US Internet sales top $5 Billion

Thursday, August 31st 2000, 12:00 am
By: News On 6

Washington, Aug. 31 (Bloomberg) -- U.S. retail purchases over the Internet totaled $5.52 billion, or 0.7 percent of all sales, during the second quarter, the Commerce Department said today in its third report on electronic commerce.

Sales in the first quarter of this year totaled $5.24 billion, also 0.7 percent of total purchases, previously reported as $5.26 billion.

Today's quarterly figures are part of the Commerce Department's scientific survey to address the effect of Internet business on the economic expansion, now in its 10th year.

The government surveyed 12,000 businesses, including mail- order and online retailers, furniture stores, building materials dealers, new car dealers, groceries and department and apparel stores. Online travel services, financial brokers and ticket sales agencies were not included.

The survey was conducted at the same time as data was collected for the monthly retail sales reports during the second quarter. Second-quarter electronic commerce sales rose 5.3 percent compared with a 0.8 percent first-quarter increase.

Total retail sales during the second quarter of the year rose 9.1 percent after falling 8.9 percent in the first quarter.

The Census Bureau is still examining the best way to categorize the companies surveyed by industry within the realm of electronic commerce. The government expects that as more data is collected the quarterly figures could be eventually issued as a monthly report like the overall retail sales report.

The new statistics aren't adjusted for seasonal variations or broken down by industry. Because of that, the government said the e-commerce figures shouldn't be compared with private industry estimates.

U.S. Internet shoppers spent $4.03 billion in July to buy office supplies, videos, summer fashions and sporting goods, according to a survey released Aug. 18 by the National Retail Federation and Forrester Research Inc.

Sales rose less than 1 percent from $4.01 billion in June, according to the poll of 5,000 consumers. The average amount spent by each Web consumer rose 1 percent to $290 in July from $288 a month earlier, the survey said.

Sales Expectations

Shoppers are expected to spend $38.8 billion on the Internet this year, almost double last year's $20.2 billion, according to Forrester Research. July's sales weren't expected to increase significantly from June because consumers do less shopping during summer months, the National Retail Federation said.

Some Internet retailers like Inc. and Inc. are struggling.'s second-quarter sales fell short of forecasts and its loss more than doubled, the company said last month. The biggest Internet retailer said second-quarter sales rose less than 1 percent to $577.9 million from the first quarter and missed the $585 million average estimate of analysts polled by First Call/Thomson Financial., which sells computers and technology products on the Web, said earlier this month that third-quarter sales will fall as much as $26 million below earlier forecasts as it shifts its focus to business customers.

The company was expected to lose 38 cents a share on sales of $132 million during the period, the average estimate of three analysts polled by First Call/Thomson Financial. now expects sales of $106 million to $116 million. Inc., an Internet store targeting price-conscious shoppers, said last month that its second-quarter loss widened from a year earlier as sales growth slowed.

The loss grew to $33.6 million, or 26 cents a share, from $28.1 million, or 32 cents, a year earlier when it had fewer shares outstanding. attracted 362,000 new customers, or 20 percent fewer than in its first quarter when 449,000 new customers were added. The company said it raised prices in some categories. Sales of hand-held computers were limited by product shortages.

The Internet and high-technology industries are responsible for at least a third of nation's growth from 1995-1998, according to the government. The electronic sales report is part of a larger effort by the Commerce Department to gauge the effect of information technology on the economy.

The department requested $13 million for fiscal year 2001, which begins Oct. 1, to improve its measurement capabilities. The Census Bureau, one of the department's two economic data-gathering agencies, is proposing to create partnerships with companies to help it get Internet data more quickly.

The other agency, the Bureau of Economic Analysis, wants to use that new Census data in its broad calculations of the economy, including the gross domestic product.

Last October, the government released benchmark revisions -- which went back as far as 1959 -- to take into account what businesses invested on computer software. The changes in calculation boosted 1998 growth to 4.3 percent and 1997's growth to 4.5 percent, both previously 3.9 percent.