In a bow to the growing economic importance of
electronic commerce, the government reported Thursday for the first
time on cyberspace shopping and found retailers rang up $5.3
billion in sales in just the last three months of 1999.
Sales over the Internet and other online systems, which now
account for a small part of total retail sales nationwide, are
growing in popularity and expected to continue to expand. Private
economists believe electronic commerce likely will become a big
force in the economy in the years ahead.
"It's where the future is," Wells Fargo economist Sung Won
Sohn said. "Twenty years ago everyone went to department stores.
Now most people go to discount stores. It may be that e-retail will
become the lion's share of total retail sales in another 20
The Commerce Department's $5.3 billion unadjusted fourth-quarter
sales figure marked the government's first in what will become a
quarterly estimate of goods and services sold over the Internet and
other online systems. The government's monthly retail sales reports
include online sales but they aren't listed separately.
"This is a historical landmark that symbolizes and helps
measure our transition to a new information economy," President
Clinton said of Commerce's effort to keep tabs on Internet retail
sales. Clinton said it was "an important step to ensure that we
have accurate and timely information about the economy in the 21st
Commerce said that the $5.3 billion in online sales accounted
for only 0.6 percent of the $821.2 billion in total retail sales
during the last three months of 1999.
The online sales statistic is based on a wide range of
businesses from traditional bricks-and-mortar retailers to
Internet-only merchants such as Amazon.com, Commerce Secretary
William Daley said.
Books, cars, clothing and furniture are among the online sales
tracked. Items bought over Internet auction sites, such as eBay,
also are included, Daley said. To be counted, an order must be
placed online, Commerce officials said.
But the statistic does not include sales from online travel
services, financial services and ticket sales for things like music
concerts. Neither does the monthly retail report include these
Given that, some analysts believed Commerce's calculation of
online sales activity may be conservative but it is consistent with
how the agency estimates total retail sales nationwide.
Jupiter Communications, a research firm, estimated that
consumers spent $7 billion online in just November and December
the holiday shopping season. That figure doesn't include travel and
financial services but it does include ticket sales.
Forrester Research, another research company, estimated that
consumers spent $10 billion online during the fourth quarter. That
includes tickets and travel but doesn't include financial services.
This past holiday season was a huge success for Internet
retailers, which enticed new shoppers with aggressive advertising.
With plentiful jobs, rising incomes and stock market gains,
Americans have been in the mood to spend.
Consumer spending accounts for two-thirds of all economy
activity and has been the locomotive behind the nation's speeding
economy, which grew by a breakneck 6.9 percent annual rate in the
fourth quarter. The Federal Reserve has raised interest rates four
times since June to slow the red-hot economy and keep inflation
The new quarterly online sales reports by themselves will not
change the government's monthly estimates of the U.S. economy's
growth or prospects for inflation, private and government
That is because online sales are already captured in the
government's broadest measure of the economy's pulse: the Gross
Domestic Product, the total output of goods and services.
Private economists believe Internet retailers are putting
pressures on traditional retailers to cut prices, a force that
would augur for lowering inflation.