February 19, 2010, 12:00 AM

Q4 online sales grow 14.4%, year up 2.2%, Commerce Department reports

In a down year for the U.S. economy, online retailers continued to grab market share from offline retailers, according to the latest report from the U.S. Department of Commerce.

In a down year for the U.S. economy, online retailers continued to grab market share from offline retailers, according to the latest report from the Census Bureau of the U.S. Department of Commerce.

Online retail sales in the fourth quarter grew 14.4% on an adjusted basis over the fourth quarter of 2008, reaching $35.9 billion, the Department of Commerce reported.

For the year, e-commerce sales increased 2.0% to $134.9 billion.

While the growth was far from the double-digit growth that online retailers have come to expect, it still represented a major shift from offline to online buying.

Total retail sales in the fourth quarter rose just 2.1% to $942.4 billion, while total retail sales for the year declined 7%, the Commerce Department says. The shift to online accelerated in the fourth quarter: The difference in growth between online and offline was 12.3 percentage points for the fourth quarter and 9 for the year.

By the Commerce Department estimates, e-commerce sales in the fourth quarter of 2009 accounted for 3.8% of total sales, up from 3.4% in the fourth quarter of 2008. The proportion of online sales to offline is higher than that as the Commerce Department bases its calculation on total retail sales that include sales of many items that are unlikely to occur online, such as gasoline, restaurants and bars, and automobiles.

On a not-adjusted basis, e-commerce sales grew 14.6% in Q4 from Q4 2008 and 2.2% for the year, according to the Commerce Department.

The Commerce Department’s finding of sharp e-commerce sales growth are in line with the estimate of 15.5% growth in online retail sales from Nov. 1-Dec. 24 from MasterCard Inc.`s SpendingPulse holiday spending report. But it contrasts with estimates by web measurement firm comScore Inc., which reported earlier this month that Q4 sales were up only 3%. Until now, the comScore numbers and Commerce Department numbers were closely aligned.

ComScore is still investigating why there is such a large discrepancy, a spokesman says. He says the company has identified two areas that could account for a couple of percentage points of difference. One is auto sales, which were substantially higher in the fourth quarter of 2009 than in the very weak Q4 of 2008; although there are not that many auto sales online, they are high-ticket items that add up, the spokesman says.

The other reason Commerce Department sales would be higher is that the U.S. agency counts digital downloads of electronic books to Amazon`s Kindle e-book reader. ComScore does not track activity of its consumer panel members from their Kindles, only from their PCs, and thus would not register those sales, the spokesman says.

The Commerce Department’s numbers are based on a survey of 12,500 retailers, while comScore’s estimates are based on Internet use by several hundred thousand U.S. consumers. MasterCard`s consulting unit, MasterCard Advisors, puts together its SpendingPulse estimates based on traffic in the MasterCard credit and debit card network and estimates of non-card spending.

Other indices also reported robust Q4 sales growth:

  • E-commerce provider MarketLive Inc. reports sales growth for its clients at 8.54% in Q4.
  • Mercent Inc., also an e-commerce provider, reports Q4 growth of 31.9% for its clients.
  • Chase Paymentech, a payments processor, reported online sales growth of 15.3% for the six weeks from Nov. 1 to Dec. 16.

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