Sunday, February 27, 2011

Only about 7% of retail is online

I got into an argument with a friend the other day about how much retail happens online vs. offline. Given the amount of money I spend on Amazon and the various branches of the empire that is Gap, I guessed that about 10% of retail happens online (at least in the US), while my friend insisted it was more like 2%.

My estimate was based on the convenience of home delivery and the quick, cheap delivery networks of UPS, FedEx, and OnTrac (a logistics company Amazon uses for a lot of its deliveries in California). In addition, residents of many populous states can avoid state sales taxes by ordering stuff from Amazon: For exmple, Amazon doesn't have operations in California and thus does not have to collect sales taxes. (However, in theory, California residents have to pay sales taxes on goods purchased out-of-state via their tax returns.)

After some research, I found this TechCrunch article from 2009 suggesting that in 2011, 7% of retail will happen online. Not quite 10%, but still impressive.