Why Ecommerce Is Migrating to Rural Areas

January 18, 2019 1:26 pm

According to the Bureau of Labor Statistics, the growth of online stores has slimmed the American workforce. Selling retail goods on the internet has proven to be a smarter allocation of all types of capital, including labor.

While regions like the San Francisco Bay Aea have been noted hotbeds for tech, there’s been a reverse migration of Rust Belt, Appalachian and Midwestern natives who made it big out west and are returning home. San Francisco will never be overtaken by Minneapolis. However, the American heartland does have a lot to offer, which is why ecommerce is migrating to rural areas.

Location, Location, and Location

It seems like a contradiction that location could be such a game changer in the age of ecommerce. But as real estate prices skyrocket in Silicon Valley and other well-knownl tech hubs, they retain a semblance of affordability in the less-hyped parts of America.

According to data from RentCafe, as of this writing the average rent for a two-bedroom apartment in Seattle is $2,258; in Nashville, it’s $1,334. There’s a similar gap when it comes to renting office space.

For businesses that sell a physical product that needs to be stored somewhere basing operations in rural areas is a very smart move. This isparticularly true if you’re considering something like how to sell furniture online with a platform like Shopify.

Removed from the higher densities of cities, land is ample and cheap to buy. Given inventory warehouses can potentially occupy the same footprint as several football fields, it’s shrewd business to keep fulfillment centers in places where real estate costs are lower.

Attractive Financial Incentives

Lower income and corporate taxes always make for a more business-friendly environment. Saving a percentage on income taxes can make a difference in investing in new software programs, giving your loyal employees a raise or expanding your operations.

If you started your business in California, where the top-level income tax is 13.3 percent and then moved to Missouri, where there’s an essentially flat tax rate of six percent, you might shave off three to four percent in expenses. It’s worth pointing out that in states like California and Oregon, rates are tiered progressively, so you wouldn’t even pay much more until you were making six figures.

But as your business expands and you look for savings, basing your operations in a state such as Pennsylvania (3.07 percent) or Indiana (3.3 percent) might save you a hefty chunk of change.

And Then There’s Lifestyle

This is less tangible, but for many people who grew up in the fast-paced Northeast or tried to make it big in the Bay Area, moving to a city in the South or Midwest feels like lifting a weight off of your chest. People are generally friendlier, more laid back, and in less of a hurry to get where they’re going.

There’s also the more holistic nature of the quality of life outside the workplace. For any serious lover of the great outdoors, music or craft beer to name just three reasons to get up early or stay out late, life beyond the coasts is rich and illuminating. Besides, you can always visit New York City or San Francisco to get your urban fix.

If you decide to give the heartland a chance, don’t be surprised if you stay forever. Many companies have already done so and reaped signifcant rewards. It might be good for your ecommerce business too. Take a look around the country, you could be pleasantly surprised at what you find.

And yes, that pun was intended.

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