Why December 2014 wasn’t an online flop

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Alex OgilvieAlex Ogilvie of Seller Dynamics always has an interesting perspective and today he looks at the Office of National Statistics stats which on the face of it make December sales look like they were a dud! Alex doesn’t take their numbers on face value however, and here’s his analysis:

Lies, damn lies and online sales

My favourite opening lines from a book are:
“Tom!” No answer.
“Tom!” No answer.

Reading those lines as a young kid I was immediately hooked, here was someone to identify with. Someone who would prefer to be left to their own devices, rather than heed the call of their aunt. The Tom in hiding was fence painting entrepreneur, Tom Sawyer.

He had a turn of phrase did Mark Twain, the author, he’s also largely credited with the line:

“There are three kinds of lies: lies, damn lies and statistics”.

It’s a phrase we are all familiar with, a truism if ever there was one. And it makes me wonder, why on earth would anyone join the Office of National Statistics… aren’t you just setting yourself up to be accused of telling untruths?

At Seller Dynamics we keep an eye on that organ of confusion: the ONS. It’s the ONS stats for online retail that we are particularly interested in, and given the chatter surrounding the impact of Black Friday 2014 we thought the stats might be more interesting than usual.

Here is their summary for December 2014: “The value of Internet sales decreased by 2.8% compared with November 2014, the largest fall since August 2012 when it fell by 7.1% and accounted for 11.3% of all retail sales in December 2014. Online sales increased by 8.0% compared with December 2013.”

That was a bit of a surprise, was December really down on November? It seemed a bit unlikely. But the missing words from their summary are, “seasonally adjusted”, that statistical massage they apply to most statistics.

For retailers, “seasonally adjusted” is of value, but it’s not enough of the story. None of us look at our wallet and seasonally adjust it, do we? We don’t discard £50 from our purses to seasonally adjust, and unless I’ve missed something important, we don’t add £50 from fresh air to seasonally adjust in the opposite direction. For the bulk of Amazon sellers, eBay sellers and indeed all marketplace sellers it has to be about what has actually happened to their income.

With that in mind I thought I’d have a look at the full set of ONS stats.

When you look at the actual unadjusted numbers for December 2014, compared to November 2014, you find that December was actually UP on November by 16.6%. Looking at the same period for the few years previous you find December was typically up 19% or so on the prior month. So December 2014’s growth wasn’t as great as previous years when compared to November, fair enough.

But what about November? Well as we can all guess it’s the new Black, which is convenient given Black Friday. November 2014’s unadjusted growth compared to the previous month of October is higher than it has been previously. 2014 saw 11.6% growth from October, compared to around 9.5% in previous years. So November is on the up.

I also wondered why the ONS had felt it appropriate to tell us about August 2012 when talking about December 2014, that seemed a bizarre footnote given their passion to talk about seasonality. I thought, instead, that it would make more sense to look at past November v December seasonally adjusted performance, so here it is.

When compared to the previous month of November (after seasonal adjustments):

December 2009 was down 6.9%
December 2012 was up 7.2%
December 2010 was down 2.1%
December 2013 was up 3.4%
December 2011 was down 1.8%
December 2014 was down 2.8%

ONS seasonal online retail as painted by Tom Sawyer 1200

So, newsflash, it’s not unusual for December to underperform November when you look at the seasonally adjusted numbers, that should be rather comforting for all retailers. All that’s happened this year is that a heavily promoted and freshly painted black November, is winning new sales. Which does rather pose the question for the seasonally obsessed ONS, “Should we be seasonally adjusting out Black Friday in the future?

That’s my revisionist interpretation of the ONS December numbers complete, but as Mark Twain once said, “Get your facts first, then you can distort them as you please.” So feel free to put your own spin on the ONS numbers.

2 Responses

  1. Rah..Rah…Rah… More nonsense from the Statistical Moronic Brigade who are yet again trying to convince us all everything is fine and the economy is growing and its all rosy when everyone at ground zero knows only too well its not.

    Lucky them on their £100k per year salarys. Give me £100k a year and I’ll sing any tune you ask, i’ll even thank you and gladly learn the words!

    Unfortunately those tossers are totally detached from the reality of all of us struggling daily on the ground.

    I prefer the quote: Statistics are whatever you want them to be.

    What a load of bullshit!!

    Long live The Revolution!! 🙂


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