Internet Sales Soar During Summer

WASHINGTON (AP) â€” While retail sales overall were stagnant during the summer, sales on the Internet were soaring, the government reported Monday. <br><br>The Commerce Department said the burgeoning world

Monday, November 27th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” While retail sales overall were stagnant during the summer, sales on the Internet were soaring, the government reported Monday.

The Commerce Department said the burgeoning world of electronic commerce posted a 15.3 percent sales gain in the July-September quarter with total sales rising to $6.37 billion.

It was the strongest performance yet for e-commerce in the short time the government has been measuring this activity. It compared to a gain of 5.5 percent in the second quarter and an 0.8 percent increase in the first quarter of this year.

In another report Monday, the National Association of Realtors said sales of existing homes dropped 3.9 percent in October to a seasonally adjusted annual rate of 4.96 million units.

That was a bigger decline than many analysts had been expecting and provided further evidence that the campaign by the Federal Reserve to dampen growth with higher interest rates was having an impact.

The improvement in Internet sales came despite the fact that overall retail sales actually fell slightly in the third quarter, dropping by 0.4 percent after a strong 9.1 percent surge in the April-June quarter.

This drop in consumer activity was part of a sharp slowdown in overall growth. The gross domestic product grew at a 2.7 percent rate in the third quarter after racing ahead at a 5.6 percent pace in the second quarter of the year.

The slowdown is being engineered by the Fed, which boosted interest rates six times beginning in June 1999 in an effort to slow economic growth and keep inflation under control.

The Commerce Department report showed that sales over the Internet and other online computer networks still accounted for a just a tiny fraction of overall sales in the summer. E-commerce sales amounted to 0.78 percent of all retail sales in the third quarter, up from 0.68 percent in the second quarter.

The government began issuing reports on e-commerce only this year. The 0.78 percent of total sales is the highest share ever recorded. The first survey, covering the final three months of 1999, put e-commerce sales at 0.63 percent of total retail sales.

Sales over the Internet are growing in popularity with some private economists predicting that electronic commerce could account for the biggest part of retail sales over the next two decades.

When the government released the first e-commerce report in March, President Clinton hailed it as a ``historical landmark that symbolizes and helps measures our transition to a new information economy.''

The online sales statistic is based on a wide range of businesses â€” from traditional bricks-and-mortar retailers to Internet-only merchants such as Amazon.com.

Books, cars, clothing and furniture are among the online sales tracked. Items bought over Internet auction sites, such as eBay, also are included. To be counted, an order must be placed online, although payment does not have to be made online.

The Commerce statistic does not include sales from online travel services, financial services and ticket sales for things like music concerts. These items are also excluded from the department's monthly retail sales report.

Given that, many analysts believe Commerce's calculation of online sales activity significantly misses the total amounts of e-commerce activity.

The Commerce figures on Internet sales are not adjusted for normal seasonal variations.

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On the Net:

http://www.census.gov/mrts/www/mrts.html