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The Importance of E-commerce-corrected!!

Posted by: Michael Mandel on June 30

Well…I didn’t expect such an, um, overwhelming response to my previous post.

I will get to everyone’s comments. But first let me respond to the people who worried that e-commerce was too small to make a difference.

In fact, over the past year e-commerce accounted for 36% (corrected!!) of the increase in retail sales, outside of gasoline stations and fuel oil dealers.

Explanation of the correction: The original version of this post said that 91% of the increase came from e-commerce. That number was based on the seasonally adjusted retail trade figures. The new number is based on the seasonally unadjusted figures. Usually year over year changes should be roughly the same for both adjusted and unadjusted data, but in this case they weren’t. Unadjusted data takes precedence in this case. My apologies. I have expunged the bad table and number because it is so far off.

Here is the revised table.

Not seasonally adjusted  percentage increase
1Q08 1Q07 increase (not adjusted for inflation)
millions of dollars millions of dollars
Retail sales 965,500 930,677 34,823 3.7%
Gasoline stations 115,984 94,898 21,086
Fuel dealers 18,090 14,969 3,121
Retail sales except
gas and fuel 831,426 820,810 10,616 1.3%
E-commerce 32414 28594 3820 13.4%
bricks/mortar retail sales 799,012 792,216 6796 0.9%
ex gas and fuel
Share of increase from e-commerce 36%
Data: Census 

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Reader Comments


June 30, 2008 01:23 PM


I see your logic but how can we reasonably estimate the percentage of that 4 billion increase that are foreign purchases on "American" e-commerce sites?? Chances are that companies like Amazon rely on shipping adresses for their own internal statistics, probably treated as proprietary data as you mention and not available to the public.
But even this is misleading. For example, at least once a month, on average, my Canadian friends buy items online under my name and have them shipped to my house. It is very common. I do not think Amazon can "extract" the nationality of the buyer from the credit card data....they pass a CC number to a Visa server which approves or deny the purchase..can you identify the nationality of the issuer from the card number??. So, probably you have to cross-reference data with Visa.
I suspect the amount of foreign e-commerce purchases is still too limited to move the needle in a noticeable way given the size of the American economy.
I find interesting one of the comment in your previous post about Canadians "invading' shopping malls in border states because of the high value of the loonie compared to the US is true, I live in Washington state and malls in cities close to the border are overcrowded with our neighbours from the Great True North. retailers reports blowout sales, weekend shopping trips to Seattle for Canadians are the norm thse days.
So maybe this "foreign purchases" are making traditional (non e-commerce) retail sales look not too bad in the first place, compensation for some of the reduction in "real" American consumer spending.


June 30, 2008 01:36 PM

Isn't the real story the increase expenditure on gas?

Plus, you didn't address all of the scale issue. How much of that $4B is foreign sales on domestic sites?

I suppose the "domestic" vs. "national" issue will be addressed.


June 30, 2008 02:25 PM

I agree to what Dominic has to say. Many people from India have electronic items shipped to addresses in the US and get them to India. The Customs Office in India has a limit of close to 600$ worth of goods that can be bought from foreign countries to India without any customs duty. This 600$ excludes the purchase of a laptop. In all, an Indian can buy 1600$ worth of goods from the US. US is the preferred choice to buy electronic goods as they are 10 to 25% cheaper than in India.
This laptop that I bought from Amazon cost me 43000 INR in the US whereas buying the same in India would have cost me 56000 INR. Same is the case with my Canon S3IS digital camera.


June 30, 2008 11:18 PM

Vijayaraghavan, why wouldn't a laptop be even cheaper in India if purchased from China? Is there no channel through which it can be purchased? Why wouldn't there be? The US laptop is probably not assembled in the U.S., nor are much of its components or underlying raw material likely to be from the U.S. There is probably a transportation adder and a significant U.S. retailer markup. Chinese commodity and wage inflation, imported oil for the plastic case, and the slow divorcing of the yuan from the weak $US ought to make the U.S. price increasingly higher if not for the steady weakening of the $US.

Wait a minute. I haven't been tracking these things -- is the $US weakening at an even faster rate than all those upward shifts? If it is, then it must be primarily due to Fed moves that weaken it. Why else would FX traders continue to bet against it?

Michael, why is your blog in the Investment section? The things you cover here are critical to business management. If you think the Fed should or could reduce rates and the value of the dollar even further, then how is that helping the U.S. economy? Does the Fed have a vested interest in supporting the flow of goods into the U.S. and maybe even back out to other countries? BW already showed us that we have essentially thrown away the infrastructure and talent that could have supported a return of manufacturing to the United States, so what good is a further weakening of the dollar to the U.S. economy? You showed us that the GDP has a significant non-domestic component that depends on the continuation of excessive imports. If that is the only motivation for further Fed weakening, then doesn't that make it purely political -- a last-ditch effort to pretend that this economy is robust and the one-sided economic theory taught in all the reputable universities remains valid?


January 19, 2009 05:32 AM

by the time being..computers are very useful these days..well e-commerce should be too coz as long as computers are needed internet rise their stacks too..and when internet rises it's stacks then e-commerce websites would be very attracted to widen the area of their sales..and of course internet market would be the main business among countries and the countries that would make their move in widening their e-commerce sales would develop so fast..

so in that time..countries having late reactions or having their late moves would hardly develop..and that would be the harshful truth..more and more countries will have their businesses DOWN!!!

well..that's what i think..and that's the future i can see..

well..that's in the mind of a 17 year old me..hehehehe


February 4, 2009 05:33 AM


Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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