- The Washington Times - Tuesday, August 16, 2011

More shoppers are hitting the Internet instead of the mall fueling an online purchasing boon that observers credit to rising prices at the gas pump.

E-commerce retail sales rose 17.6 percent over last year, jumping to $47.5 billion in the second quarter, according to figures from the Census Bureau released Tuesday. They also increased 3 percent from the first quarter.

This comes as total retail sales grew only 1.2 percent from the previous quarter. It paved the way for e-commerce to command its highest ever share of retail sales at 4.6 percent.

“E-commerce doesn’t appear to have been as strongly affected by the recent soft patch as have overall retail sales,” said Erik Johnson, U.S. economist for IHS Global Insight. “Tighter financial conditions have consumers scouring the Internet for discounts on the things they need, and online retailers have collectively benefited.”


Rising gas prices have been the biggest factor of “boosted web traffic” that has led consumers to do more shopping online instead of visiting brick-and-mortar stores, he said. The average price of all grades of gas peaked around $4 a gallon in May, compared with $3.33 in the first quarter, and under $3 at this time last year.

“The American consumer is not doing very well,” Chris Christopher, senior principal economist for IHS, said in an interview. “So firms are trying to think of ways to gain market share or expand, and e-commerce is one area.”

Rural consumers, in particular, are leading the push for more online shopping, because they have fewer options, Mr. Christopher said.

“It makes a lot of sense, because it’s a cheap way of being social or getting connected to the world,” he said.

But brick-and-mortar stores aren’t completely out of the picture. In fact, many of these stores lead the way online.

“A lot of companies have learned to have an online presence, even though they might be a leader in the brick-and-mortar,” Mr. Christopher explained. “Everything from your Wal-Mart all the way to Target, they want to have an online presence.”

These stores are learning to be aware of online prices, when they try to sell similar products.

“They have to be conscious of that,” Mr. Christopher said. “It’s sort of making retailers think about how they price things. Because they know people can go online and look for cheaper prices.”

In related news, Wal-Mart Stores Inc. on Tuesday reported a profit increase of 5.7 percent for the second quarter. Net income was $3.8 billion, up from $3.6 billion for the same period last year.