Gas Prices May Drive Consumers to Buy Online

By Evan Schuman  |  Posted 10-09-2005
Soaring gas prices have been pushed by natural disasters and an unfriendly global climate. But some e-commerce players are looking on the bright side: Maybe this will push people to drive less in the fourth quarter and instead log in and buy more online.

Gas prices could impact e-commerce activity in two opposite ways: by increasing the out-of-pocket costs of driving to stores, making e-commerce a better option; or by increasing the costs of shipping packages, making brick-and-mortar shopping the more cost-effective route.

For this holiday season, it looks like both factors are smiling on e-commerce. Shipping giant FedEx this week announced that it was hiking rates 5.5 percent because of rising fuel prices.

But—and this is crucial—those increases won't kick in until Jan. 2, so holiday e-commerce activity will be spared.

The bigger question is what will happen after Jan. 2, especially given the probability that other shipping firms will follow FedEx's lead and boost their rates a comparable amount.

Should retailers worry about a Web tax? Click here to read more.

Free shipping has quickly soared to the top of the consumer list of most-sought-after e-commerce attributes, and any hints that e-tailers will start pulling back from free shipping—most likely by increasing the dollar value of purchases that would qualify for free shipping—could have serious implications.

An NRF (National Retail Federation) survey released this week underscored the importance of free shipping.

Based on a late September survey of 1,891 consumers and 119 e-tailers, 79 percent of the consumers chose "free shipping offers" as most important when shopping online, which is just about as high as it was (80 percent) during last year's survey.

That's important, as it is one of the few e-commerce attributes that did not drop in importance when compared with last year's survey, suggesting that its value to consumers might be as close to permanent as anything Web-related can be.

Read the full story on eWEEK.com: Fill 'Er Up with E-Commerce, Please