Manufacturing – Not Online Shopping – Leads E-Commerce

Ken Zino of on Manufacturing, Not Online Shopping Largest in E-Commerce

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According to the Census Bureau’s 2018 E-Commerce Statistics report, manufacturing e-commerce shipments made up 67.3% or nearly $4.0 trillion of the $6.0 trillion in total value of manufacturing shipments. Consider for comparison that retail e-commerce sales were only 9.9% or $519.6 billion of the $5.3 trillion in total retail sales. E-commerce made up 23.4% of the total sales, shipments, receipts or revenue of all four sectors covered in this e-commerce report.

So much for the conventional wisdom that E-commerce is huge shopping service. In 1999, e-commerce accounted for $729.6 billion (18.1%) of the $4.0 trillion total value of manufacturing shipments. By 2018, this share had risen to 67.3%,  and growing in 2002 and 2009 when the total value of manufacturing shipments and e-commerce shipments declined.

Any way you look at it, this is another strong argument for the Biden Administration infrastructure initiative that is opposed by the insurrection party that once upon a time was considered friendly to business. Want to make America great again? Well, invest in people, education and infrastructure and stop lying about the elections and fomenting treason.

Ken Zino of on Manufacturing, Not Online Shopping Largest in E-Commerce

Click to Enlarge.“The share of manufacturing e-commerce shipments has climbed steadily for nearly two decades,” says Andrew Hait, a survey statistician/economist at the Commerce Department.

As with the retail trade sector, Manufacturing e-commerce includes online orders from customers. However, these orders include purchases from both traditional consumers and other domestic establishments of the same company that in turn manufacture, assemble or fabricate the product.

“For example, electronic orders of components by an automobile assembly plant from a parts manufacturer owned by the same company would be counted as manufacturing e-commerce,” said Hait.

E-commerce is sometimes conducted over the internet, but also includes sales made using extranets, Electronic Data Interchange (EDI) networks, email or other online systems. Payment may or may not be made online. The price and terms of manufacturing e-commerce shipments can also be negotiated on these platforms.

Ken Zino of on Manufacturing, Not Online Shopping Largest in E-Commerce

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“Manufacturing businesses have embraced e-commerce because it streamlines the process of purchasing and selling components and products to other businesses,” said Hait.

The Future of E-Commerce in Manufacturing

Manufacturers adopted e-commerce for some of the same reasons as the wholesale and services sectors: It allows streamlined processes and simplified interactions with downstream customers and upstream suppliers. Businesses that supply inputs to manufacturers don’t have to wait for paper order forms to be received and processed because they come in electronically and can be processed immediately.

These businesses can also more accurately schedule their logistics systems. This without question was vital during the coronavirus pandemic, when supply chain challenges have often hampered the ability of health care providers and emergency managers to quickly respond to the impact of the pandemic on residents and businesses. The automobile industry also suffered disruptions in manufacturing that still linger,

These supply chain improvements also help people who receive their online orders quicker and more accurately.

“Most people who rely on online platforms for their retail purchases will likely continue to think of retail as a key component of e-commerce and for good reason: Retail e-commerce remains the third largest sector online ($519.6 million in 2018) and online retail sales were continuing to rise, according to the e-commerce report. We’re grateful for the businesses that respond to the many Census Bureau surveys allowing us to measure the impact e-commerce has on critical economic sectors,” said Hait.

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