Is Online Shopping Recession Proof?

Is it true that online retailers have a better chance of beating the credit crunch than bricks & mortar owners? Or although online sales are still gowning are bargain hunting customers driving online prices so low their just isn’t any profit?

There is no hiding it, consumers are cutting back and economising on everything from houses & cars to clothing and food.

Currently its hard to find anything to be positive about in monetary terms, however recent research has indicated that grim economic times could bode better for online retailers. A recent Penn, Schoen & Berland Associates survey finds 26% of consumers saying they’ll shop online more if their personal financial situation worsens in the coming year.

These consumers nick named “recession shoppers” buying online for rock-bottom prices, deep discounts and solid deals.

The research has shown that “recession shoppers” prefer ‘Discount Vouchers’ when looking for discounts:

• 68% of “recession shoppers” (and 79% of “weekly shoppers”) purchased something online they wouldn’t have otherwise because of a coupon or discount.
• 64% of “recession shoppers” (and 70% of “weekly shoppers”) said they purchased something from a particular online retailer they wouldn’t have otherwise because of a coupon or discount.

Additional findings include:

• 74% of online shoppers receive e-mail alerts from their favorite retailers
• Recession shoppers are 17 points more likely to research products or services online several times a week than average users
• Consumers - 34 year olds make more online purchases every month than any other age group
• 34% of those surveyed plan buy more online in 2009 than they did last year

At a glance it seems these findings are a positive for online retailers, however there are areas which have not been covered by the research which critical for the viability of online retailers:

• Return On Investment - is there any profit left after discounts, free shipping etc…
• Customer Loyalty - once they that great deal will they return or just hunt out the best bargain from a competitor?
• High Cost Per Acquisition - shoppers and spending more time looking at more sites more time; potentially costing you money in multiple PPC clicks, affiliates and comparison sites + the discount code!

What should Online retailers do?

Sales are sales, and you should aim to get them from wherever or whenever you can. However your bottom line is still the bottom line and profit matters so you should always have a very close handle on this. Ensure your not being a busy fool selling to thousands of “recession shoppers” and making a loss more often that not.

Reference: Econsultancy

Tags: Customer Loyalty, eCommerce, High Cost Per Acquisition, online shopping, recession shoppers, ROI

This entry was posted on Friday, February 6th, 2009 at 3:26 pm and is filed under Industry News, Web Tips, eCommerce. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.