Today, the eBay Public Policy Lab released a new report - Platform-Enabled Small Businesses and the Geography of Recovery – as part of their ongoing research into the trade and commercial activity of enterprises that use the online commerce platform. The eBay research builds upon a 2016 report published by the Economic Innovation Group (EIG) that examined Census Bureau data on the net growth of business establishments over three recovery periods in the past 25 years and revealed that the geographic distribution of new firm growth became increasingly concentrated in a smaller number of more populous counties. One of the most publicized findings of the EIG analysis of Census Bureau data was that in the most recent recovery, half of net establishment growth was confined to just 20 mega counties. The goal of our new report was to create a comparable analysis of the net growth and county level dispersion of eBay-enabled SMEs to see if a similar geographic phenomenon was occurring in the Internet platform economy.

When we examined our data on Commercial Sellers ($10,000 USD or more in annual sales) from 2010-2014, we discovered a significantly more geographically inclusive spread of new enterprise formation on eBay compared to the brick and mortar economy as reported by EIG. The side by side is striking – half the net increase in eBay Commercial Sellers came from 75 counties spread across 24 states, as opposed to the 20 counties covering only 7 states for net establishment growth. The geographic distribution of the 75 counties in the eBay results – which touches nearly every region of the country - mirrors the traditional economy business growth in the recoveries in the early 90s and 2000s.      

When we looked at the entire country, 71 percent of counties saw a net increase in their number of eBay Commercial Sellers, while only 41 percent of counties saw an increase in their number of business establishments. We also discovered that the net growth of eBay Commercial Sellers was far more balanced across counties of different sizes – 60 percent of the eBay growth came from counties with more than 500K people vs. 81 percent in the traditional economy, and 40 percent from counties with less than 500K people vs. only 19 percent in the traditional economy. Additionally, 12 percent of the nationwide increase in eBay Commercial Sellers came from counties with less than 100,000 people, a group of counties that experienced no net establishment growth in the economy overall. 

We believe the findings point toward Internet-enabled small business growth as a force for economic dynamism and inclusive economic growth that are potentially countering the trends in the traditional economy over the past three recoveries. Our findings also raise important questions regarding the possibility that traditional government statistics are missing some Internet-enabled micro firm growth, and that growth in more remote areas tends to stem from Internet platform use because it facilitates remote commerce.