Thursday, March 02, 2006
Every 0.1% Increase in E-Commerce Causes -$1.8B in Commercial Printing Sales
What is valid, with an r-squared of 90% (for the statistics geeks in the audience who know that's quite good from a statistical business forecasting perspective; for everyone else, it's called the coefficient of determination, and a brief explanation can be found by clicking here), is the relationship of the percentage of retail sales that are conducted by e-commerce and inflation adjusted printing shipments.
E-commerce retail sales is now a mere 2.2% ($20.8B for Q3-05), but the equation generated by using that in a linear regression model is rather incredible, showing a $1.84 billion drop in commercial printing shipments for every 0.1% change in the share of e-commerce as a part of total retail.
Does this mean that e- commerce is the sole cause of prints decline? No, it doesn't. What it means is that this data series has a pattern that explains 90% of the direction of the printing shipments pattern. We do know that e- marketing has shifted ad dollars and business information dollars away from print.
So should we be surprised? The economy grows independent of e- commerce (it obviously grew for hundreds of years before it existed), but we know that sales information in all of its forms has been a mainstay of printing, and e-commerce strikes at its very heart.
Is e- commerce, then, sure death for printing? Not if you're a company like Vistaprint, or Printing for Less, or UDesignWePri nt, all of whom are counting on e-commerce to bring them into new markets and new audiences. We always say that you should strongly consider investing in what can put you out of business, and we also say to stay ahead of your clients and not your competitors. These companies may be doing just that.