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How The US Government Shutdown Affects Ecommerce Businesses

government-shutdown-ecommAs of midnight this morning, the United States Federal Government began shutting down as Congress failed to pass a budget agreement in time for the end of the fiscal year. The government has done this before, most recently in 1995 when the government shut down for almost a month.

Although this will affect our national society in many ways, how will it affect the day-to-day operations of your ecommerce business? If you're concerned, this post should help clarify how -- if at all -- your ecommerce business could be affected.

If it fits, it will still ship.

Contrary to popular myth, the day-to-day operations of the United States Postal Service are not funded by taxpayer dollars and therefore won't be affected by the government shutdown. Businesses relying on USPS for shipping and logistics can still expect the postman to show up and deliver their products to customers.

Private companies such as FedEx and UPS will, of course, also continue to operate normally.

Air travel will continue.

Also along the lines of logistics, air traffic controllers and the infrastructure that supports most of the essential air travel functions will continue to be funded. So if you ship nationwide, you should still be ok. Travel websites selling airfare or servicing travelers can still operate as passenger air service should be ok.

Passports for international travel will (probably) continue.

According the State Department's current plan, applications for foreign visas and domestic applications for passports should continue since these activities fund themselves through the fees collected. Most passport offices should remain open, with the possible exception of those offices located in shuttered federal buildings.

Ecommerce websites selling to travelers should still be able to keep selling those vacation packages. In fact, now might be a great time to get away!

Social Security, Medicare, and unemployment benefits will (probably) continue.

If you sell to the elderly or other groups affected by disability, Medicare, or other government payments, your customers should continue receiving these payments. The processing infrastructure at these agencies might be impacted, so new applications or assistance will probably be slowed or stop - but the last time the government shut down in 1995 the payments continued going out and it looks like that will happen again.

Tax collection will continue.

As there is not -- yet -- a nationwide tax on ecommerce transactions, the required tax collections will not be affected. Currently, ecommerce tax law is handled by the states in which the store's operations reside. If you have any questions about taxes, good luck getting an answer from the IRS -- their help and information resources will see their staffs sent home and there won't be anyone to answer the phone.

Government backed loans will stop.

If you were planning on quickly wrapping up any government backed or assisted loan to help you expand operations or increase working capital, you're probably out of luck. Processing for small business loans will be suspended.

Consumer spending will probably dip.

With approximately 800K government workers off the job, odds are that your customer base will be affected in some way. Furloughed workers are likely to severely curb their spending while there's still no guarantee that they'll receive back-pay for the time that they're out of work.

In addition to federal employees, national crises like this tend to impact overall consumer spending as economic confidence is impacted. Brian Kessler, economist with Moody's Analytics, currently estimates that the overall economic impact is likely to be at least 10 times greater than just the cumulative calculation of lost wages for federal workers. Of all the possible impacts to your business, the simple damage that this causes to the confidence of the American consumer may be the most significant.

National parks & landmarks will close.

If you're relying on selling to folks planning a camping trip -- especially if you're selling consumable products - your sales may be impacted as access to national parks is shut down. Trips to national parks are complex trips (especially for families) that involve the consumption and use of many products. From matches to tents to beef jerky, sales may be impacted as long as this continues.

(1:49PM EST UPDATE: This apparently doesn't apply to anyone trying to stop veterans from visiting their memorial - because they won't let that stop them)

E-Verify will stop working.

The government system that allows you to verify whether or not that awesome new employee is a properly documented worker will stop working.

Government data analysis will stop.

The Department of Commerce is likely to furlough about 87% of its work force, so the data and analysis that you might be relying on for strategic decision making will be significantly delayed.

You can still file for patents & trademarks.

The United States Patent and Trademark Office is expected to continue to operate normally due to the fees it collects to fund its operations. So that awesome invention you're planning to sell or that trademark you want to protect should be good to go.

What do marketers need to know?

Some companies are doing a great job communicating to their audience and customers how -- if at all -- the government shutdown affects the service they provide. AmeriFirst Home Mortgage wrote a great article about how the shutdown affects their primary audience of first time home buyers. With government-backed loans in jeopardy, there's probably a fair number of the AmeriFirst audience and potential customer base who had significant concerns about whether or not they'd be able to continue doing business with them. A vacuum of information rarely leads to predictable action, so notifying your audience whether or not your services will be affected might make sense.

There are also companies whose services will be tangentially affected by the shutdown. The closing of the national parks and landmarks may, for example, impact companies that sell to camping and traveling audiences. Consider whether or not this will affect your customer audience and if you should create content to educate them.

For example, an ecommerce site selling camping gear could create a list of awesome parks that still have camping available even after the Department of the Interior closes the major parks. Inbound marketing is all about being a valuable resource and experience customized for your buyer personas, and your customers will find great value in clear and centralized resources to help them.

What about you? Will the government shutdown affect your business at all? Tell us in the comments below.

Image credit: MSVG

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