In 1986, former President Ronald Regan said the nine most terrifying words in the English language were: “I come from the government and I’m here to help”.

Those who relied on February 2022 online sales data reported by the Census Bureau to adjust their business strategies or make investment decisions may have reason to be a little terrified at this time.

Indeed, revised online sales data released by Census last Thursday – May 19, 2022 – contrasts sharply with data released by Census three months earlier.

The details

When the census released data on online sales for the fourth quarter of 2021 as a percentage of all retail sales in February 2022, it said that share was 12.9%.

That’s significantly lower than what the share would have been if the share’s historical growth trend had continued and the pandemic had never happened: 13.7%, as I show below.

Based on revised census data reported last Thursday, May 19, online sales for the fourth quarter of 2021 were 14.5%, up 1.6% from the 12.9% census reported in February. And at least so far, their revised data shows Online hasn’t given up on the boost it’s received from the pandemic.

That would be a stunning revision to census data at any time, but it’s especially troublesome in times of market turmoil when even modest negative news can cause investors to pull back.

The PYMNTS data analysis team discovered the massive overhaul and its implications when using census data to update ours last Thursday.

Here is the whole story.

What the census said in February 2022

In a sense, the February 2022 census data was the data shock that rocked the market – at least the part of the market where online sales are a major driver of business, market value and sentiment. investors.

This shock came in the form of a graphic (below) featured in an April 16 the wall street journal article using census data to report on the impact of the pandemic on online sales growth. The graph is an “accurate” representation of the inaccurate census data that had been reported at that time.

This chart, using data from February 2022, showed the expected rise in Q2 2020 at 15.7%, then a steep decline finally falling to 12.9% in Q4 2021.

Looking at the graph, it is clear that the online share was lower than it would have been if the previous trend had simply continued and the pandemic had never happened. In fact, as I’ll detail below, online share would have been 13.7% in Q4 2021 had the historical trend continued without the pandemic. So according to this chart, based on February data, the reported online share of 12.9% was actually lower than it would have been without the pandemic. The exit from the pandemic has apparently set back the digital transformation!

But that was before the Census revised the underlying data on which the February chart was based.

What the census said in May 2022

The Census released revised online sales data last week, May 19, 2022, as they do quarterly. When the census releases its quarterly figures, it is not uncommon to see revisions to previous quarters. These revisions generally do not exceed 1% and therefore have no significant impact on the previous quarter’s reports.

Not this time.

What the PYMNTS data team saw when using their data to update ours was staggering.

The May 2022 census data reflected an eleven-year adjustment to online sales data – dating back to 2011. The revisions are quite small until the first quarter of 2020 – then the revisions are substantial. The data now shows a revised estimate for the fourth quarter of 2021 for the online share of retail sales at 14.5%.

Q4 2021 online sales comparison of 12.9% in February 2022 and in the fourth quarter of 2021 online sales of 14.5% in May, it is an upward revision of 12.4% ((14.5/12.9)-1 = 0.124).

When Census released its May numbers, it said nothing about the dramatic upward adjustment in online sales share. PYMNTS has contacted Census for comment. At the time of publication of this article, we have not had an answer to this question.

The February 2022 census data is no longer online, although the census press release that announced this data in February can be found here.

Reputable data aggregators used census data to update their own charts. See this one from Statista, accessed May 20, 2022, using February Census data to replicate the same graph as April 16 The Wall Street Journal.

I’m also pretty sure you can also find February 2021 Q4 2022 Census data cited in dozens of payments and investor ecosystem presentations. Maybe even some of yours.

Believe Cplus Data or your own eyes

Notwithstanding the February 2020 census data, a good old-fashioned check on what they reported — and the doomsday predictions about the future of e-commerce that followed — should have raised four very big red flags, counting given what they assumed or implied.

First: that none of the digital experiences introduced by merchants and payment providers in 2020 and 2021 would last even a little. To most people I spoke with after this data was reported, it seemed implausible and almost unbelievable. Nobody believed that the innovations introduced and used by consumers between 2020 and 2021 were just a big COVID band-aid that they would completely rip off the second they could return to physical stores, that none of the conveniences people have grown accustomed to during the pandemic would persist, that consumers would emerge from the pandemic less likely to use online than before.

Two: This line was an all-or-nothing proposition. No one, even the most avid e-commerce enthusiasts, ever thought that consumers would completely abandon brick-and-mortar stores and live their lives only online. The idea that consumers would move all of their purchases online was a false assumption, although it is inevitable that the majority of physical interactions – purchases and almost everything else – will be enabled through an internet-connected device at some point. in the future. . That’s because it’s already happening all over the world.

Three: that all of the data collected and presented from various sources on consumer digitalization was flawed. The census data also seemed contrary to the balanced monthly census studies of digital consumer behaviors that PYMNTS had been capturing and reporting since March 6, 2020. What our data showed was that consumers were returning to the physical world, but continued their activities in the digital world. world too: ordering ahead using their mobile devices to pick up in-store, ordering groceries online while still buying groceries at grocery stores, eating out while ordering food at aggregators for eating at home.

Monthly consumer shopping data for April 2022 from PYMNTS shows that 33% of consumers made retail purchases online that month, up from 29% in March 2022. This shows that e-commerce does not exclude in-store purchases, but not in-person commerce. Nor exclude the use of digital channels to buy things.

That’s what prompted me to write about it last week, using PYMNTS data to push back what was starting to sound like conventional wisdom about the end of online and digital transformation.

Four: that online sales growth would suddenly stop after more than two decades of steady growth. And this despite the pandemic forcing most people to change their habits and try online solutions. As part of our analysis over the past few days, the PYMNTS data team has projected what online share would have been in Q4 2021 if the 2010-2019 trend had simply continued into Q4 2021 in the absence of a pandemic. As I indicated earlier, using a simple trendline projection, we find that the online share of retail sales would have been 13.7% in Q4 2021, compared to 12.9% based on census data released in February.

If the February census data were correct, it would imply that online sales were down 1.8 percentage points underneath the trend line after the two years of confinement of the physical world caused by a pandemic.

And after

Using revised May Census figures, the PYMNTS data team shows Q1 2022 online sales as a percentage of overall retail sales at 14.3%.

i.e. 0.9 percentage point upper than the pre-pandemic historical trend.

At least so far, this suggests there is some persistence of the online boost achieved through the pandemic. Of course, online may lose some of that momentum as the effects of the pandemic fade.

The May Census data review is very important for anyone trying to assess digital transformation.

In the first quarter of 2022, online sales increased by 14.3%, compared to 11.1% in the fourth quarter of 2019. This is almost a third more (although down slightly from the 14.5 % of the fourth quarter of 2021).

The pandemic appears to have boosted online retail sales.

And it’s a data-driven cause for optimism about the digital economy and the companies driving it.

Original post

Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.