August 22, 2011
By the ZippyCart Content Team
By now everyone (or pretty much everyone) is aware that the United States, which enjoyed the highest possible credit rating on its sovereign debt (AAA) has been downgraded for the first time ever by Standard & Poor, a worldwide credit rating agency. The markets showed bumpy fluctuations for the first few days, but there has been a modicum of recovery since then, though stocks of publicly traded ecommerce solutions have not returned to their July 25th levels. But what does this debt downgrade mean for smaller ecommerce solutions and people operating independent shopping cart sites? Several reports on spending and credit conditions at these small business shed some light on prospects.
For starters, despite historic lows in interest rates as set by the Fed (Federal Reserve), credit remains extremely tight. As such, almost all small businesses have found getting additional credit to expand operations difficult. Ecommerce solutions that operate entirely online, however, have the greatest ability to keep overhead and operating costs low, and are taking advantage of every resource they have to do so. Even major players like Amazon are reacting to adverse economic conditions by attempting to avoid taxation wherever possible.
However, all this talk about a lack of credit and cutting costs doesn’t mean that things are necessarily dire for all small ecommerce retailers. According to a report by the National Federation of Independent Businesses, 92% of retailers surveyed said that their credit needs were met and that they were not interested in borrowing. Additionally, the low Fed interest rates are beneficial to ecommerce solutions of all sizes that already have established lines of credit. Finally, those on the cusp of great growth or who have the next big idea can still get venture funding. While the total number of companies financed isn’t huge, the numbers can be. Airbnb recently became a member of the “billion dollar” (valuation) company, with millions of dollars in investment capital to back it up.
If your ecommerce solution is faltering right now, there’s not much good news on the horizon to try to cheer you up. You could consider going international, where the relative weakness of the US dollar will make your products appear more attractive to foreign consumers. However, many (formerly monied) European markets are in danger of sinking beneath the waves of debt, including Italy and Spain. However, the truest test of a savvy business owner is dealing with adverse market conditions.
Jack Cieslak grew up in New York State where he attended the New School, emerging with a degree in Creative Writing. Seattle drew him in with its focus on personal health and fitness, as well as the environment, and of course the great weather. Three-thousand miles later he is all dug in and ready to throw himself wholeheartedly into writing of all types - including reporting new developments in e-commerce, and places where social media and e-commerce cross paths. Jack revels in a challenge, whether it's writing, running, or lifting heavy objects - Jack says "bring it."
