e-Commerce Slows Again

Thirty-four billion, six hundred million.

That's what the U.S. Census Bureau figured e-commerce accounted for in the retail sector between March and July.

It's a big number, for sure, and again the highest ever, but not a surprise for the e-commerce marketplace, which has logged increases since the Bureau began tracking electronic retail transactions in 1999, when popular use of the Internet boosted overall electronic purchasing and brought total e-commerce spending to $4.6 billion of an estimated total retail-sector tally of $725 billion. In the fourth quarter of 1999, e-commerce spending accounted for less than 1% of total estimated retail sales.

But for this year's second quarter, preliminary estimated e-commerce spending ' adjusted for seasonal variation, but not for price changes, the Census Bureau notes ' was 3.3% of total estimated retail spending of $1.034 trillion.

In a likely reflection of a recently slowing economy, that percentage of e-commerce of all sales was the same for the third consecutive quarter ' something that's happened only once, in 2001, when the percentage of e-commerce sales was 1.1% for the first through third quarters.

Some Background, Some Context

Perhaps not incidentally, the third quarter of 2001, when the 9/11 terrorist attacks occurred, was the only quarter since the Census Bureau began tracking estimated e-commerce quarterly spending that the e-buying sector lost ground from a previous quarter in terms of overall activity ' from $8.34 billion in the second quarter of 2001 to $8.3 billion in the third quarter.

Besides that, total e-commerce spending has advanced quarterly, although the percentage of e-commerce as a total of all retailing has fluctuated slightly on occasion.

This year's percentage of change from the same quarter in the previous year, though, was the lowest ever, at 9.5%, again likely a sign of an uncertain economy, and mixed economic-indicator signals, such as recent ups and downs on Wall Street; last year, the change from the second quarter of 2006 was 22.4%. e-Commerce increase from the same quarter in a previous year has never been negative.

More Second Quarter Stats

Here are other statistics from the second-quarter report:

• e-Commerce sales were up 2.9% from the first quarter (' 1%), when they were $33.8 billion ' up 0.8% from the fourth quarter of last year;
• The total second-quarter estimated retail sales of $1.034 billion was 0.9% ('0.3%) more than during the first quarter; and
• Total estimated second-quarter retail sales increased 2.5% ('0.5%) over the second quarter of 2007.

Not adjusted, the second-quarter estimated figures look this way:

• Retail e-commerce sales totaled $32.5 billion, up 0.5% ('1.0%) from the first quarter;
• Second-quarter 2008 e-commerce estimated sales increased 8.9% ('1.2%) from the second quarter of 2007, while total retail sales increased 2.3% ('0.5%) in the same period; and
• e-Commerce sales in the second quarter of 2008 accounted for 3.1% of total sales.

Defining 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.

Information from the Census Bureau's Web site, with some interpretation and with background on the Bureau's survey methodology and history, follows.

The Bureau says it will release third-quarter data on Nov. 19.

Latest e-Commerce Total
And Sector Report

In mid-spring, the Census Bureau released its E-commerce 2006 report. The Bureau's compilations of e-commerce activity typically lags a year after the reported year is over so that data can be analyzed, and a report with accurate, meaningful statistics can be prepared and released.

The report had good news for the general e-commerce sector, and for particular sectors, such as law, for 2006.

Overall, e-commerce grew faster than all economic activity in the four major sectors the Bureau's E-stats report covers:

• Manufacturing;
• Merchant wholesaling;
• Retailing; and
• Selected service industries.

Even so, the change in each sector from traditional to e-supported shipments, sales or revenues remained gradual.

Once again, the business-to-business (“B2B”) sector (legal services for purposes of e-Commerce Law & Strategy coverage fall into this category) ' which is manufacturing and merchant wholesaling in the Census Bureau's report ' led e-commerce, with 93% of all activity.

Total e-commerce transactions in 2006 came to nearly $107 billion, the Bureau says.

Also again, manufacturers and merchant wholesalers were the heaviest users of e-commerce, and manufacturers raised the pace at which they use e-means more quickly than
did retailers or selected service businesses.

And from among merchant wholesalers comes indication that B2B e-commerce is rooted in, and mostly done by, electronic data interchange (“EDI”).

Sector Activity

The report that the Census Bureau released in May (for 2006) supercedes the previous report, highlights of which e-Commerce Law & Strategy has carried, sometimes with sector-specific analysis, for some time.

Data used in the report comes from four surveys of about 137,700 manufacturers, wholesalers, service businesses and retailers.

In 2006, the sector leader, manufacturing, racked up e-commerce totaling 31.2% (read that as $1.568 billion) of all shipments. The Bureau noted that the total is a consecutive increase over five previous years.

Merchant wholesalers, an aegis under which the Census Bureau reports manufacturing sales branches and offices (“MSBOs”), was ranked number two. This sector took 20.6% of e-commerce, or $1.148 billion of all sales.

The Retail Sector

As for retailers, e-commerce sales increased in that sector by 22%, but remained relatively low as a share of total retail sales for 2006 ' at 2.7%, or around $107 billion; in 2005, the e-commerce total was $87 billion, or 2.4% of all retail sales.

In retail, more than 90% of e-sales came from non-store retailers, and motor vehicle and parts dealers. The tally there came to $78 billion for non-store retailers (73%), and $20 billion for motor-vehicles and parts dealers (19%).

Where were the buys? Nearly all e-sales for non-store retail came from Internet shopping or the mail-order industry ' a group that includes catalog and mail-order houses, many of those selling through several channels; from pure-play retailers ' those selling solely on the Internet; and from the e-tail operations of traditional bricks-and-mortar retailers but that are operating as separate units and don't sell motor vehicles on the Net.

In the e-shopping and mail-order business, e-sales leading categories were:

• Clothing and clothing accessories (along with footwear): $12 billion;
• Other merchandise: $11 billion; and
• Computer hardware: $9 billion.

As for percentage of online sales, the categories and numbers came out like this:

• Music and videos: 71%; and
• Electronics and appliances: 69%.

The Census Bureau adds that online sales accounted for 39% or more of sales in all but one of the 13 published merchandise lines.

For the electronic shopping and mail-order houses segment, 39% of 2006 sales were “e.”

In selected service industries, e-commerce sales were $114 billion, up 14.9% from 2005 ' or 1.8% of all sales for this sector. In 2005, e-commerce sales here were $99 billion ' 1.7% of the whole take.

Manufacturing Data Rundown

Manufacturing shipment and e-shipment estimates for the report were taken from the Census Bureau's 2006 Annual Survey of Manufacturers (“ASM”). The Bureau says that the “manufacturing universe” comprises about 345,000 plants.

ASM data is gathered yearly from a more'than-50,000-manufacturing-plant probability sample that have five or more employees. Plants with fewer than five employees are subject to estimates from administrative sources, the Bureau notes.

ASM consists of activities at separate, individual plants, rather than a whole company.

ASM questionnaires included e-commerce queries, along with questions about employment, payroll, shipment value, consumed-material costs, and capital expenditures.

Shipment estimates for NAICS (“North American Industry Classification System”) subsectors were calculated by summing reported and inputed plant data (inputed data came from non-reporting plants, based on known information).

Data on the Other Sectors

Information on sectors other than manufacturing come from the Census Bureau's Annual Wholesale Trade Survey (“AWTS”), Service Annual Survey (“SAS”), and Annual Retail Trade Survey (“ARTS”).

AWTS accounts for economic activity among merchant wholesale firms that have employees who are paid, including MSBOs. Merchant wholesale firms take title to goods they sell. The Bureau requests feedback yearly from about 8,700 merchant wholesale firms, including 1,200 MSBOs. Weighted data from this input is weighted against about 405,000 merchant wholesale establishments, 19,000 of them MSBOs.

The SAS shows activity of firms in nine service-related sectors:

• Transportation and warehousing;
• Information;
• Finance and insurance;
• Real estate, and rental and leasing;
• Professional, scientific, and technical services;
• Administrative, and support and waste management and remediation services;
• Health care and social assistance;
• Arts, entertainment and recreation; and
• Other services.

About 58,000 of 3 million companies with paid employees report information.

ARTS measures economic activity of all retailers with and without paid employees, from about 21,000 firms with paid employees; sales by non-paid employee companies are estimated through administrative records.

About 2.5 million firms populate the retail trade universe used.

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Thirty-four billion, six hundred million.

That's what the U.S. Census Bureau figured e-commerce accounted for in the retail sector between March and July.

It's a big number, for sure, and again the highest ever, but not a surprise for the e-commerce marketplace, which has logged increases since the Bureau began tracking electronic retail transactions in 1999, when popular use of the Internet boosted overall electronic purchasing and brought total e-commerce spending to $4.6 billion of an estimated total retail-sector tally of $725 billion. In the fourth quarter of 1999, e-commerce spending accounted for less than 1% of total estimated retail sales.

But for this year's second quarter, preliminary estimated e-commerce spending ' adjusted for seasonal variation, but not for price changes, the Census Bureau notes ' was 3.3% of total estimated retail spending of $1.034 trillion.

In a likely reflection of a recently slowing economy, that percentage of e-commerce of all sales was the same for the third consecutive quarter ' something that's happened only once, in 2001, when the percentage of e-commerce sales was 1.1% for the first through third quarters.

Some Background, Some Context

Perhaps not incidentally, the third quarter of 2001, when the 9/11 terrorist attacks occurred, was the only quarter since the Census Bureau began tracking estimated e-commerce quarterly spending that the e-buying sector lost ground from a previous quarter in terms of overall activity ' from $8.34 billion in the second quarter of 2001 to $8.3 billion in the third quarter.

Besides that, total e-commerce spending has advanced quarterly, although the percentage of e-commerce as a total of all retailing has fluctuated slightly on occasion.

This year's percentage of change from the same quarter in the previous year, though, was the lowest ever, at 9.5%, again likely a sign of an uncertain economy, and mixed economic-indicator signals, such as recent ups and downs on Wall Street; last year, the change from the second quarter of 2006 was 22.4%. e-Commerce increase from the same quarter in a previous year has never been negative.

More Second Quarter Stats

Here are other statistics from the second-quarter report:

• e-Commerce sales were up 2.9% from the first quarter (' 1%), when they were $33.8 billion ' up 0.8% from the fourth quarter of last year;
• The total second-quarter estimated retail sales of $1.034 billion was 0.9% ('0.3%) more than during the first quarter; and
• Total estimated second-quarter retail sales increased 2.5% ('0.5%) over the second quarter of 2007.

Not adjusted, the second-quarter estimated figures look this way:

• Retail e-commerce sales totaled $32.5 billion, up 0.5% ('1.0%) from the first quarter;
• Second-quarter 2008 e-commerce estimated sales increased 8.9% ('1.2%) from the second quarter of 2007, while total retail sales increased 2.3% ('0.5%) in the same period; and
• e-Commerce sales in the second quarter of 2008 accounted for 3.1% of total sales.

Defining 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.

Information from the Census Bureau's Web site, with some interpretation and with background on the Bureau's survey methodology and history, follows.

The Bureau says it will release third-quarter data on Nov. 19.

Latest e-Commerce Total
And Sector Report

In mid-spring, the Census Bureau released its E-commerce 2006 report. The Bureau's compilations of e-commerce activity typically lags a year after the reported year is over so that data can be analyzed, and a report with accurate, meaningful statistics can be prepared and released.

The report had good news for the general e-commerce sector, and for particular sectors, such as law, for 2006.

Overall, e-commerce grew faster than all economic activity in the four major sectors the Bureau's E-stats report covers:

• Manufacturing;
• Merchant wholesaling;
• Retailing; and
• Selected service industries.

Even so, the change in each sector from traditional to e-supported shipments, sales or revenues remained gradual.

Once again, the business-to-business (“B2B”) sector (legal services for purposes of e-Commerce Law & Strategy coverage fall into this category) ' which is manufacturing and merchant wholesaling in the Census Bureau's report ' led e-commerce, with 93% of all activity.

Total e-commerce transactions in 2006 came to nearly $107 billion, the Bureau says.

Also again, manufacturers and merchant wholesalers were the heaviest users of e-commerce, and manufacturers raised the pace at which they use e-means more quickly than
did retailers or selected service businesses.

And from among merchant wholesalers comes indication that B2B e-commerce is rooted in, and mostly done by, electronic data interchange (“EDI”).

Sector Activity

The report that the Census Bureau released in May (for 2006) supercedes the previous report, highlights of which e-Commerce Law & Strategy has carried, sometimes with sector-specific analysis, for some time.

Data used in the report comes from four surveys of about 137,700 manufacturers, wholesalers, service businesses and retailers.

In 2006, the sector leader, manufacturing, racked up e-commerce totaling 31.2% (read that as $1.568 billion) of all shipments. The Bureau noted that the total is a consecutive increase over five previous years.

Merchant wholesalers, an aegis under which the Census Bureau reports manufacturing sales branches and offices (“MSBOs”), was ranked number two. This sector took 20.6% of e-commerce, or $1.148 billion of all sales.

The Retail Sector

As for retailers, e-commerce sales increased in that sector by 22%, but remained relatively low as a share of total retail sales for 2006 ' at 2.7%, or around $107 billion; in 2005, the e-commerce total was $87 billion, or 2.4% of all retail sales.

In retail, more than 90% of e-sales came from non-store retailers, and motor vehicle and parts dealers. The tally there came to $78 billion for non-store retailers (73%), and $20 billion for motor-vehicles and parts dealers (19%).

Where were the buys? Nearly all e-sales for non-store retail came from Internet shopping or the mail-order industry ' a group that includes catalog and mail-order houses, many of those selling through several channels; from pure-play retailers ' those selling solely on the Internet; and from the e-tail operations of traditional bricks-and-mortar retailers but that are operating as separate units and don't sell motor vehicles on the Net.

In the e-shopping and mail-order business, e-sales leading categories were:

• Clothing and clothing accessories (along with footwear): $12 billion;
• Other merchandise: $11 billion; and
• Computer hardware: $9 billion.

As for percentage of online sales, the categories and numbers came out like this:

• Music and videos: 71%; and
• Electronics and appliances: 69%.

The Census Bureau adds that online sales accounted for 39% or more of sales in all but one of the 13 published merchandise lines.

For the electronic shopping and mail-order houses segment, 39% of 2006 sales were “e.”

In selected service industries, e-commerce sales were $114 billion, up 14.9% from 2005 ' or 1.8% of all sales for this sector. In 2005, e-commerce sales here were $99 billion ' 1.7% of the whole take.

Manufacturing Data Rundown

Manufacturing shipment and e-shipment estimates for the report were taken from the Census Bureau's 2006 Annual Survey of Manufacturers (“ASM”). The Bureau says that the “manufacturing universe” comprises about 345,000 plants.

ASM data is gathered yearly from a more'than-50,000-manufacturing-plant probability sample that have five or more employees. Plants with fewer than five employees are subject to estimates from administrative sources, the Bureau notes.

ASM consists of activities at separate, individual plants, rather than a whole company.

ASM questionnaires included e-commerce queries, along with questions about employment, payroll, shipment value, consumed-material costs, and capital expenditures.

Shipment estimates for NAICS (“North American Industry Classification System”) subsectors were calculated by summing reported and inputed plant data (inputed data came from non-reporting plants, based on known information).

Data on the Other Sectors

Information on sectors other than manufacturing come from the Census Bureau's Annual Wholesale Trade Survey (“AWTS”), Service Annual Survey (“SAS”), and Annual Retail Trade Survey (“ARTS”).

AWTS accounts for economic activity among merchant wholesale firms that have employees who are paid, including MSBOs. Merchant wholesale firms take title to goods they sell. The Bureau requests feedback yearly from about 8,700 merchant wholesale firms, including 1,200 MSBOs. Weighted data from this input is weighted against about 405,000 merchant wholesale establishments, 19,000 of them MSBOs.

The SAS shows activity of firms in nine service-related sectors:

• Transportation and warehousing;
• Information;
• Finance and insurance;
• Real estate, and rental and leasing;
• Professional, scientific, and technical services;
• Administrative, and support and waste management and remediation services;
• Health care and social assistance;
• Arts, entertainment and recreation; and
• Other services.

About 58,000 of 3 million companies with paid employees report information.

ARTS measures economic activity of all retailers with and without paid employees, from about 21,000 firms with paid employees; sales by non-paid employee companies are estimated through administrative records.

About 2.5 million firms populate the retail trade universe used.

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