Do you shop online?
The Census Bureau just released its annual report on retail e-commerce sales.
More and more people are shopping with keystrokes and mouse clicks. It’s convenient. It allows you to comparison shop and even “bid”. You can avoid the traffic and crowds. But what does it do to your local economy?
Recently, my 14-year old son asked if he could bid on an Ipod from ebay. When I learned the seller was located in China and had a total of 10 positive feedbacks (an ebay term to establish credibility), I asked him what he would do if it malfunctioned? Who would he turn to for protection if it were a fraudulent purchase? How would he return it if there were problems? I asked how he knew it was really an Ipod instead of some knock-off?
He opted not to bid.
I asked why he didn’t purchase it down the street at Circuit City (it’s only 2 miles from our house for heaven’s sake!). He said, “price”. The ebay Ipod was less than half of that sold locally. He works hard at his weekend job and doesn’t want to pay any more than he must.
He’s not alone.
Online shopping is changing the way Americans do business. And as his generation ages, it will only become more prevalent.
Unless something unforeseen happens to change our behavior, it will be impractical to think that Americans will voluntarily “be loyal and buy local”.
The Census Bureau reports that total e-commerce sales for 2005 were estimated at $86.3 billion, an increase of 24.6% from 2004 – a growth rate 3.4 times faster than total retail sales.
Total retail sales in 2005 increased 7.2% from 2004.
E-Commerce sales in 2005 accounted for 2.3% of total sales, up from 0.6% in 1999.
Source: http://www.census.gov/mrts/www/data/html/05Q4.html
Why is this important to understand? Because states and localities that are dependent upon sales tax collections (like Texas, Tennessee and Florida) are predicted to continue to see substantial erosion of their revenues due to inability to effectively collect sales tax.
Read more about it: http://cber.bus.utk.edu/ecomm.htm
PS – My son still doesn’t own an Ipod. He’s still shopping for the best value. But then his birthday is just around the corner so maybe Mom & Dad will help. Who knows?
