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Rising Gas Prices Thwart eCommerce

Jun 1, 2011

Conventional wisdom holds that as gas prices rise, more consumers will shop from home rather than drive to brick and mortar stores. That sounds like good news for online merchants, but Andrew Lipsman of ComScore.com, says, "Not so fast!" According to this ecommerce expert, the dent that gas prices put in paychecks will decrease all spending for all retailers.

"One theory says that as gas prices rise, consumers will be more likely to forego car trips to the mall and opt instead to shop online," according to Lipsman. "While this effect might exist to some small degree, the $30 or $40 a month more the average American is spending on gas plays a much larger role in their retail spending habits than the fact that they can save a dollar or two in gas by forgoing a trip to the mall." That means slower ecommerce growth rates, as all spending takes a hit. "I think it's fair to say that rapidly rising retail gas prices are cause for concern for the retail ecommerce sector," Lipsman writes. "As disposable income shrinks, so too does discretionary spending as manifested in online retail. All other factors being equal, we should anticipate a two percentage point decline in ecommerce spending growth rates, versus what we would have otherwise seen."

So what's an online merchant to do? According to Greg Scott of Drop Ship News, now is the time for web retailers to ramp up their social marketing efforts. "With gasoline prices now up to a national average of more than $3.50 a gallon, there doesn't seem to be much doubt that this is definitely putting a dent in consumer spending," Scott writes. "So, if this consumer cash crunch is affecting your dropship business, maybe it's time to take the plunge into social media, if you have been putting it off for some reason." Scott cites several compelling reasons to take a Facebook plunge, including 600 million active users, growing numbers of retailers on the platform, and the low cost of entry, since a Facebook page is free of charge.

Topic: Wholesale News

Related Articles: gas prices  revenue  ecommerce 

Article ID: 1452

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