Gas Prices Boost E-Commerce

JULY 25, 2008

Fuel-saving strategy has been a long time coming.

Depending on your perspective, online sales are up either despite or because of the economic slowdown. With gas prices continuing to climb, a growing number of shoppers are deciding to skip car trips to the mall in favor of online merchants.

Even as many brick-and-mortar stores are struggling, 11% of US consumers surveyed by Nielsen in June 2008 said they were shopping more on the Web as a result of gas prices.

"E-commerce is a bright spot," said Jeffrey Grau, senior analyst at eMarketer. "While retail store growth is in the middle-low single digits, e-commerce is still growing at least in the mid to high teens."

"With gas being such an issue, we know that mall traffic is down more than off-mall traffic," said Mike Boylson, CMO of JCPenney, in a July 2008 New York Times article. Mr. Boylson said J.C. Penney had an 8.7% increase in Internet sales in Q1 2008, compared with a 7.4% decrease in sales at stores open at least one year. The Times also reported that Gap had an 11% decline in same-store sales in Q1 2008, but a 21% increase in online sales.

The effect of gas prices on consumer behavior has been building for a while. Some 13% of adult consumers in the US surveyed in January by Vertis Communications said they were buying more online.

Over one-half of respondents to an April 2008 Piper Jaffray study selected rising gas prices as an incentive to increase online buying, while slightly less than one-half (48%) cited lower prices as a reason for making Web purchases.

Another April survey by iCongo revealed that high gasoline prices were an incentive for 33% of shoppers to purchase more online.

Fine-tune your online retail strategy for Q4. Read eMarketer's US Retail E-Commerce: Slower But Still Steady Growth report.