Think online retail is the largest e-commerce sector? Think again.

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.

By comparison, retail e-commerce sales were only 9.9% or $519.6 billion of the $5.3 trillion in total retail sales.

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The share of manufacturing e-commerce shipments climbed steadily for nearly two decades.

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%, growing even in 2002 and 2009 when the total value of manufacturing shipments and e-commerce shipments declined.

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Just like 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.

E-commerce can be conducted over the internet but also includes sales made using extranets, Electronic Data Interchange (EDI) networks, email or other online systems and payment may or may not be made online.

The price and terms of manufacturing e-commerce shipments can also be negotiated on these platforms.

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

The automobile assembly industry is a prime example.

The industry adopted “just-in-time” manufacturing years ago. Under this process, components needed to build cars are delivered to the assembly plant right when they are needed. This helps reduce the need for large parts inventories and warehouse space to store them.

To make this process efficient, the assembly plant maintains an electronic data interchange with parts suppliers to order parts exactly when they are needed.

Does E-Commerce Rule in all Manufacturing Industries?

Food Manufacturers reported $519.0 billion in e-commerce shipments in 2018, closely followed by Chemical Manufacturers with $514.5 billion.

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While some manufacturing sub-sectors dominate e-commerce, nearly all of them saw increases in e-commerce shipments between 1999 and 2018.

E-commerce shipments in Paper Manufacturing, for example, rose 66.2% from $15.3 billion in 1999 (9.8% of total shipments) to $145.1 billion in 2018 (75.9%), the largest percentage increase of any manufacturing sub-sector.

Only two sub-sectors saw e-commerce shipments dip during the same period. But even then, the e-commerce share of their total shipments increased.

For example, e-commerce shipments of Leather and Allied Product Manufacturers decreased by $190 million (-8.1%) between 1999 and 2018. Yet e-commerce made up a much larger share of total shipments: 47.4% in 2018 compared to 24.2% in 1999.

Similarly, e-commerce shipments of Apparel Manufacturers decreased by $11.4 billion (-69.2%) between 1999 and 2018, but the industry’s share of e-commerce shipments increased from 26.5% to 51.4%.

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