Record Online Sales Brighten U.S. Economic Outlook

By Wayne Rash  |  Posted 2011-11-28

Record Online Sales Brighten U.S. Economic Outlook

The news for the e-commerce economy couldn't be better. Online sales for Black Friday were 24 percent higher than ever. Cyber Monday sales should top $1.2 billion, also a new record, according to analyst firm ComScore.

But the news gets better. According to ComScore's Andrew Lipsman, Cyber Monday isn't even the best online shopping day of the holiday season, and probably won't be the best this year. Lipsman says that buying patterns have shown that there will be several days in December with bigger sales than Cyber Monday.

This is, obviously, wonderful news for online retailers. Business is up, in some cases substantially. Some reports have put traffic at Amazon at 50 percent higher than at this time last year, for example. According to a report in Billboard, Wal-Mart, Best Buy, Target and Apple all saw huge traffic increases.

If this increase in online sales were paired with flat or declining sales at physical stores, then it would indicate that the trend was simply to buy stuff online and avoid the crazed shoppers wielding pepper spray, 9mm handguns or worse. But that's not the case. Sales at physical stores also increased to record levels.

So what does this mean? At a minimum, it means that holiday shopping is off to a much bigger start than anyone predicted, and it shows that online sales have really taken off. But in reality, it means more than that. The extremely strong e-commerce activity, expected to strengthen even more as December comes along with its surge of holiday shopping, is demonstrating that the gloomy economic reports that have been hitting the headlines lately are simply that-gloomy.

The fact that they're gloomy doesn't mean they're right. Consumers, especially in the U.S., have gotten used to hearing bad economic news over the past four years: There's a recession. The recovery will be accompanied by week job growth; there'll be a double-dip recession; Europe is on the verge of a Eurozone financial collapse; and things are going to Hell, with or without a handbasket.

But the fact is that the real economy isn't controlled by headlines. As much as we in the journalism business would like to think about our value, we can't control the economy. So despite our continued cries of "recession," it isn't true if the consumers say it isn't. And that's what they're saying.

Instead, the very strong sales at the beginning of the holiday shopping season are telling us that the economy, especially the critically important consumer confidence level, is doing very well. Sales are up across the board. People are spending their money on things besides necessities, and they're spending freely.

E-commerce plays an important role in this surge of economic activity. First, there's very little friction when consumers buy online, which means there are fewer barriers to getting consumers to spend money. When shoppers go online, they generally know what they are looking for, know where to go to find it and are ready to click the buy button when they do.

E-Commerce Streamlines Sales Tracking


Contrast this against the madness of those Wal-Marts that refuse to include crowd control in their shopping plans, the cost of gas required to get to the madness, and the fact that you can't park within a half mile of the mall and have to fight with insane shoppers once you're there.

The next important factor is that e-commerce is trackable. Merchants know exactly what their sales are and can report those sales in real time. Likewise, since virtually all online sales are made using credit cards, there's a second level of tracking that allows credit card processors to report on the number and value of transactions. So we know almost immediately just how well sales are doing, what consumers are buying and where they're buying.

Adding to the economic strength of e-commerce is that merchants have put a wide variety of tools in place to encourage shopping. Amazon's Wish List is a good example of how this works. A person can create a wish list of everything they want, regardless of whether it's sold by Amazon. They can add stuff to the list over time and then make sure that their family and friends know where to find the list. You can, for example, publish your Amazon wish list on Facebook (as my children have done) just so you can increase your chances of getting the cool stuff you want. You can create your own wish list on various social networking sites.

Credit card issuers are doing their part to encourage consumers to spend freely. For example, American Express keeps a list of small businesses that have good online or in-store deals. Shopping sites are all offering their own special deals. All of this makes shopping, whether for yourself or others, virtually seamless.

While the ease of online shopping doesn't manufacture the money needed to pay for purchases, it does help people part with the money or credit they have in the easiest way possible. It means that instead of being pepper-sprayed at Wal-Mart, you can simply order online and get the same deals.

This also means that while online shopping alone won't be able to take credit for turning the economy around, it is at least partly responsible for making the turnaround happen perhaps a little more quickly and for generating the facts and figures that will help economists make predictions faster and easier. It's too early to tell whether the record holiday sales of 2011 will spur manufacturing and job growth in 2012. But it's perhaps the best economic news to hit this country since 2008.

Sadly, there are some things e-commerce can't do. For example despite the fact that I have a Porsche Boxter S on my Amazon Wish List, my family is showing no signs of buying it for me. What they do instead is send derisive Tweets about my big-ticket wish list items. I guess everything is moving online one way or another. 


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