Monday 04 November, 2013

The Government Grinch that Stole Christmas – How the Shutdown Will Affect Ecommerce

The United States government shutdown brought the nation to the brink of despair but at the last minute before the entire country defaulted on its debts, they saved the day. It was the worst shutdown in history and it really made America look like a no-count loser that can’t put its house in order.

Now that the politicians are through sitting on their hands, we’re wondering what the long-term effects of the shutdown will be and how it will affect ecommerce. In particular, it’s likely to affect holiday sales, which are the bread and butter of many small ecommerce businesses.

How the Government Shutdown Affects Ecommerce

The main effect of the shutdown on ecommerce is that it caused major uncertainty, which is always a bad thing for retail. When the government takes a holiday and you don’t know if the world economy is about to be sunk by a devalued dollar, you don’t really feel like going on a shopping spree. If you’re one of the furloughed government workers who had a sudden unpaid vacation because of the shutdown, you may not have any money to spend anyway.

This is bad timing when you consider that Black Friday and Cyber Monday, the two biggest shopping days of the year, are right around the corner. A tiny sales slump on these important days can be a total retail disaster.

How bad will it be? It’s hard to say, but what’s certain is that consumer confidence is at an all-time low. In 2011, when there was a similar debt ceiling crisis but on a much smaller scale, we felt the hit to consumer confidence in the following months. Less consumer spending will hit small businesses such as online shops especially hard.

Small businesses that depend on government loans are particularly in trouble. Getting a loan is a process that already takes time, and with the furlough of government workers, there’s going to be quite a backlog. This will leave small businesses waiting even longer for the money they need to get going.

What Ecommerce Businesses Can Do

Consumer confidence is down and this is something ecommerce businesses will have to deal with, but there are some things you can do to encourage people to keep buying. This is a good time to offer deals and incentives and maybe the best holiday deal you’ve ever offered. Give your customers a deal they can’t resist, even when they’re not sure if it’s safe to spend their money.

If you’ve built a strong relationship with your customers, this will help. When things get tough and people don’t want to part with their money, they’re much more likely to shop at online stores they feel a connection with.

This holiday season, you may want to boost your advertising efforts. Make your business and the deals it’s offering more visible to folks who may buy from you.

The government shutdown was an ugly scene that made the country look like ridiculous and it hurt consumer confidence, but your ecommerce business can weather the storm this holiday season and come out looking good.

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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