Online retailers have been fairing better than their brick-and-mortar counterparts. One school of thought is that affluent buyers make up a bigger portion of online buyers and they fare better during recessions, which means online retailers are likely to do better.
Another line of reasoning suggests that there is a perception among buyers that there are better deals online than in stores. So its the bargain hunting, not the higher incomes that is driving people to shop online. I think there’s some truth to this.
Last week, I needed to replace the battery on my motorola KRZR cellphone. The battery was no longer holding charge and had developed a slight bulge in the middle as well. I went to the Verizon store and they told me I was out of luck, and would have to buy a new battery for $40 plus tax.
Instead, I bought a cellphone battery online for only $6.41 delivered! I had to wait 2 days, but I got a whopping 85% discount!!!
For some reasons, retailers think that replacement batteries should cost 40-50% of the cost of a new electronic item. If you’re willing to spend a few minutes doing the research and wait 2-3 days, then you can usually save at least 60% of the cost. Now whether your time is worth that 60% in savings is another question.
Incidentally, that battery link goes to a niche store I built initially to buy cheap iPod batteries, which cost a ridiculous $79 plus tax at the local Apple store. I bought my battery replacement kit for $20 online instead!
But getting back to my main point, I think that with inflation eroding the purchasing power of the average American, more people will turn to online shopping. And with gas prices being so high, people are more likely to limit they’re driving to the mall.
So there are two lessons to learn here.
1. If you own stocks of retail stores, ditch them and buy online retailers instead.
2. Look online for bargains.
Maybe it’s time to look at Amazon’s stock (AMZN)?