Estimated e-Commerce Retailing ' And Total ' Are Up Again

Despite continuing bad news from Wall Street, the U.S. economy took a slight uptick in the second quarter, according to the Census Bureau.

Figures released last month put estimated U.S. retail e-commerce sales for the second quarter ' adjusted for seasonal variation, but not for price changes ' at $47.5 billion, an increase of 3% from the first quarter. The Bureau said that total estimated retail sales for the second quarter were $1.04 trillion, an increase of 1.2% ('0.5%) from the first quarter ' and the third consecutive increase at or above $1 trillion, even though job-creation nationwide has been slower than either the Obama administration or many economists had hoped.

The first- to second-quarter estimated e-tailing increase amounts to about $1.4 billion, according to Census Bureau figures.

The Unadjusted Figures

Not adjusted for seasonal variation or price changes, total estimated U.S. retail e-commerce sales for the second quarter totaled $44.2 billion ' a rise of 1.1% ('1.2%) from the first quarter ' a change of about $500 million, judging by the preliminary second-quarter figures compared with the revised first-quarter figures.

Again, unadjusted, second-quarter e-commerce figures were estimated to have increased 17.2% ('2.5%) from the second quarter of 2010; total retail sales increased 8.4% ('0.2%) in the same period, the government reports.

e-Commerce sales in the second quarter accounted for 4.2% of total sales in the quarter, figured with unadjusted data.

How the Census Bureau Defines e-Commerce

The Census Bureau classifies e-commerce sales as any involving goods and services for which a buyer places an order, or for which price and terms of sale are negotiated, over the Internet, an extranet, an electronic data interchange (“EDI”) network (this is the leading method), e-mail or other online system. Payment needn't be made online for the transaction to count as e-commerce.

Whats and Whys

Observers generally are at a loss to explain the particulars of the increase in spending, except to speculate that consumers are continuing to spend more online as an alternative to paying department store prices and as a means of directing discretionary income to buying specialty items that low-overhead and free-shipping e-commerce outfits offer and that are either unavailable or more expensive in such brick-and-mortar outlets as hobby or sporting-goods stores.

For those and other reasons ' not many of which e-commerce observers can articulate ' second-quarter estimated e-commerce spending was up 17.6% ('2.5%) from the second quarter of 2010; total estimated retail sales increased 8.1% ('0.2%) in the same period, the government said.

e-Commerce sales in the second quarter accounted for 4.6% of all retail sales, the Bureau reported.

Survey Description

The sample that the Census Bureau uses to estimate retail e-commerce sales is drawn from the same one used for the Bureau's Monthly Retail Trade Survey (“MRTS”) to estimate preliminary and final U.S. retail sales, the Bureau notes. Estimates of advance retail sales are made from an MRTS sample subsample not large enough to measure changes in retail e-commerce sales.

The Census Bureau uses a “stratified simple random sampling method” to select about 12,500 firms whose retail sales are weighted and bench marked so that they represent the nation's “complete universe” of two million retail firms.

The MRTS sample is probability-based and represents all employer firms engaged in retail activities as defined by the North American Industry Classification System (“NAICS”), the Bureau says. All retailers ' whether or not engaged in e-commerce ' are covered.

The retail sector represents only a small portion of e-commerce transactions, which are by far made primarily in business-to-business markets.

Online travel services, financial brokers and dealers, and ticket-sales agencies are not classified as retail, though, and are not included in either the total retail or retail e-commerce sales estimates.

Non-employers are figured into the estimates by benchmarking those figures against prior annual survey estimates that include non-employer sales, based on administrative records. e-Commerce sales are included in the total monthly sales estimates.

The Census Bureau notes that the MRTS sample is updated regularly and new retail employer businesses (including those selling via the Internet), business deaths and other changes to the retail business universe are accounted for. Firms report e-commerce sales separately each month. For each month of a quarter, non-responding sampling-unit data are imputed from responding sampling units in the same kind of business and sales size category. Responding firms represent about 81% of the e-commerce sales estimate, and about 75% of estimated U.S. retail sales for any quarter.

Monthly estimates for each quarter are obtained by summing weighted sales (either reported or imputed), the Census Bureau explains. Monthly estimates are benchmarked to prior annual survey estimates. Quarterly estimates are obtained by summing monthly benchmarked estimates. The figure for the most recent quarter is a preliminary estimate, subject to revision.

Background, Context

Yet, even though e-tailing estimates are up, Census Bureau analyses show overall e-commerce was down in 2009 from 2008 in industrial and business-to-business sectors, where the vast majority of e-commerce as the Census Bureau defines it occurs.

In the Bureau's latest E-Stats report (statistics on activity in 2009), for instance, issued in May this year, two of the four major sectors covered ' manufacturing and merchant wholesalers ' experienced e-commerce decreases, mainly because of lowered production and exchange activity brought on by the recession.

As usual, in 2009, manufacturers and merchant wholesalers used e-commerce ' including such methods as electronic data interchange (“EDI”) networks, the leading form of e-commerce in any market segment, with business-to-business transactions accounting for 91% of e-commerce ' much more than did retailers or the particular businesses in what the Bureau calls the Selected Service Industries (such as air transport and publishing ' except Internet publishing), where all types of e-commerce, including consumer Internet transactions and point-of-purchase purchasing are counted.

2009 E-Stats data show:

• Manufacturers led all industry sectors, with e-commerce
  accounting for 42% ($1,862 billion) of total shipments.
• Merchant wholesalers, including manufacturing sales branches and offices (“MSBOs”), ranked second, with e-commerce accounting for 23.4% ($1,211 billion) of all sales.
• Retailers' e-commerce sales increased by 2.1%. e-Commerce was 4%, $145 billion, of total retail sales, up from 3.6% ($142 billion) in 2008.
• e-Commerce sales for Selected Service Industries, a special group of service industries created for the E-Stats report, increased by 2.2%. Of these industries' total revenue, e-commerce accounted for 2.3% ($153 billion).

Also, a new Selected Service Industries total has been provided, which includes more industries that have been published for the first time. This new series shows a total e-commerce sales of Selected Service Industries at $244 billion.

Sector Totals for 2009

Manufacturing

• e-Commerce accounted for $1,862 billion of manufacturing shipments in 2009, down from $2,171 billion in 2008, an annual decrease of 14%.
• e-Shipments were 42% of all manufacturing shipments in 2009, up from 40% in 2008. In this sector, e-shipments accounted for at least 25% of all shipments in all 21 manufacturing subsectors.
• e-Shipments as a share of total shipments were largest in the beverage and tobacco products group (59%) and transportation equipment (58%).

Merchant Wholesale Trade

• U.S. merchant wholesalers, including MSBOs, reported total e-commerce sales of $1,211 billion in 2009, down from $1,311 billion in 2008 ' a yearly decrease of 7.6%.
• e-Sales were 23.4% of merchant wholesalers' and MSBOs' combined overall sales in 2009.
• e-Sales accounted for 19.7% ($729 billion) of all sales for merchant wholesale ' excluding MSBOs.

Retail Trade

• U.S. retail e-commerce sales reached $145 billion in 2009, up from a revised $142 billion in 2008 ' an annual gain of 2.1%.
• From 2002 to 2009, retail e-sales increased at an average annual growth rate of 18.1%, compared with 2.2% for total retail sales.
• In 2009, e-sales were 4% of all retail sales ' up from 3.6% in 2008.
• More than 90% of retail e-sales were concentrated in two industry groups ' non-store retailers, and motor vehicles and parts dealers ' which accounted, respectively, for 80.3% ($117 billion) and 11.8% ($17 billion) of the sector's total e-sales.

Nearly all non-store retail e-sales occurred in the electronic shopping and mail-order houses industry group. This group includes catalog and mail-order operations, many of which sell through multiple channels; “pure plays” (i.e., retail businesses selling solely over the Internet); and e-commerce units of traditional brick-and-mortar retailers (i.e., “brick and clicks”), in which the unit operates as a separate entity and does not sell motor vehicles online.

Michael Lear-Olimpi is Editor-in-Chief of this newsletter. A long-time journalist and university teacher of writing in a range of genres, he is owner and editorial director of Susquehanna Editorial Services, in Harrisburg, PA. Lear-Olimpi provides writing, editing and article-placement services for law firms and other clients. He can be reached at [email protected].

Despite continuing bad news from Wall Street, the U.S. economy took a slight uptick in the second quarter, according to the Census Bureau.

Figures released last month put estimated U.S. retail e-commerce sales for the second quarter ' adjusted for seasonal variation, but not for price changes ' at $47.5 billion, an increase of 3% from the first quarter. The Bureau said that total estimated retail sales for the second quarter were $1.04 trillion, an increase of 1.2% ('0.5%) from the first quarter ' and the third consecutive increase at or above $1 trillion, even though job-creation nationwide has been slower than either the Obama administration or many economists had hoped.

The first- to second-quarter estimated e-tailing increase amounts to about $1.4 billion, according to Census Bureau figures.

The Unadjusted Figures

Not adjusted for seasonal variation or price changes, total estimated U.S. retail e-commerce sales for the second quarter totaled $44.2 billion ' a rise of 1.1% ('1.2%) from the first quarter ' a change of about $500 million, judging by the preliminary second-quarter figures compared with the revised first-quarter figures.

Again, unadjusted, second-quarter e-commerce figures were estimated to have increased 17.2% ('2.5%) from the second quarter of 2010; total retail sales increased 8.4% ('0.2%) in the same period, the government reports.

e-Commerce sales in the second quarter accounted for 4.2% of total sales in the quarter, figured with unadjusted data.

How the Census Bureau Defines e-Commerce

The Census Bureau classifies e-commerce sales as any involving goods and services for which a buyer places an order, or for which price and terms of sale are negotiated, over the Internet, an extranet, an electronic data interchange (“EDI”) network (this is the leading method), e-mail or other online system. Payment needn't be made online for the transaction to count as e-commerce.

Whats and Whys

Observers generally are at a loss to explain the particulars of the increase in spending, except to speculate that consumers are continuing to spend more online as an alternative to paying department store prices and as a means of directing discretionary income to buying specialty items that low-overhead and free-shipping e-commerce outfits offer and that are either unavailable or more expensive in such brick-and-mortar outlets as hobby or sporting-goods stores.

For those and other reasons ' not many of which e-commerce observers can articulate ' second-quarter estimated e-commerce spending was up 17.6% ('2.5%) from the second quarter of 2010; total estimated retail sales increased 8.1% ('0.2%) in the same period, the government said.

e-Commerce sales in the second quarter accounted for 4.6% of all retail sales, the Bureau reported.

Survey Description

The sample that the Census Bureau uses to estimate retail e-commerce sales is drawn from the same one used for the Bureau's Monthly Retail Trade Survey (“MRTS”) to estimate preliminary and final U.S. retail sales, the Bureau notes. Estimates of advance retail sales are made from an MRTS sample subsample not large enough to measure changes in retail e-commerce sales.

The Census Bureau uses a “stratified simple random sampling method” to select about 12,500 firms whose retail sales are weighted and bench marked so that they represent the nation's “complete universe” of two million retail firms.

The MRTS sample is probability-based and represents all employer firms engaged in retail activities as defined by the North American Industry Classification System (“NAICS”), the Bureau says. All retailers ' whether or not engaged in e-commerce ' are covered.

The retail sector represents only a small portion of e-commerce transactions, which are by far made primarily in business-to-business markets.

Online travel services, financial brokers and dealers, and ticket-sales agencies are not classified as retail, though, and are not included in either the total retail or retail e-commerce sales estimates.

Non-employers are figured into the estimates by benchmarking those figures against prior annual survey estimates that include non-employer sales, based on administrative records. e-Commerce sales are included in the total monthly sales estimates.

The Census Bureau notes that the MRTS sample is updated regularly and new retail employer businesses (including those selling via the Internet), business deaths and other changes to the retail business universe are accounted for. Firms report e-commerce sales separately each month. For each month of a quarter, non-responding sampling-unit data are imputed from responding sampling units in the same kind of business and sales size category. Responding firms represent about 81% of the e-commerce sales estimate, and about 75% of estimated U.S. retail sales for any quarter.

Monthly estimates for each quarter are obtained by summing weighted sales (either reported or imputed), the Census Bureau explains. Monthly estimates are benchmarked to prior annual survey estimates. Quarterly estimates are obtained by summing monthly benchmarked estimates. The figure for the most recent quarter is a preliminary estimate, subject to revision.

Background, Context

Yet, even though e-tailing estimates are up, Census Bureau analyses show overall e-commerce was down in 2009 from 2008 in industrial and business-to-business sectors, where the vast majority of e-commerce as the Census Bureau defines it occurs.

In the Bureau's latest E-Stats report (statistics on activity in 2009), for instance, issued in May this year, two of the four major sectors covered ' manufacturing and merchant wholesalers ' experienced e-commerce decreases, mainly because of lowered production and exchange activity brought on by the recession.

As usual, in 2009, manufacturers and merchant wholesalers used e-commerce ' including such methods as electronic data interchange (“EDI”) networks, the leading form of e-commerce in any market segment, with business-to-business transactions accounting for 91% of e-commerce ' much more than did retailers or the particular businesses in what the Bureau calls the Selected Service Industries (such as air transport and publishing ' except Internet publishing), where all types of e-commerce, including consumer Internet transactions and point-of-purchase purchasing are counted.

2009 E-Stats data show:

• Manufacturers led all industry sectors, with e-commerce
  accounting for 42% ($1,862 billion) of total shipments.
• Merchant wholesalers, including manufacturing sales branches and offices (“MSBOs”), ranked second, with e-commerce accounting for 23.4% ($1,211 billion) of all sales.
• Retailers' e-commerce sales increased by 2.1%. e-Commerce was 4%, $145 billion, of total retail sales, up from 3.6% ($142 billion) in 2008.
• e-Commerce sales for Selected Service Industries, a special group of service industries created for the E-Stats report, increased by 2.2%. Of these industries' total revenue, e-commerce accounted for 2.3% ($153 billion).

Also, a new Selected Service Industries total has been provided, which includes more industries that have been published for the first time. This new series shows a total e-commerce sales of Selected Service Industries at $244 billion.

Sector Totals for 2009

Manufacturing

• e-Commerce accounted for $1,862 billion of manufacturing shipments in 2009, down from $2,171 billion in 2008, an annual decrease of 14%.
• e-Shipments were 42% of all manufacturing shipments in 2009, up from 40% in 2008. In this sector, e-shipments accounted for at least 25% of all shipments in all 21 manufacturing subsectors.
• e-Shipments as a share of total shipments were largest in the beverage and tobacco products group (59%) and transportation equipment (58%).

Merchant Wholesale Trade

• U.S. merchant wholesalers, including MSBOs, reported total e-commerce sales of $1,211 billion in 2009, down from $1,311 billion in 2008 ' a yearly decrease of 7.6%.
• e-Sales were 23.4% of merchant wholesalers' and MSBOs' combined overall sales in 2009.
• e-Sales accounted for 19.7% ($729 billion) of all sales for merchant wholesale ' excluding MSBOs.

Retail Trade

• U.S. retail e-commerce sales reached $145 billion in 2009, up from a revised $142 billion in 2008 ' an annual gain of 2.1%.
• From 2002 to 2009, retail e-sales increased at an average annual growth rate of 18.1%, compared with 2.2% for total retail sales.
• In 2009, e-sales were 4% of all retail sales ' up from 3.6% in 2008.
• More than 90% of retail e-sales were concentrated in two industry groups ' non-store retailers, and motor vehicles and parts dealers ' which accounted, respectively, for 80.3% ($117 billion) and 11.8% ($17 billion) of the sector's total e-sales.

Nearly all non-store retail e-sales occurred in the electronic shopping and mail-order houses industry group. This group includes catalog and mail-order operations, many of which sell through multiple channels; “pure plays” (i.e., retail businesses selling solely over the Internet); and e-commerce units of traditional brick-and-mortar retailers (i.e., “brick and clicks”), in which the unit operates as a separate entity and does not sell motor vehicles online.

Michael Lear-Olimpi is Editor-in-Chief of this newsletter. A long-time journalist and university teacher of writing in a range of genres, he is owner and editorial director of Susquehanna Editorial Services, in Harrisburg, PA. Lear-Olimpi provides writing, editing and article-placement services for law firms and other clients. He can be reached at [email protected].