Internet Impacts Roughly $1.83 Trillion in Offline Buying

e-Commerce shopping cartI’ve been arguing for years now that the “real story” is not e-commerce (or now m-commerce) but online-influenced offline commerce (in-store buying). Let’s run some numbers to make that claim a bit more concrete.

If the US retail economy was worth roughly $4.4 trillion in 2012 (US Commerce Department) and e-commerce came in at $186 billion according to comScore, that would mean that US e-commerce was worth less than 5% of total retail.

The US Commerce Department estimated e-commerce to be about 5.8% of Q2 retail sales. Spending on local services is worth at least another $2.9 trillion according to the Bureau of Labor Statistics. That means in-store/offline spending in the US is roughly $7.3 trillion. (I’m leaving travel out because it’s a gray area.)

e-commerce figures

There are multiple surveys in the market that show consumers increasingly do online research before buying (online or off). The numbers range but are growing. It’s very hard to average out all the data but the data seem to indicate that just over half of internet-enabled US consumers research at least 50% of their purchases online (see, e.g., the e-Tailing Group’s 2012 “connected consumer” study). These are respondents’ estimates and may not be entirely accurate reflections of their behavior.

Oracle cites Forrester to assert in a 2012 cross-channel shopping white paper that “43% of all U.S. retail sales are influenced by the Web.” (The Forrester estimates are based on consumer surveys as well.)

Let’s be conservative. If half of consumers research half of their purchases online then roughly 25% of purchases overall would be influenced by the internet in some way. If we use that “conservative” figure and spread it across retail and services spending, we arrive at the following statement:

Roughly $1.83 trillion in offline purchases in the Us are impacted by the internet on annual basis.

If we use the Oracle-Forrester figure it would mean (limiting it to retail), the number is very similar: $1.89 trillion. Using either number or formula, online-influenced offline spending is about 10X e-commerce — which is what I’ve been arguing.

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No Responses to “Internet Impacts Roughly $1.83 Trillion in Offline Buying”

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