Will Consumers See Driving

By Evan Schuman  |  Posted 2005-10-09 Print this article Print

Less as an E-Commerce Advantage?"> As for the question of whether there will be an impact on e-commerce from rising gas prices making consumers more hesitant to drive to the mall, Silverman said he has mixed feelings. "You could make the case that it could boost sales because people dont want to spend money on gasoline," Silverman said. "But for the same reason, it could depress all sales. Less money in your pocket, less money to spend." High-income consumers will likely not be swayed by either argument, Silverman said, but marketers should be cautious how they pitch this.
"I would certainly expect that message to be tested. Youre trying to get them to buy. I would be careful about reminding people how much they are spending on gas," Silverman said.
"They may be less receptive to then spending on gifts and merchandise, thinking, Maybe I shouldnt be buying that shirt or perhaps I should buy wool instead of cashmere. But then again, theres been so much media coverage on the high gas prices that it may not matter." Paula Rosenblum, the director of retail research for the Aberdeen Group, is not nearly as mixed in her opinion as Silverman and said she definitely sees gas prices as helping e-commerce, even for purchases that dont quality for free shipping. Amazon.com now has its eye on consumers spare change: all $10.5 billion worth. To read more, click here. "Its going to be cheaper to pay the delivery fee than to pay for your SUV to troll around the malls," Rosenblum said. Rosenblum added that the shop online, pick up in stores approach may also benefit from the gas hikes because it avoids any shipping costs or delays and allows for consumers to see the item, and also because going to one store for pickup has much less gas impact than driving around town searching for something. Patti Freeman Evans, who tracks retail trends for Jupiter Research of Jupitermedia Corp., said she agrees that the rising gas prices will help e-commerce sales, but stressed that it will likely come from more a belief that the customer is probably saving money rather than an actual calculated savings. "Its unlikely that customers are going to make calculations and figure, Its going to cost me $1.50 to go to Costco and, if I go online, I wont have to pay that," Evans said. "But the perception of not having to use gas and then if they dont have to pay shipping, that could have an impact. Free shipping could have more value this year. Free shipping is always a big deal to consumers, though." But even though Jupiter has not finished crunching its retail revenue projections for this year, whatever the margins were going to be this year, theyll now be less. With backing from PayPal and eBay, will micropayments work this time? To read more, click here. "Given that its looking more and more likely that gas prices are going to stay high, its a challenge for retailers online. Their expenses are going to increase and their margins are going to be eroded," Evans said. Bernard Baumohl, the executive director of global economic risk and forecasting firm The Economic Outlook Group, also agreed that rising gas prices will help e-commerce, but he was more bullish than most. "This year will be the best ever for e-commerce," Baumohl said, because those fuel increases are "still a small percentage of the total retail sales, but it will be the best because people dont want to spend money on gasoline that they could spend on buying more presents. Already, people are cutting back on travel. If theyre staying at home, theyre more likely to go online and shop. Gas levels are already at $3 a gallon." Of all the segments he is tracking, Baumohl said, he sees e-commerce as benefiting the most. "E-commerce will be the big beneficiary of high gas prices. With the price of gasoline up more than 50 percent over the past year and with consumers facing higher energy costs for heating, consumers will be financially stretched," he said. "Theyll save money by not driving to various malls. Theyll go online." Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.

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