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'Amazon effect' leads ONS to factor in online sales for inflation measure

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By John Glenday, Reporter

July 9, 2018 | 2 min read

Britain’s Office for National Statistics has begun factoring in online sales as it seeks to calculate a more accurate inflation rate.

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Until now statisticians have relied on more traditional bricks and mortar metrics. But the growing dominance of online sales is now skewing inflation figures for goods and services, a phenomenon known as the ‘Amazon effect’.

For the new metric the ONS will track 750,000 items available for to purchase online from 30 retailers, spanning 80 different product categories ranging from electronics to clothing and household items, and joining 700 goods and services from 20,000 UK stores that have been traditionally used to pin down broader pricing shifts.

To achieve this the ONS has employed price comparison website MySupermarket to employ ‘web scraping’ techniques to keep tabs on fluctuating prices with Kantar TNS double checking the veracity of this data.

This ‘shopping basket’ of items will be updated every year in accordance with changing consumer appetites with internet sales informing the Consumer Prices Inflation Index following a research period.

It is estimated that internet-based merchants now account for 20% of all UK sales but their price tags are far more changeable than their high street brethren.

Amazon's rise to dominance has seen it leapfrog Alphabet to become the second most valuable company in the US.

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