Economic Crisis Forcing Shoppers to Use the Internet

With the economy faltering, shoppers will turn to new websites even more, according to Internet shopping experts.
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NEW YORK -- With the economy faltering, shoppers will turn to new websites even more, according to Internet shopping experts.

According to the Wall Street Journal last week, "Analysts are predicting sharper price cuts on flat-panel televisions and Blu-ray players in the coming weeks." Such consumer product price volatility can cause buyers to hesitate.

Because prices are always changing, savvy consumers need more than just a snapshot of prices at any given moment, as delivered by shopping portals and retail websites.

Internet analyst James Wallace, co-founder of free price information website PriceProtectr.com, said that the Internet is making smart shoppers smarter, whether they buy online or in brick-and-mortar stores.

"The Internet is more optimized for information than commerce," said Wallace.

Online shopping last year raked in $25 billion, and online shopping growth should exceed 10% as compared to single digits for overall consumer spending. But, online transactions still account for less than 5% of total consumer spending.

"Just about all Internet users look for product information online, but less than 10% of those who look for information actually end up buying the item online -- a huge difference," said Wallace.

"If someone is ready to buy, they want reliable, trustworthy price information from a site that isn't solely concerned with selling," said Wallace, who touted PriceProtectr.com as the prime example of such a site.

Price Protectr provides price alerts, helping the shopper to make the best decision on when to buy (i.e., when the price drops).

Price Protectr's service comes at the right time. The era of the impulse buy is largely over. Sears recently announced a planned re-launch of its layaway program on the heels of Kmart's successful national advertising campaign. In just-announced statistics, the U.S. personal savings rate in Q2 '08 skyrocketed to 2.7% after years of declines. In addition, Americans reduced their rate of borrowing in Q2, the first time that's happened in 10 years.

With people being more deliberate in their buying, debt, and savings habits, shopping will mean more than just comparing prices, a trend likely to continue long after holiday gifts are opened.

"We've seen price drops as much at 95%," said Wallace. "An $1,800 set of leather-bound books went on clearance for under $20. It sold out in minutes. Just last week a GPS unit had a price drop of 80%, from over $800 to about $150. People don't realize how much prices change beyond the promotional sales they see. Even we were surprised at first."

The website also provides details on 150 major retailers who have price protection policies and give money back if the price goes down after you buy.

"Price Protectr's free service has watched nearly $30 million in products. We have the most reliable service, a record of privacy and trust, and favorable mentions by Consumer Reports and Good Housekeeping," Wallace added. "If someone shops without using Price Protectr, they're just throwing money away."

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