly convert to these technologies. Even with exponential growth, we see the pace doubling at different intervals resulting in a move like described over a number of years (even a decade). A shift of this order could happen down the road but it will be a much slower process over the next few years.
That said, the existing entities are already taking notice. There was a reason for all the FUD in 2018. The banks and other financial institutions saw the threat and knew they needed to do something. It worked since many were scared away from cryptocurrency. This will not change the outcome, in my opinion, only delay the inevitable.
We could see massive disruption with a few hundred million people around the world engaging in blockchain and cryptocurrency technology. This means we will probably see a difference once 50 million use these regularly. Even that amount of business sucked out of fiat and placed into crypto will cause problems for the established entities.
This holds true for cryptocurrency, blockchain, social media networks, and exchanges. By pulling a small yet significant portion of the users away, converting them to these technologies, we will see a major shift. It is a lesson that we see repeatedly playing out.
Traditional retailers are trying to figure out how to survive because of the disruption caused by Amazon and other online retailers. We are going to see the same process playing out with blockchain and cryptocurrency. For the moment, we are but a flea on the arse of the dog. That will, most likely, not be the case in 5-10 years.
Keep this in mind when judging the growth rate and where we stand compared to the existing system. It will not take a majority conversion before the impact is felt. We are going to see the carnage long before then.
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