“Online traffic continues to grow,” said Nick Bombersbach, VP of the JCPenney Website, JCP.com. “We are benefiting from that growth now, particularly due to the increase in gas prices.”
JCPenney’s online division — currently the fastest-growing arm of the company — is not alone. As gas prices have surpassed $4 a gallon and mall traffic continues to slump, a number of online merchants, including Amazon.com’s fashion unit Endless.com, have recorded sales increases and rising Web traffic. Shop.org, the digital division of the National Retail Federation, has forecast a 17 percent increase in online sales for 2008, despite the down economy.
Footwear, in particular, stands to reap big rewards online compared with brick-and-mortar counterparts, according to Helen Malani, chief shopping expert for Shopzilla.com. “In the footwear category, online retail is quite progressive,” said Malani, citing Web-based footwear retailers’ ability to offer a wide range of styles and sizes often at lower prices than traditional retail. “Consumers told us they wanted to shop more online. They were comparison shopping more online, and they were trying to go out of their way to avoid paying more on gas.”
Shop.org Executive Director Scott Silverman also said the connection between the rise in gas prices and increased Web sales is undeniable. “The higher gas prices are giving people another reason to shop online,” said Silverman, adding that he recently asked to consumers about the correlation between Internet shopping and the rise in prices at the pump. His findings: “Buy online, save money on gas.”
According to a July survey of 7,500 customers conducted by research firm Big Research, 16.4 percent of consumers said they were shopping more often online compared with 12.6 percent a year earlier. That’s good news for Web-based footwear behemoths such as Zappos.com.
Although Zappos doesn’t typically disclose quarterly or monthly sales comparisons, the firm’s merchandising VP, Steve Hill, said the shoe shopping site is still on track to hit $1 billion in sales for 2008, up from $840 million a year earlier. Still, Hill stressed that selection is the main sales driver at Zappos.
“Seventy-five percent of sales come from repeat customers on any given day,” said Hill. “We haven’t heard [about fuel costs] from our customers. We continue to hear from our customers that they come back for the service and the selection we offer.”
At Amazon.com, the firm recently boosted its full-year revenue forecast to a range of $19.35 billion to $20.10 billion, buoyed by an exceptionally strong second quarter. CEO Jeff Bezos, during a conference call, cited the company’s free shipping offer (on most orders over $25) as an added incentive to consumers who face higher gas prices.
Amazon’s fashion arm, Endless.com, didn’t state whether higher gas prices were driving consumers online, but company spokeswoman Tracy Ogden said customers are taking more public transportation to save money on gas and are interested in finding comfortably stylish shoes to commute in. She added that moderate footwear brands, such as Jessica Simpson, Nine West, Crocs, Teva and Clarks, are selling well. “Obviously, consumers are extremely budget conscious these days, so we’re seeing a huge response to mid-range brands,” said Ogden.
Anne Crays, VP of Shoebuy.com, said it’s difficult to determine how much the rise in gasoline prices are factoring into the increase in her company’s online sales. Still, she said, “during a time when consumers are visiting stores less, we are experiencing record traffic of more than 5 million visitors a month, with our repeat buying making up more than 60 percent of our sales.”
Online consumers are also looking for best deals, according to Phil Rist, EVP at Big Research. Rist said a recent survey revealed that 23.8 percent of the consumers surveyed said they comparison shopped online versus 16.4 percent a year earlier.
“When [consumers] are faced with economic pressure, they are going to use all the tools at their disposal to manage the parts of their life that they can,” said Rist.
According to Shopzilla.com, an early June survey of 370 consumers revealed that 50 percent comparison shopped online this year, up from 34 percent two years ago.
Even JCP.com indicated that many of its footwear customers are scouting out styles online before driving to the mall and choosing to do the bulk of their purchases in one visit. “Being a multichannel retailer plays to our advantage,” said Bombersbach. “If you’re not online, you’re at a disadvantage compared with the competition.”