E-commerce 1999 - Census.gov

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1E-commerce 1999Cen sus B ureau data sh ow that bus iness tobusiness (B-to-B) e-commerce dominated199 9 e-c om me rce activity. E-Statsprovides the first official snapsh ot ofe-commerce activity for key sectors of theU.S. economy. This report shows thatwh ile e-co mm erce in 199 9 accou nted for arela tive ly small perc en t of total eco no micactivity in these sectors, e-commercetransactions between businesses,commonly referred to as B-to-BNote to readersE-commerce data were collected in four separateCensus Bureau surveys. These surveys useddifferent measures of economic activity such asshipments for manufacturing, sales for wholesaleand retail trade, and revenues for serviceindustries. Consequently, measures of totaleconomic and e-commerce activity vary byeconomic sector, are conceptually anddefinitionally different, and therefore, are notadditive. The Census Bureau’s e-commercemeasures report the value of goods and servicessold online whether over open networks such asthe Internet, or over proprietary networks runningsystems such as Electronic Data Interchange (EDI).e-c om merc e, a ccounte d fo r a remark ab lylarge share of overall e-commerce. Thereport also shows that the dollar value ofe-co mmerc e activ ity varie d sign ifica ntlyam on g key secto rs o f the eco no my. W ithinthes e se ctors , how eve r, almo st all indu strygroup s we re enga ged in e -com me rce tosome degree, but a significant portion ofthe total e-commerce dollar value wascon cen trated in a ha ndfu l of indu strygroups.Ma nufac turing led all industry se ctors w ith1999 e-commerce shipments thataccounted for 12.0 percent ( 485 billion)of the total value of manufacturingshipme nts. M erch ant W hole salers we resecond with e-commerce sales thatrepresented 5.3 percent ( 134 billion) oftotal sales. A special grouping of serviceindustries created for this report showsthat Selected Service Industriese-co mm erce reven ues acc oun ted fo r 0.6percent ( 25 billion) of total revenues forthese industries. Retail Trade, the focus ofmuch e-commerce attention, hade-commerce sales in 1999 that accountedAlthough E-Stats does not cover the entire U.S.economy, this report covers North AmericanIndustry Classification System (NAICS) industriesthat accounted for approximately 70 percent ofeconomic activity measured in the 1997 EconomicCensus. The report does not cover agriculture,mining, utilities, construction, nonmerchantwholesalers, and approximately one-third ofservice-related industries. See Explanatory Notesfor additional information regarding reportcoverage, methods, and data reliability. Themeasures of sampling variability for Tables 1-5follow the Explanatory Notes and are found inTables 1A-5A.Economic and Statistics AdministrationU.S. Census Bureau

2for 0.5 perce nt ( 1 5 billion ) of total re tailsales .Man ufa ctu ring and M erc ha nt W ho lesaleTra de , se cto rs w he re g oo ds are prim arilysold to oth er b usine sses, ha d sub sta ntia llyhig he r e-c om merc e perc en tag es tha n R eta ilTrade and Selected Service Industries,secto rs w he re g oo ds and serv ices are soldto individual co nsum ers as w ell as tobusinesses. Although the surveys did notcollect sep arate da ta on b usines s tobusiness (B-to-B) and business to consumer(B-to-C) e-co mm erce, on e can appro ximaterelative shares by using some simplifyingassumptio ns. If on e assum es allmanufacturing and wholesale e-commercewas entirely B-to-B and all retail and servicee-commerce activity was entirelyB-to-C, and ignores the definitionaldifferences between shipments, sales, andrev en ue , more tha n 90 perc en t of totale-commerce was B-to-B.One possible explanation for the largee-commerce percent differences among thefour sectors may be the long-standing useof EDI systems for online selling by manymanufacturing and wholesale tradeindu stries in c ontra st to th e m uch mo rerecent adoption of Internet systems bymany retail an d se rvice indu stries. Inmanufacturing, while many plants used theInternet for accepting online orders fromtheir customers, in terms of dollar volume,EDI systems continued to dominate. Ofthose manufacturing plants that reportedoffering online ordering to their customers,52 percent used the Internet mostfrequently for accepting online orders,wh ile 36 perce nt us ed E DI m ost o ften.How ever, in terms of dollar value, plan tsusing Internet ordering systems m ostfrequently accounted for only 5 percent oftotal ma nufac turing e-co mm erce sh ipme ntswhile plants offering EDI online orderingacc oun ted fo r 59 perce nt.The E-Stats tab les show tha t alm ost allindustry groups are engaged in e-commerceactivity to some degree, but that in termsof dollar value, e-commerce is concentratedin a few groups within each sector. Forexample, in Merchant Wholesale Tradethree industry groups accounted for 76percent of wholesalee-commerce sales, while in Retail Tradeone group accounted for 77 percent ofretail e-co mm erce sales .ManufacturingU.S. manufacturing e-comm erce shipments,as show n in Ta ble 1, a cco unte d for 1 2.0pe rce nt ( 4 85 billion) o f the valu e of allshipments ( 4,038 billion) from U.S.manufacturing plants. This informationwas collected in the 1999 Annual Surveyof M anu factu res (A SM ) Com pute r Netw orkUse Su pple me nt, a sepa rate surve y of m orethan 50,0 00 A SM ma nufa cturing plan ts.Ma nufa cturing e-c om me rce sh ipm ents we reconcentrated in five industry groups thatacco un ted for 63 perce nt o f allman ufa ctu ring e-c om merc e ship men ts interms of dollar value. TransportationEquipment was largest, accounting for 29percent ( 140 billion) of totalmanufacturing e-commerce shipments.Substantial e-commerce shipments alsowere found in Food Products, Chemicals,Machin ery , an d C om pu ter and ElectronicProducts manufacturinggrou ps.Every manufacturinggro up was enga ge d ine-com me rce activityand , in fact, th ere w ereonly two groups - Wood Products, andPetroleum and Coal Products - wheree-commerce shipments accounted for lessthan 5 percent of total shipments for thegroup. While Transportation EquipmentEconomic and Statistics AdministrationU.S. Census Bureau

3accounted for the largest percentage ofgroup shipments (21 percent), other groupswith large percentages of e-commerceshipme nts inc lude d Elec trical Eq uipm ent,Applianc es, and C om pon ents (20 p erce nt);Apparel (18 percent); Leather and AlliedProducts (18 percent); and Textile ProductMills (15 perc ent).Merchant Wholesale TradeU.S. merchant wholesale e-commercesales , as sh ow n in Ta ble 2, w ere 5.3percent ( 134 billion) of total sales( 2,541 billion) for 1999. This informationwas collected in the 1999 Annual TradeSurvey, a survey of more than 6,900merchant wholesalers that take title to thegoods they sell. Table 2 therefore,excludes nonmerchant wholesalers such asmanufacturers’ sales branches and offices,agents, brokers, commission agents, andelec tron ic m arketp lace s an d exch anges. Inthe 1997 Economic Census, nonmerchantwho lesalers accou nte d fo r ap pro xim ate ly44 percent of total wholesale trade sales.E-c om merc e sales w ere conc en trated inthree industry gro ups that a cco unte d formore than 75 percent of total e-commercesales by merchant wholesalers. Drugs andDruggists’ Sundries wholesalers accountedfor 35 percent ( 47 billion); MotorVehicles, Parts and Supplies wholesalers,25 percent ( 33 billion); and Professionaland Commercial Equipment and Supplieswh olesa lers, 16 perc ent ( 22 b illion).While all merchantwholesale industry groupshad some e-commercesales , only tw o industrygroups sold more than 10pe rce nt o f theirmerchandise over onlinenetworks. Drugs and Druggists’ Sundrieswh olesa lers’ e-c om me rce sa les w erealmost one-third of their total sales andMotor Vehicles, Parts and Supplieswholesalers’ e-commerce sales were 17percent of their total sales.Selected Service IndustriesU.S. e-commerce revenues for selectedservice industries, as shown in Table 3,accounted for 0.6 percent ( 25 billion) oftotal re venu es ( 4 ,27 6 billion ). Thisinformation was collected in the 1999Service Annual Survey, a survey of 51,000services firms. The Selected ServiceIndustries total provided in Table 3 is notan official NAICS grouping, but rather thesum of the bolded groups shown in thetable. Some of these groups are notcomplete. Incomplete industry coveragewithin a group is denoted by the absenceof a NAICS Code for a Table 3 bolded rowand the use of “Selected” in the groupdescription. Table 3 includes about twothirds of the NAICS service-relatedind ustries covere d in the 1997 Econ om icCensus and 55 percent of their totalrevenues.Four groups accounted for almost 60percent of total Selected Servicee-commerce revenues. Travel Arrangementand Reservation Services accounted for 21percent of total Selected Servicee-commerce revenues, Securities andCommodity Contracts Intermediation andBrokerage represented 15 percent of thetotal, Publishing accounted for 12 percentof total e-commerce revenues, andComputer SystemsDesign and RelatedServices an additional 11perc ent.Travel Arrangement andReservation Services wasthe online leader among all the selectedservice groups withEconomic and Statistics AdministrationU.S. Census Bureau

4e-commerce revenue accounting for 21percent of the total revenue for the group.On line Informa tion S ervice s an d Co uriersand Messengers, both with online revenuesclose to 5 percent, were the only otherservice groups where e-commerce revenuesrepresented more than 2 percent of totalrevenues for a group.Retail TradeU.S. reta il e-c om merc e sales, a s sho wn inTable 4, accounted for 0.5 percent ( 15billio n) o f total s ales ( 2,8 68 billion). Thisinformation was collected in the 1999Annual Retail Trade Survey, a survey ofmo re tha n 19 ,000 retailers.E-c om merc e sales w ere conc en trated intwo groups: Nonstore Retailers and MotorVe hicle a nd P arts D ealers . Non storeRetailers include catalog and mail-orderoperations as well as retail sites sellingsolely over the Internet andaccounted for 77 percent( 1 2 billion ) of reta ile-commerce sales. MotorVe hicles and Parts D ealerswere next largest with 12percent ( 2 billion) of totalretail e-co mm erce sales .Nonstore Retailers was the only retail groupwith e-commerce sales greater than 1pe rce nt o f their to tal s ales. The Electron icShopp ing an d M ail-Orde r Hou ses industryacc oun ted fo r almo st all of N ons toreRetailers e-commerce sales. Table 5provides detailed information on the kindsof merchandise sold by businessesclassified in the Electronic Shopping andMail-Order Houses industry. The leadingme rcha ndise ca tego ries w ithin this in dus trywere Computer Hardware with 37 percentand Books and Magazines with 14 percentof total industrye-commerce sales. The other merchandisecategories where e-commerce salesrepresented 5 or more percent of totalindustry e-commerce sales were Music &Video, Clothing, Office Equipment andSupplies, Computer Software, and OtherMerchandise. For Electronic Shopping andMail-O rde r Ho uses 45 perce nt o f theirBooks and Magazines sales and 31 percentof their Computer Software total saleswere sold online.These 1999 retail trade e-commerce data are notdirectly comparable with the 2000 e-commerceretail trade estimates, part of the quarterly retaile-commerce series, released on February 16,2001. See the Explanatory Notes for additionalinformation.Future E-Stats ReportsThe 1999 Annual Trade Survey, AnnualRetail Trade Survey, and the ServicesAnn ual Surve y collected data for bo th1998 and 1999. This report provides 1999information. The 1998 data will be postedto ww w.ce nsus .gov/es tats on March 13,200 1.The 1999 Annual Survey of Manufactures(ASM) Computer Network Use Supplementcollected data only on 1999 e-commerceactivity. The survey collected additionalinforma tion on m anufa cturing plan tscurrent and planned use of some 25selected e-business processes. It alsocollected information regarding onlinesharing by plants of different types ofinformation with vendors, customers, andother plants of the same company. Initialresults highlighting the extent to whichmanufacturing plants are using selectede-b usine ss pro cesses will be available inMay 2001.Economic and Statistics AdministrationU.S. Census Bureau

5Explanatory NotesGeneralThe e-comm erce estimates in this releaseare based on data collected from foursurveys conducted by the U.S. CensusBureau: the 1999 Annual Survey ofMa nufa cture s (AS M) C om pute r Netw orkUse Supplement, the 1999 Annual TradeSurvey (ATS), the 1999 Service AnnualSu rve y (S AS ) an d th e 199 9 A nn ua l Re tailTrad e Su rvey (A RTS). Th ese surve ys w erecon duc ted indep end ently to me asu reseveral important economic variables. Theestimates of total and e-commerceshipments, sales, and revenues from thesesurveys have been consolidated to providea broader perspective of e-commerceactivity. Brief descriptions of the surveymethods are given below.Indu stry cla ssifications use d in this repo rtare b ase d on the N orth A me rican In dus tryClassification System (NAICS). The annualsurveys for wholesale, retail, and selectedservices published estimates on a NAICSbasis for the first time effective with the1999 reference year. Previous datareleases used the Standard IndustrialClassification system.Inform atio n abo ut N AIC S a nd additio na ldetail about coverage, sample design andestimation methodology for the annualsurveys may be found online atww w.ce nsus .gov/es tats.U.S. retail e-commerce sales for 2000 were 26billion or 0.8 percent of total retail sales. Thesedata were released on February 16, 2001 as partof the Census Bureau’s quarterly retaile-commerce series. See www.census.gov/estatsfor the full release. The 2000 retail e-commerceestimates, however, are not directly comparablewith the 1999 e-commerce estimates shown inTable 4 since the quarterly estimates are based onthe old Standard Industrial Classification (SIC)system while the 1999 estimates are based onNAICS. Important differences between NAICSand the SIC include a change in the Retail Tradeand Wholesale Trade boundary which shifted asignificant number of businesses from Wholesaleto Retail, and moved Food Services from the RetailTrade sector to the Accommodation and FoodServices sector. The quarterly e-commerce series,which now uses the Standard IndustrialClassification system, will begin using the NAICSsystem effective with the e-commerce release forthe second quarter 2001, scheduled for August2001.Definitions o f Econ om ic ActivityThe four surveys use different measures ofeco nom ic activity .Value of Shipm ents is th e m easure u sed inthe AS M. It is the mark et v alu e of allcommodities shipped from a plant. Value ofshipments includes shipments to outsidecustomers as well as to affiliated plants.Sales is the measure used in the ARTS andthe ATS. Sales are the dollar value oftransactions between the reporting firm andits custom ers. Sales inc lude trans actions toforeign affiliates, but exclude transactionsam ong dom estic a ffiliates.Revenue is the m eas ure u sed in the S AS .Revenues are the dollar values oftransactions and contracts between thereporting firm and its customers. Thesevalues include services performed forforeign affiliates, but exclude transactionsamong domestic affiliates. RevenueEconomic and Statistics AdministrationU.S. Census Bureau

6includes the total value of servicecontracts, the market value ofcompensation received in lieu of cash,amounts received for work subcontractedto others and other industry-specific items.Survey MethodsAnnual Survey of Manufactures ComputerNetw ork Us e Su pplem entThe ASM is designed to produce estimatesfor the manufacturing sector of theecon om y. The man ufa ctu ring un iverse isapp roxim ately 3 65,0 00 p lants. Data areco llected annu ally from a prob ab ility sam pleof approximately 50,000 of the 200,000ma nufa cturing plan ts w ith five or mo reemployees. Data for the remaining165,000 plants with less than fiveemployees are imputed using informationobtained from adm inistrative sources.The 1999 Annual Survey of ManufacturesComputer Network Use Supplement wasma iled to th e plan ts in the ASM s am ple.This supplement collected informationabout manufacturers’ e-commerce activitiesand use of e-business processes. Thequestionnaire asked if the plant allowedonline ordering and the percentage of totalshipme nts th at w ere o rdere d on line.Information on online purchases were alsoasked. In addition, information wascollected about the plant’s current andplanned use of selected e-businessprocesses and the extent to which theplant sh ared inform ation on line withvend ors, cus tom ers, and other plan tswithin the compan y.App roxima tely 83 pe rcent of the plantsresponded to this supplement. A stratifiedrandom sample of approximately 150non respo nden ts wa s selecte d. The se plan tswere contacted by telephone to determineif they accepte d o nlin e orde rs and to o bta inthe percentage of total shipments orderedon line . Th e informatio n colle cte d from thissample was weighted to represent theentire g roup of no nres pon den ts.Estim ates for NA ICS s ubs ecto rs werecalculated from the respondents to thesupp lemen t by sum ming their online datawe ighted b y the inve rse of the p robab ilityof the establishment’s inclusion in the ASMsample. Estimates from the supplement andthe no nresp onse sam ple we re sum me d torepresent the entire ASM sam ple. Theseestimates were then linked to the 1997Economic Census results to reducesam pling a nd n ons am pling e rror.Annual Trade Survey, Service AnnualSurvey, Annual Retail Trade SurveyThe ATS measures the economic activity ofmerc ha nt w ho lesale firm s w ith p aidem ploye es. M erch ant w hole sale firm s arethos e tha t take title to the goo ds th ey se ll.Data are collected annually from over 6,900firms that represent the universe ofappro ximate ly 300,00 0 me rchan t firms withpaid em ploye es.The SAS measures activity of selectedemployer firms classified in nine servicerelated sectors: Transportation andWarehousing; Information; Finance; Rentaland Leasing; Professional, Scientific, andTechnical Services; Administration andSupport and Waste Management andRemediation Services; Health Care andSocial Assistance; Arts, Entertainment andRecreation; Accommodation and FoodServ ices; a nd O ther S ervice s. Da ta arecollected annually from over 51,000 firmsto represent the universe of over 2.9 millionfirms with paid employees. Revenue for theap pro xim ate ly 190 ,00 0 firm s w itho ut p aidemployees in the Accommodation and FoodServices sector are estimated fromadministrative records.Economic and Statistics AdministrationU.S. Census Bureau

7The A RTS mea sures th e eco nom ic activityof a ll reta ilers with a nd witho ut p aidem ployee s. The A RTS collects da taan nu ally from over 1 9,0 00 firm s w ith p aidem plo yees. Sa les for firm s w itho ut p aidemployees are estimated fromadministrative records. The Retail Tradeuniverse contains over 2.5 million firms.For these three surveys, stratified randomsamples of firms were drawn from a frameconstructed using information from the1997 Econ om ic Cens us an d upd ated w ithinform ation from the C ens us B urea u’sBus iness Reg ister. Th e sa mp les w eresubsequently updated to representemployer firms in business during 1999.All wholesale, service, and retail firmsma iled in the surve ys w ere aske d to re porttotal and e-commerce sales/revenue for19 99 and 199 8. R eta ilers in th e ElectronicShopp ing an d M ail-Orde r Hou ses industrywere also asked to report total ande-c om merc e sales fo r 19 99 for specificmerchandise lines. E-commerce data forno nre spon din g emplo yer firm s and all retailnonemployers were imputed fromresponding firms within the same kind ofbus iness and sales size ca tego ry.Estimates of total sales and e-commercesales w ere calcu lated by s um ming data(both reported and imputed) weighted bythe inverse of the prob ability of th e firm’sinclusion in the appropriate sample. Theestima tes in this repo rt have be en linked tothe 1997 Economic Census to reducesam pling error and to allow co mp arabilitywith the c ens us.Reliability of EstimatesThe estimates in this release are based onsample surveys and are subject to samplingand nonsampling errors. Sampling errorocc urs b eca use only a sub set o f the e ntirepopulation is measured. Nonsampling errorencompasses all other factors thatco ntribu te to th e to tal e rror of a samplesurve y estim ate and m ay also occur incen sus es.Tab les 1A throu gh 5 A sh ow sam pling e rrorsfor estimates of percentages andcoefficients of variation for estimates oflevel. The standard error measures theexten t to whic h estim ate s deriv ed from allpossible samples drawn using the samedesign differ from the average of theseestimates. The coefficient of variation(exp ressed a s a perce ntag e) is the stan darderror of the estimate divided by theestimate. Note that sampling errors andcoefficients of variation are estimatesderived from the sample and are alsosub ject to sam pling e rror.Th e coe fficien ts o f va riation pre sente d inthe tab les ma y be us ed to c om puteco nfid en ce inte rva ls abo ut the sampleestimates. The particular sample used foreach survey included in this report is one ofa large numb er of samples of the sam e sizethat could have been selected using thesame design. In about 9 out of 10 (90percent) of these possible samples, theestima tes w ould differ from the resu lts of acomplete enumeration by less than 1.645times the perc enta ge s how n.To compute a 90-percent confidenceinterval for an estimate of level, multiply theestimate by its coefficient of variation andthen by 1.645. This amount is then addedto and subtracted from the estimate to givethe u ppe r and lowe r bou nds of the interva l.As an example, the estimated total value ofshipments from Textile Mills (Table 1,NAICS code 313) is 54,854 million andthe estimated coefficient of variation forthis es timate is 1.2 perc ent (0 .012 ).Multiplying 54,854 million by 0.012 andthen by 1.645 gives 1,0 83 m illion.Economic and Statistics AdministrationU.S. Census Bureau

8Subtracting 1,083 from and adding 1,083 to 54,854 million gives a 90percent confidence interval of 53,771million to 55,937 million. Confidencestate me nts fo r estim ated perc enta ges arecom pute d in a s imilar m ann er.One source of nonsampling error is theina bility to o bta in informatio n abo ut a llcases in the samples. Response rates foreach survey are given in the followingtable.Con tactsFor additional information regarding surveysincluded in this report con tact:ASM - Judy M. Doddsjudy.m.dodds@census.gov(301) 457-4587ATS/ARTS Scott A. Scheleurscott.a.scheleur@census.gov(301) 457-2764SAS -Michael Armahmichael.armah@ census.gov(301) 457-2766For general information about the CensusBureau’s e-business measurement programcon tact:Other sources of nonsampling error includeresponse errors, definition difficulties,differences in the interpretation ofquestions, mistakes in recording or codingthe data obtained, and other errors ofcollection, response, coverage, andestimation of missing data. Although nodirect measures of these sources ofnonsampling error have been obtained,pre cautio na ry step s w ere tak en in allphases of the collection, processing, andtabulation of the da ta in an effo rt tomin imize th eir influen ce.Tho ma s L. M ese nbo urgtmesenbo@census.gov(301) 457-2932or visit: ww w.ce nsus .gov/es tats.The Census Bureau is committed to providing thebusiness community and policymakers with morerelevant and useful economic statistics. This reportis an important first step in achieving that goal.We thank all the businesses that participated inthese surveys. Their cooperation and continuedparticipation is vital to the future success of theeconomic statistics programs.Economic and Statistics AdministrationU.S. Census Bureau

e-commerce activity for key sectors of the U.S. economy. This report shows that while e-commerce in 1999 accounted for a relatively small percent of total economic activity in these sectors, e-commerce transactions between businesses, commonly referred to as B-to-B e-commerce, accounted for a remarkably large share of overall e-commerce. The

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