Online sales continue to rise, up 23.1 percent

While they're still only a tiny portion of overall US retail sales, retail online sales continued to rise in the second quarter to US$15.7 billion. That's up 23.1 percent from the US$12.7 billion posted in the same period a year ago.

The estimated figures were released today in a report from the Census Bureau of the U.S. Department of Commerce, which tracks retail sales and other economic indicators for the nation.

Overall retail sales through traditional brick-and-mortar stores and e-commerce sales totaled US$919 billion in the second quarter, which ended June 30. That was 7.8 percent higher than the US$852 billion posted for the same period last year, according to Commerce Department figures.

The quarterly e-commerce sales accounted for just 1.7 percent of total retail sales, a slight uptick from the second quarter of 2003, when e-commerce sales made up 1.5 percent of total retail sales. In the first quarter of 2004, e-commerce sales were 1.9 percent of total sales.

A spokesman for the Commerce Department's Center for Economic Studies couldn't be reached Friday for comment.

E-commerce sales in the second quarter were up about 0.9 percent from the previous quarter, while overall retail sales rose about 10.1 percent for the same period.

Analyst Carol Baroudi at Baroudi Bloor in Arlington, Mass., said the continuing increases in e-commerce retail sales from quarter to quarter "speaks to the enormous potential for e-commerce." Even so, traditional retailers aren't likely to be bested by online sales anytime soon.

"Is (e-commerce) going to replace the corner store? No way," she said. "I still think we're at the very tip of the iceberg. Is it going to hit 50 percent of sales anytime soon? No, but it is going to grow like gangbusters."

William Cody, managing director of the Jay H. Baker Retailing Initiative, an industry center at the University of Pennsylvania's Wharton School, agreed that while e-commerce is small compared to traditional retail sales, it will continue to play an important role in the economy.

"It hopefully will be an additive (sales driver) for specific retailers who do it well," Cody said. But online retail won't likely ever take over the sales lead from retail stores and malls because "one of the few social activities out there is going shopping. You're not going to get rid of the social chase."

E-commerce sales figures for the fourth quarter of 2003 ended the year on a high note, with US$17.2 billion sales in the final three months of 2003, up a hefty 25.1 percent from the US$13.7 billion in sales posted during the same quarter in 2002.

The Commerce Department has been tracking e-commerce sales since 1999, but has not adjusted its figures for seasonal differences. That will change in the department's third-quarter report, when it will begin making adjustments for those differences to help make the figures more accurate.

The studies are conducted quarterly using e-commerce sales and a stratified random sampling method that selects about 11,000 retail companies whose sales are used for the calculations. Retailers are included in the survey whether or not they are engaged in e-commerce.

Online travel services, financial brokers and dealers, and ticket sales agencies are not classified as retail, and are not included in either the total retail or retail e-commerce sales estimates. Businesses are asked each month to report e-commerce sales separately.

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