Government Puts Q2 Online Retail Sales at $5.5 B

Online retail sales in the U.S. continued to rise in this year's second quarter, although they also remain a miniscule piece of the total retail business, according to estimated figures released yesterday by the U.S. Census Bureau.

The Census Bureau estimated that the online retail business totaled US$5.518 billion in the second quarter, up 5.3% from $5.24 billion in the first quarter and 6.2% from $5.198 billion in the fourth quarter of last year -- the first three-month period in which the bureau began tracking e-commerce sales.

The online figures are still just a drop in the retail bucket, though. The second-quarter number amounted to less than 1% of the $815.7 billion in total retail sales that the Census Bureau estimated based on a survey of 12,000 retailers. That percentage has essentially remained unchanged since the e-commerce tracking began, the bureau said.

As a means of comparison, Bentonville, Ark.-based Wal-Mart Stores Inc. -- the world's largest retailer -- yesterday announced that it alone recorded net sales of $14.5 billion in just the four-week period ended Aug. 25.

Nonetheless, U.S. Commerce Secretary Norman Y. Mineta said in a statement that the Census Bureau's second-quarter figures "show that Internet sales continue to strengthen and grow." Most industries showed online retail sales increases, with the strongest growth coming in autos, sporting goods and apparel, Mineta added.

Even at today's relatively small levels, online sales have an important role to play in helping brick-and-mortar retailers gain new customers who had never shopped in their stores before, said Greg Girard, a retail-industry analyst at AMR Research Inc. in Boston.

"The real impact of this is how store sales . . . are affected by sales through the Internet," Girard said. "We're going to see more of a fusion of the channels." The future, he added, looks brightest for retailers who can give their customers multiple ways to buy goods and access services.

Harry Wolhandler, an analyst at ActivMedia Research LLC in Peterborough, N.H., said the Census Bureau numbers may underestimate the actual online retail sales growth, based on the research his company has done. ActivMedia estimates that U.S. online retail sales were about $10 billion in the second quarter, almost double the government figures.

Wolhandler said the difference may be due in part to the fact that ActivMedia surveys a different mix of companies, many of which may not be on the government's radar screen. For example, he said ActivMedia includes numerous e-commerce start-ups that have shown more sales growth online than have brick-and-mortar retailers with newer Internet businesses.

But whichever numbers are more accurate, Wolhandler added, the message is that online sales are on the rise. "The whole pie is growing rapidly," he said. "While I see more growth out there than they see, I think we're all moving in the same direction."

The Census Bureau, which is part of the Department of Commerce, uses a random sampling method to select the 12,000 brick-and-mortar and e-commerce retailers that take part in its survey. Their sales are then weighted and benchmarked to represent all of the more than 2 million retail companies in the U.S., the bureau said.

Online travel services, financial brokers and ticket sales agencies aren't included in either the e-commerce or total retail estimates because the Census Bureau doesn't classify those businesses as retail operations. Companies ranging from online retailers to furniture stores and building materials dealers are part of the survey. Third-quarter retail sales estimates are due to be released in November, the bureau said.

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