Thursday, May 25, 2006
E-commerce Jumps, Print Shipments Fall
We also updated our data series and ran the statistical analysis again. Every 0.1 percentage point change in e-commerce as a percentage of retail sales is equivalent to $1.6 billion in annual printing shipments. The strength of the statistical relationship is shown by the r-squared (coefficient of determination), which was 90.2%. This is excellent as sales forecasting models that are in the 75% range are considered to be very good.
Why did e-commerce jump so much (from $21B in goods in 4Q-04 to $27B in 4Q-05)? Aside from the trend for more e-commerce as broadband penetrates more and more Internet households and businesses, it may have gotten a boost from consumers trying to bypass rising energy prices. Shoppers avoiding trips to malls and shopping centers may have been more inclined to buy online. Retailers have been encouraging consumers to shop online as their sites, e-mail promotions, and data bases continue to improve every year.
Wonder why rising energy prices haven't slowed the economy? One of the reasons is that e-commerce provides a way of sidestepping higher personal energy costs for transportation. Of course, goods have to be shipped, but FedEx and UPS are far more efficient in their use of energy than individual consumers. Let's also remember that the online FedEx and UPS package tracking systems have increased the confidence that consumers have in buying products online. When consumers are certain about the delivery status of their orders, suspicions about e-commerce recede, and its use increases.
P.S.: A printing business that embraces e-commerce can experience the opposite of the industry trend. Vistaprint's third quarter sales were $41.6 million, up 66% compared to the same quarter of last year. The rule: invest in the technologies that can put you out of business. Then, let your competitors worry about coping with them while you use them to leapfrog ahead.