More on e-commerce

Posted by: Michael Mandel on July 01

This is the chart I was doing when I found the mistake in the previous post. It shows the share of retail sales growth coming from e-commerce (leaving out gasoline station and fuel oil dealers). Until recently, e-commerce accounted for a relatively small share of retail sales growth. In the first quarter, however, e-commerce was 36% of growth

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Reader Comments

pushmedia1

July 1, 2008 12:36 PM

Gas prices go up, demand is inelastic so expenditure on gas goes up. At the same time, consumers will pick low hanging fruit to reduce gas consumption, e.g. order stuff online instead of driving down to the mall.

In any case, that up-tick in e-commerce's share of consumer spending (minus gas, why that should be the interesting statistic I'm not sure) growth doesn't seem extraordinary to me. That's about a 50% increase in share for a statistic that was seeing 10-25% increases in the recent past.

Its certainly not extraordinary enough to be moving the overall growth number, especially by the mechanism you're proposing. Even if you assume the share should be the same as last year's (15%) and *all* e-commerce is overseas sales, you're only talking at most 0.02% growth explained by this mechanism. This is well within the error bars of the point estimate.

Lord

July 1, 2008 03:51 PM

My experience is stores stock less than ever requiring you to order online.

Thomas A. Coss

July 2, 2008 11:44 PM

I agree that gas prices are relatively inelastic, fortunately, people are elastic.

I'm eager to see how we adjust and how quickly we adjust, ergo I'm short oil and long people.

CJ

July 4, 2008 01:30 PM

So the e-commerce is up 13%. But it still is only 3% of the total retail sales. So we have a strong increase in an insignificant submarket.

You exclude gas stations and fuel dealers. But that is the elephant in the room. E-commerce is a mouse.

The INCREASE in sales at gas stations and fuel dealers is close to the TOTAL of all e-commerce sales!

RDaniels

September 9, 2008 10:13 AM

I was re-reading the July 14/21 story on this same issue. Regardless of the level of impact this mistake has on the overall US numbers right now, the Census Bureau still needs to fix the way it gathers data.

As we move forward, internet sales will play an ever-increasing role in the US retail economy, the number of international sales from US sites will continue to fluctuate, and it is reasonable to speculate that in some periods the impact will be much higher than today. Saying that the problem is insignicant because it only represents a small segment of the economy is like says we wouldn't need to fix the Hoover Dam if it sprang a smallish leak. Any leak, any error in data gathering, weakens our ability to make good business decisions going forward. The actual numbers themselves are completely worthless if we can not trust their accuracy.

The good news is that WE HAVE THE TECHNOLOGY already. For tax purposes, every internet sale is already linked to a shipping address. E-companies have reporting systems that identify the number and dollar amount of sales to any particular geographic region. Yet instead of relying on this data, the Census Bureau is looking at IRS data for "domestic revenue", which itself needs to be updated.

The data is out there. All companies, whether they are mainstream commerce or e-commerce, know where their revenue is coming from in order to make future sales and marketing decisions. The Census Bureau is simply asking the wrong questions.

And why wouldn't they - it makes our economy look stronger in a time where consumer confidence is low. Joe Consumer will look at their numbers and say, "Hey, retail sales continue to grow, so people like me are spending more money than last year, so the economy must not be all that bad, so it is safe for me to buy this [add electronics item here] that I really want." US consumers always want more than we have - it's the way we were raised. So, if the government is putting out false numbers that allow us to rationalize our intention to purchase non-necessities, we're not necessarily going to jump through hoops to get them to be more accurate.

Which leads to another very interesting economic question: To what extent is overall consumer spending artifically inflated due to our erroneous confidence level based on errors in gathering and reporting data by the Census Bureau? How much worse off would the economy be if consumers were given accurate statistics? It is reasonable to expect that elastic spending would decrease, and even some inelastic spending, but HOW MUCH? And WHAT WOULD THE IMPACT OF THAT BE? Those are the real questions that need to be answered and can only be answered by fixing this "insignificant" problem.

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

 

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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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