Inflation and the Credit Crunch Hurting eCommerce

Since I work for a company that develops enterprise-level eCommerce software, I might as well devote some time to writing about eCommerce stories I wouldn’t be able to write for my work blog.

In a time of high gas prices and a slowing economy, we’d expect eCommerce, or online shopping, to take off.  After all, if you’re savvy enough, you can find great prices for virtually anything in comparison to brick and mortar prices.

But in actuality, eCommerce plummeted in the first quarter of 2008 and at a much faster rate than retail when you compare numbers from the first quarter of 2007.  So online merchants are hitting hard times as much as their retail brethren.  The US Labor Department blames inflation as the biggest reason why online stores are making a downturn.  More consumers are using more of their disposable income to buy necessities such as food and gas.

The only aberration is Amazon, which actually posted a 102 percent increase in second-quarter profits this year.  No big surprise there.

Long story short, in a flagging economy, many industries and sales channels will eventually suffer from reduced consumer spending.  But shopping online does have the benefit of easy, gas-free comparison shopping.

Google please.