How Will The Credit Crunch Affect Ecommerce Business
I can't help thinking of a tasty new cereal when I hear the term 'credit crunch'. Every day I hear about job losses, economic downturn, recession - listening to Radio 4 in the mornings is getting very depressing.
To some extent I think the credit crunch is fuelled by the media and fear. People are worried about loosing their jobs, and trying to save money in case the worse happens. This leads to less public spending, manufacturing is hit, people loose jobs - rinse and repeat.
Businesses who rely on loans from banks are in a more precarious position than self funded businesses. Finding a bank willing to agree a loan will be more difficult, so any large expansions in ecommerce are unlikely unless it is self funded.
So how will ecommerce fair as the worldwide economy continues to nosedive?
In the U.K ecommerce seems to be fairing quite well so far. According to IMRG ecommerce sales increased by 14.2% in December 2008, compared to December 2007. This equates to an estimated value of just over £4.67 billion, that's about £76.67 per person. Online sales are still growing but the rate of growth is slowing.
Advertising is becoming cheaper in print media as other companies are cutting back on costs. This means some bargains can be found in local newspapers. Many businesses are having big sales at this time of the year. It's a good time for ecommerce businesses to stock up on any consumables they need such as packaging or stationary.
The main things people are cutting back on are non-essential items. For many niche websites this is bad news, people are more worried about buying food and fuel than a new luxury item.
Of course different people and businesses require different essentials, office supplies are essential for lawyers. Any ecommerce sites competing in this market may see more sales as businesses look for cheaper products online rather than buying in the high street, or from their regular supplier.
Posted by Tom on Fri 16th Jan 2009
