Less than 10 days to better sales

Non-political discussion on current events effect on sales

[lgn]

Lets keep this non-political.

Anybody noticed that sales are not quite what they expect. My experience in the past has been, it is not the prospect of war, but the uncertainty that leads up to war that effect sales.

Once war has started, and people have gotten tired of watching CNN, life returns to normal, and sales will increase.

To keep with the TOS, lets not discuss whether it is right or wrong, but how it effects the bottom line, and the prospect for improvement.

The Internet was not around in a commericial form, during round I of this current conflict. It will be interesting to see how this plays out for ecommerce during this round.

[jimnovo]

The Internet might not have been around during round I, but TV Shopping was, and though it used clunky technology it still was interactive and always on. Any major news event would slow sales immediately as people were distracted, then depending on the severity and duration of the event, sales would come back.

The first few days of round I crushed TV Shopping sales, but as soon as it looked like the matter would be resolved quickly, sales came back. I expect the same will happen this time to all interactive remote retailing vehicles. I also expect people to try and make money by selling commemorative T-Shirts, as they did last time.

[Crazy_Fool]

i've seen sales slump following important events like this and during sunny weather in winter etc. but they always come back. my guess is we don't actually lose anything - if there weren't any important news events then i'd guess sales would be more or less the same, just spread out a bit more over the year ......

[lorax]

>> and sales will increase

I'm not sure this will be true for on-line stores. The fear of hackers, crackers, and other malevolent types may significantly increased once/if war breaks out. I've already heard of folks swearing off on-line purchases because they fear the Inet has somehow become less safe than it was 6 months ago - though I'm not sure how they arrived at this conclusion.

[juniperwasting]

Constant diversification has kept my store trucking right through the unsettled waters. As a company, we keep our eye on the goal, and let nothing, even a TV war fest, stop us from achieving it. Or so the motto goes. I agree that if/when a war happens sales will slow, but I think only for a day maybe less. Our store still had orders on 9/11/01. Of course, we weren't there to process them. The American Public has become a bit more resilient, and lazy, all at the same time. The convenience and discounted prices of e-commerce will, I think, become an even bigger draw if a war drives up prices in the current economy. The only real threat I see on the horizon is the unified State Sales Tax proposals, to start taxing e-commerce no matter where they ship. That will do far more damage to emerging businesses then the pre/post and war uncertainties.

[Skier]

My business depends upon people flying internationally to reach us, and we have essentially just a three month earnings season. March is the make or break month for our year. So - I am paying close attention to this issue.

September Eleven knocked us to a standstill until mid-January last time around. I agree with crazyfool, most of those sales were not lost, just postponed purchases. We started picking them back up three or four months later, and this January/February has seen many more of those customers re-appear.

The uncertainty about March 2003 has hit us hard. Sales for March are not totally gone, like last time, but down enough that some of my competitors are going to go under. Once again I am confident that these are just postponements because traffic on our site has remained at about 75% of normal.

Sales to customers from the UK seem to be the least impacted.
Continental Europe has virtually disappered.
US distant sources have dropped by 75%
Japan has vanished (economy?)
Maylasia/Singapore unaffected
Domestic sources up by 20%
Travellers coming from US by car down only about 40%

[choster]

- the real estate bubble is peaking in some markets (arguably already peaked in London). The Federal Reserve does not have much room for further rate cuts. People making large purchases using equity loans, or spending windfall savings from refinancing, will eventually have to fall and take their spending down with them. At any rate, the current housing value increases in the hot markets are totally unsustainable. Of course, this won't affect most of us, unless you're selling big-ticket items like major appliances, autos, or foreign vacations.

- A few words on oil supplies. Oil prices have already increased significantly, raising inflation and cutting into disposable income. The uncertainty over the Persian Gulf is a sigificant reason, but far from the only major one. All around it's bad timing.

First, the PDVSA strike slammed Western Hemisphere supplies hard (U.S. gas and oil imports from Canada, Mexico, and Venezuela vastly outweigh its imports from the Middle East). Now that it seems Chavez has broken the strike, production is slowly returning. Second, the Tepco scandal in Japan meant the shutdown of a substantial part of that country's nuclear energy capacity-- 17 plants. In order to maintain electrical power, Tepco has resorted to running its oil-fired plants at full steam, causing a surge in Japanese fuel oil imports. This will only get worse as the weather turns warm and the strain of air conditioning is placed on the system. Third, an unusually cold winter in the eastern United States has led to cuts in gasoline and diesel production in favor of fuel oil production, reducing supplies and driving up cost. This is the opposite of what happened in 2001, when the collapse of the airlines and an unusually warm winter practically flooded the streets with gasoline.

Should war begin in Iraq, predictions are that the price of oil could go to $90 a barrel, but decline sharply afterwards. In the short run, however, life will suck. The worst thing about oil price increases is that an increase in the price of energy means an increase at every level of input. Not only is there less money in the budget to go around, but production costs go up, and more to the point for the online retailer, delivery company rates will go up. What happens when FedEx and UPS instate "temporary fuel surcharges" that make online buying unpalatable? Last year, the minor annoyance of the $2 taxicab fuel surcharge was enough to discourage me from going out to eat at least two or three times (I don't own a car).

- the scare with the domestic terrorism alert level being raised to orange meant that at least for one month, money that might have been spent on consumer goods was spent on emergency supplies. I would think that this would balance out somewhat-- fear of eating out or shopping in malls replaced by ordering dvds and playing games online, or people pursuing entertainment to ease their worried minds. Anyone seen this in practice?

The only thing I can see from experience is that Sept. 11 was terrible for non-Sept. 11-related causes, whether charitable, political, or other. Last year this had recovered somewhat and one of my clients was oversubscribed for its main fundraiser. I'd expect this to drop off to background levels once we return to "normalcy."

[pshea]

choster, thanks for the primer, I enjoyed that.

As to the topic, my January sales doubled the previous month. February doubled January. March is on track to beat February. I sell a low-cost goofy product that you would only purchase if you were ready to have a party and feel a little over-the-top. In my case, I think that people are looking for a release. The retail industry is reporting that people are going for wild vivid colors; this is, some theorize, a reaction to the darkness of these days. It has been startling.

[lorax]

>> I agree with crazyfool, most of those sales were not lost, just postponed purchases.

That makes sense. So the only question becomes - how long will the postphonement last? ;)

[lgn]

The oil shock has already hit us. Canada Post who
for years have promised that they would never add a fuel surcharge, just added a fuel surcharge of 2.5% on all shipments.

You can't pay your banker with postponed sales.

From this morning news, it looks like this dance will continue for a while yet.

[Crazy_Fool]

the dance goes on day after day, week after week, year after year.
any news item / world event affects the dance.
a big event has a big effect, a long lasting event has a long lasting effect.
but if there were no events, then in general, there would be no effect.
and the best we can do is ride the waves.

when things get tough, prepare for the future. use the slack time to provide staff training (even if you are a one-man business), create better systems to streamline processes in the future, create better information / advice / promotion material for potential customers (write new content for your web site and optimise it better) and so on. when the storm is over, you'll be in a good position to gain market share and make bigger profits etc.

[Receptional]

One of my businesses sells corporate murder mystery games. That REALLY took a dive after Sept 11th which almost crippled the company. Not surprising really given the nature of the business. But it was the element of surprise that did the damage.

This time people are ready. Things won't be so bad methinks.

Dixon.

[Skier]

How much of the e-commerce market is travel based? I believe that it is substancial.

If current predictions are accurate, airlines may collapse and the whole matrix may be re-shuffled. The impact of a one-season glitch in revenue may be too much for many destinations and carriers. The potential for after-effects of a war negatively impacting travel for several seaons is a real possibility.

We could see a downsizing of the travel industry that pulls down the whole e-commerce sector.

[Ankheg]

My largest business sells web services, like hosting and webmail, but no physical products. We got a fair increase in new subscribers in the last month wanting more reliable e-mail/webmail than they were getting with their existing (often free) providers. Some of this increase I think can be attributed to our increased AdWords marketing, but, still, several customers specifically said they wanted to be able to stay in touch with relatives, etc from work without worrying about this, that, or the other big provider "going down" for whatever reason.

I don't expect any further developments in the gulf region to impact our business, but it's hard to say. We weren't around for 11 Sept 01, being an eight-month-old venture.

I don't know if anyone else here is in a similar field, selling web services, but I, for one, will find it interesting to see how many of these "war fears customers" remain as customers if/when this whole thing settles down. That's my only concern, and is the primary reason why we aren't doing any war-based advertising. Sure, some flashy ads about "keep in touch with your loved ones overseas" might produce a spike in business... but for how long? Besides, I'd feel all cheap, sleazy, and exploitative.

[jimbeetle]

The retail industry is reporting that people are going for wild vivid colors

Hey pshea,

You're more than right here. Just worked a fashion-related show and colors for next year are going even brighter. The colors were decided upon within the last four months, the period leading up to all of this.

Folks with goofy products such as yours might actually ride all this out quite well <envy>mumble mumble green with mumble</envy> whilst those of us in the wrong businesses will just have to muddle through until the 'recovery.' I rode out 9/11 and ain't giving up now.

Jim