Skyrocketing Gas Prices: A Boon or a Breakdown?

These days, the sounds that have become synonymous with driving—the revving of the engine, music from the dashboard radio, wind rushing through the sunroof—are drowned out by a quieter but altogether disturbing noise: the ticking of the gas pumps as the dollars accumulate to unprecedented sums. Your tank can’t tell the difference, but it sure is hard for you to swallow.

With the national average hovering right around $4 per gallon, rising gas prices are a topic of universal complaint and heated debate throughout the country. The short-term effects - more expensive vacations, busted budgets, and slumping gas station sales - are no match for the longer - term ramifications many analysts predict for our already faltering economy.

So, all told, there’s nothing good that can come of pricy petroleum, right? Some may disagree - like Yahoo.

In an article published in their search engine blog on July 1st (http://www.ysmblog.com/blog/2008/07/01/high-gas-prices/), the web marketing Goliath suggested that skyrocketing fuel prices could actually serve as a windfall for eCommerce companies. The premise seems simple enough: with 40% of Americans reporting that they’re driving much less these days, it stands to reason that a good chunk of these byway boycotters may head to the virtual highway for their shopping needs. Rather than driving to the mall or the superstore, many consumers are ordering everything from baby clothes to toilet paper from the comfort of their kitchen tables. When it costs upwards of $80 to fill their SUV’s gas tank, a few bucks for shipping suddenly doesn’t seem so bad.

How to Capitalize on Pump Paralysis

With so many consumers shying away from unnecessary driving, online stores are presented with a rare opportunity to target their ad campaigns accordingly. Yahoo suggests incorporating the merits of staying at home into banners and product copy. For instance, if you run an online DVD store, you might consider a campaign extolling the benefits of hunkering down for at-home movie viewings rather than piling the family into the minivan and spending $10 in gas to drive to the cinema across town. Or if you sell motorized scooters, you’re missing out on a potential surge in sales if you don’t point out the fuel savings your product offers.

The Flip Side

Of course, as is the case with any fluctuation in the marketplace, the pendulum can swing either way. High gas prices equate to a general belt-tightening among potential consumers, so - although traditional brick-and-mortar shoppers may be more inclined to shop online than they would be if fuel costs hadn’t soared - providers of goods and services are seeing a market-wide drop in sales. So while you may notice an increase in the number of customers purchasing from your site, you won’t likely see a spike in average order sales. More people are going online to get what they need, but not necessarily what they want. Sites selling necessities like clothing, basic home goods, and bulk food items are more likely to see boosted profits than sites selling luxury items, such as upscale furniture, fine jewelry, or pricey designer accessories.

Also, if your company markets in multiple channels, you may see a dip in retail store sales that will somewhat mitigate the spike in Internet revenue. For instance, the Gap saw a 21% increase in Web sales during the first quarter of 2008, but that was accompanied by an 11% decline in store sales. The lift in eCommerce traffic also doesn’t do much to alleviate the high operating expenses and freight charges that many large companies are facing.

The Last Word

However you look at it, there’s no disputing the power of the pump. The ripple effects of fuel costs can be felt throughout the economy, and as an online seller struggling against the current of a rough economy, you can’t afford not to consider the gas price epidemic as a component of your marketing plan.