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April 20, 2011

Rising Gas Prices Expected to be a Boon for Ecommerce

The continued rise in gas prices is bad news for travel, entertainment and home improvement. However, based on historical information, ecommerce is expected to see a boost. Since the last week of March 2011, gas prices have risen 12 cents to a national average of $3.68 per gallon. SpendingPulse of MasterCard Advisors has recorded a correlation between high gas prices and ecommerce sales.

Customers making Fewer Trips to Stores

This is mainly due to the fact that customers will consolidate shopping trips and shop at stores closer to home, thus making fewer trips and consuming less gas. Therefore, individuals are more willing to make their purchasing online so the ecommerce industry greatly benefits. According to MasterCard Advisors SpendingPulse, ecommerce sales have grown for the fifth consecutive month as gas prices have also continued to increase.

MasterCard Advisors SpendingPulse Report

MasterCard Advisors SpendingPulse is a macroeconomic report that tracks retail and service-industry overall sales each month. According to the report, ecommerce sales have increased by 16.1 percent in March 2011 while February 2010 saw an increase of 13.2 percent. At the same time, gas prices one year ago were much lower than they are today.

Furthermore, brick-and-mortar department stores noted an increase of 8.4 percent in online sales. Ecommerce sales of apparel and subsequent accessories as a rise of 18.7 percent while electronics also increased by 14 percent. These are significant increases which are excellent for the ecommerce marketplace.

A Late Easter is Beneficial to the Economy

Easter 2011 is occuring the latest this year since 1943. Therefore, according to the National Retail Federation, this extra time may benefit the economy by allowing shoppers additional time to make purchases.

The National Retail Federation’s Intentions and Actions Survey

Conducted by BIGresearch, the National Retail Federation’s Intentions and Actions survey demonstrates that the average consumer is predicted to spend $131.04 on items for the Easter holiday. This is a large increase from the $118.60 spent per person on Easter gifts from 2010. However, the 2011 total does not quite reach the prerecession years numbers.

Finding a Balance

As gas prices continue to sharply rise across the United States, ecommerce stores will flourish due to less travelling to brick-and-mortar stores. Unfortunately, there needs to be a balance of reasonable gas prices with a booming ecommerce market. Until a balance is reached, physical stores and shops will suffer.

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