With the price of gasoline currently between four and five dollars a gallon, many aspects of the economy are being affected. But interestingly, high gas prices have led to an increase in retail sales online at a time when off-line retailers are struggling to stay afloat.
Many big-name retailers have seen increased online sales in 2008, including Amazon.com, Wal-Mart and JCPenney. The New York Times is reporting that JCPenney’s web site has seen double-digit growth in the first half of 2008, and other retailers report similar surges in online sales.
Another factor that is driving the increase in online sales is the strategy of offering free shipping when customers buy online. Luxury retailers such as Macy’s, Saks and Nordstrom are all offering free shipping specials on many items, as are more moderately priced retailers like Target and Kmart.
By way of contrast, off-line sales at department stores and shopping malls have seen a decrease in sales so far this year, according to a recent New York Times article. Companies like JCPenney have seen profits dwindle by 7.4% at their off-line retail outlets — clearly indicating that consumers are opting to shop online, rather than drive to a store.
With many Americans cutting back on unnecessary driving and expenses, online shopping just makes sense. As well as saving money on gas, consumers also save time and the hassle of dealing with traffic.
Another big reason for increased shopping online? The “trust factor.” When online shopping outlets first appeared back in the 1990s, there was a great deal of fear and insecurity about the prospect of making purchases over the Internet. But with improvements to security measures, consumer confidence in online shopping has steadily increased, and is now reaching a critical mass.
These days, many consumers actually feel more confident buying online than they do handing their credit card to a (often underpaid) teenage clerk in a department store. Polls have also showed that many consumers now find online shopping to be as safe or safer than ordering over the telephone.
And there is good reason to feel that way: online shopping outlets use 128 bit encrypted web sites to protect against fraud, while ordering an item and giving out your credit card information over the phone is a notoriously risky proposition, and there are no guarantees that other parties are not listening in.
The increased trust Americans have in online shopping, combined with the astronomical price of gasoline has resulted in a economic situation that is bleak for many “brick and mortar” retailers, but ideal for buying online.
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I would have to agree with the above. With the price of gas I started shopping online.
Comment by Carl — July 25, 2008 @ 7:36 am