August 27, 2008, 12:00 AM

The story behind the latest e-commerce numbers

Last month’s report from the U.S. Department of Commerce confirmed once again that online sales are growing faster than offline sales. But the disparity in growth between online and offline is greater when gasoline and food sales are subtracted from the Commerce Department’s numbers.

Internet Retailer

Online sales are growing faster than offline sales-no news there. Last month’s report from the Census Bureau of the U.S. Department of Commerce confirms that once again-but it doesn’t tell the entire story. And especially in a down economy, retailers should have a clear picture of where sales are taking place.

The Census Bureau reports that online sales reached $34.6 billion, on a seasonally adjusted basis, in the second quarter, up 9.5% from $31.6 billion in Q2 a year ago. Total retail sales were $1.034 trillion, up 2.5% from $1.009 trillion a year earlier. By that measure, online sales grew at about four times the rate of offline sales.

But the disparity in growth between online and offline is greater when gasoline and food sales are subtracted from the Commerce Department numbers, analysts note. Prices have been going up rapidly for gasoline and food, and gas is never bought online and food only rarely, so those price increases result in higher offline sales.

Analysis of retail spending minus food and gasoline shows first half growth in total retail sales of 0.35%. If fuel sales, which represent home heating purchases and also are unlikely to occur online, are further subtracted from the Commerce Department numbers, retail growth was an almost non-existent 0.06%.

Meanwhile, e-commerce sales were up 11.2% in the first half, to $68.25 billion from $61.35 billion. By that measure, online sales are growing far more rapidly than offline. In fact, growth in total retail sales minus food and gasoline was $6.25 billion in the first half, while growth in online sales was $6.90 billion.

“Inflation is occurring in categories not bought online, namely food and gas,” says Gian Fulgoni, chairman of web measurement firm comScore Inc. “You’ve got to eat and drive, and you’re going to make those purchases offline. So inflation is holding up that offline retail number.”

Consumer spending on gasoline was up 20% in the first half from a year ago; on fuel sales, 23%; and on groceries, 5.7%.

kurt@verticalwebmedia.com

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