Online sales climbing
By Vince Golle
Bloomberg News Service
WASHINGTON — Internet sales rose as a proportion of all U.S. retail sales in the first quarter compared with the same three months last year as consumers took advantage of free shipping when they bought merchandise.
Online commerce totaled $11.9 billion, or 1.5 percent of all sales, during January through March, the Commerce Department said.
That compares with a 1.3 percent portion in the first quarter of last year and represents the second-largest share of all sales since the survey began in 1999. In the fourth quarter of 2002, Internet commerce was 1.6 percent of all sales.
Free shipping, discounting and ease of ordering over the Internet are luring customers.
Amazon.com Inc., the world's biggest Web retailer, said its sales picked up in the first quarter after offering free shipping on orders over $25 and discounts of as much as 30 percent on books, electronics and other items. Consumer spending accounts for more than two-thirds of the economy.
"Given the environment of war and terrorism, consumers purchased goods from their homes rather than heading to stores and malls," said Richard Yamarone, chief economist at Argus Research Corp. in New York. Americans "are very comfortable shopping from their homes, which will result in a greater pace of Internet sales."
The government surveyed 11,000 businesses, including mail-order and online retailers, furniture stores, building materials dealers, new car dealers, groceries and department and clothing stores. Online travel services, financial brokers and ticket sales agencies were not included.
The government's 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.
Sales 'encouraging'
Online retail sales are seen growing 26 percent this year to $96 billion, according to a Shop.org annual study conducted by Forrester Research of more than 130 retailers. Shop.org is an association for online retailers and a division of the National Retail Federation. Online sales are expected to reach 4.5 percent of total retail sales this year, up almost one percentage point from last year.
"In a time when the retail industry has been extremely challenged, it is encouraging to see the online channel continue to grow, and even better, start to make money," said Kate Delhagen, consumer markets research director at Forrester Research.
Amazon.com's first-quarter sales grew at a faster rate than overall U.S. Internet sales and its operating expenses, which rose by 4.5 percent to $231.4 million. Sales for all U.S. online retailers rose 17 percent during 2003's first three months, according to ComScore Networks Inc., a research firm.
Playboy Enterprises Inc., publisher of the most widely read men's magazine, earned $632,000 in the first quarter after 16 straight losses because of higher sales of sexually oriented material on its Web sites.
The online division should become profitable this year after a "small loss" in the first quarter, Playboy Chief Executive Christie Hefner said earlier this year.
