December 7, 2004

E-commerce is still tiny

Commerce By: ams

Brad DeLong quotes Andrew Samwick:

…the fraction of all [US] retail sales that are conducted via E-Commerce … [is] still only 2 percent, at about $17.6 billion out of $916.5 billion last quarter. The growth rate for [US] E-Commerce is about 2-3 times the pace for total retail sales, but even though that sounds like a lot, it will take a while for the E-Commerce share to become very important in the aggregate. (Simple extrapolation of the last five quarters of growth in each series would get to an 8 percent share in another 10 years.)

(I’ve taken the liberty of inserting qualifiers in the text — the original author seems to have thought unimportant the distinction between ecommerce and American ecommerce. But he’s talking about American ecommerce and quoting figures from this Census Bureau report.)

So there’s still a lot of B2C commerce that’s still not using the web. Even in the $23-billion-a-year American book industry, Amazon has a minority — Amazon’s selling US$2 billion a year in the US but $5.8 billion a year overall. (Notice, again we have the long tail: Amazon has the most online transactions, but most online transactions aren’t on Amazon. America has the most sales, but most sales aren’t in America.) I think online book sales in general are only a small multiple of Amazon’s sales, and Amazon apparently only has around 9% of the book market (assuming all of Amazon’s sales are books, which isn’t quite true).

(As another footnote, eBay’s gross merchandise volume is around $30 billion, of which more than half was in the US’s $70 billion a year [from the above Census report].)

So American retail ecommerce is 2% of American retail sales; presumably in the world, ecommerce is an even smaller percentage, particularly by PPP. Even in industries like book publishing, which is almost perfectly suited to online selling (large numbers of different products, each highly standardized, costing many dollars per kilogram, not perishable, requiring significant research to find products suited to the buyer) online selling seems to be a minority of all selling.

How can we make ecommerce more useful? It clearly has a long way to go.

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