March 31, 2006, 12:00 AM

E-retail sales growth: No breaking the mold in 2005

Online sales growth just won’t quit. They rose to $86.3 billion in 2005, up 24.6% from 2004, as total retail sales increased 7.2%.

25% annual growth has been pretty much the story of online retail sales the last few years-and 2005 was no exception. The Census Bureau of the U.S. Department of Commerce reported at the end of February that online retail sales in 2005 grew 24.6% over 2004, reaching $86.3 billion from $69.3 billion. The Commerce Department’s numbers are the last word-literally and figuratively. While other researchers had reported 2005 numbers weeks earlier, most benchmark their numbers against Commerce.

Online retail sales in the fourth quarter grew 23.4% over online sales in Q4 2004, reaching $26.5 billion from $21.5 billion, the Commerce Department reports. Q4 sales also were 27.5% over Q3’s sales of $20.8 billion.

By comparison, total retail sales in 2005 were up 7.2% from 2004. Year-over-year Q4 growth in total retail sales was 6%. Q4 total sales were up 0.3% from Q3.

Online sales accounted for 2.3% of all retail sales in 2005, the Commerce Department reports. The Commerce Department numbers include many sales that are never likely to occur online, such as fuel and restaurant sales, but exclude auto parts. Adjusting the Commerce Department numbers to exclude fuel, gasoline station and food service sales but to include auto parts, the proportion of online sales to offline sales that could occur online jumps to 3.4%.

However, the Commerce Department also excludes eBay and other auction sales. So including eBay’s gross merchandise sales of $44.3 billion minus eBay’s automobile sales of an estimated $13 billion, and assuming that two-thirds of remaining eBay sales could equate to retail sales (as opposed to people just getting rid of stuff), total online sales in 2005 shoot up to $107 billion, which amounts to 4.3% of all retail sales.

 

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