Statistics reveal incremental online shopping growth

InfoWorld - Putting aside the hype coming from companies that track e-commerce industry growth, government statistics reveal that the online shopping industry barely reaches beyond 1% of total retail sales.

In 2001, the last full year where numbers are available, the Department of Commerce broke out e-commerce sales vs. total U.S retail sales, revealing that the $3.16 trillion retail industry saw a total of $37.7 billion in sales take place online -- comprising 1.2% of the total.

This year e-commerce is tracking about the same. Through the third quarter, the last full quarter where numbers are available, total retail sales were $856 billion vs. $11 billion in e-commerce, about a 1.3% share.

There is no doubt that online shopping is growing, but even if it grew 10% per year and the rest of retail remained stagnant it would take until 2013 before e-commerce garnered just more than 10% of total sales.

Although the numbers are not large, the data shows that "channel shifting" is taking place on the part of consumers toward online shopping, according to Max Kalehoff, a senior manager at comScore Networks, a Reston, Va.-based company that tracks online shopping.

"If you look at the total economy, this season has been one of the worst [for retail sales] in recent memory, but the online sector is still doing quite well. What you have is a redirection of sales from offline to online channels," Kalehoff added.

The numbers from comScore for the week before Christmas released this week show significant growth for the online retail industry. Sales totaled $1.9 billion, a 19% increase from a week before Christmas 2001. With two weeks left to the end of the fourth quarter, e-commerce spending is expected to total about $13 billion -- up almost 30% from last year.

While sales of computers and high-tech peripherals were down by about 1% over last year there were big gains made in Home and Garden, a 78% increase; Furniture and Appliances, a 75% increase; and Toy shopping online with a 61% increase.

Tim Bajarin, president of Creative Strategies, said three key factors are responsible for increased online sales.

"Besides the consumer becoming more comfortable with shopping online, the big credit card companies have introduced zero liability so that consumers are more at ease about shopping online," Bajarin said.

Bajarin also said online shopping is more intuitive and just easier to do than it used to be.

One of the conundrums of the almost insignificant share of the total that e-commerce retail sales represent is its disproportionateclout in Washington and in state houses around the country where bills that would force e-tailers to pay sales tax have been consistently voted down.

With traditional retailers claiming that no sales tax gives e-tailers an unfair advantage and state legislators face huge budget deficits, the free sales tax ride may soon be history. California, for instance, is currently facing a $35 billion deficit and is reconsidering its stand on sales tax for e-commerce.

"What the states are waiting for is federal support for taxing e-commerce. Once the federal position changes the move for sales tax for online goods will kick in. [Tax free] for online shoppers will not last forever," Bajarin said.