A Reply From Dr. Rick Davis of Consumer Metric Institute

Hui Zhong:

Thank you for your kind words and interest in the Consumer Metrics

1) Since all of our data is presented as year-over-year comparisons, to
some extent your observations are true: 2008 saw a sharp decline, the 2009
“improvement” was substantially a return to “normal” (which looked strong
in comparison to relatively weak 2008 data), and the 2010 drop was at least
partly a return to the lower absolute numbers of 2008.

2) However, when looking at the the shape and timing of each year’s data
profile it is clear that there were specific economic pressures that
distorted the profile during each of the years — including specific
governmental stimulus interventions and programs. Those economic
dislocations cause each of the years to have a unique shape when plotted
over time.

3) As we have said in our commentary, the 2010 contraction will be longer
than the 2008 contraction, and any “recovery” upswing is likely to neither
as steep as the 2008 upswing nor as likely to return to net growth in
anywhere near as short a time span.

4) The renormalization that we mention addresses only the issue of
internet commerce gaining market share relative to traditional
“brick-and-mortar” commerce. Actual absolute volumes of internet commerce
are constantly growing as more consumers feel comfortable with internet
transactions and new younger shoppers become first-time internet consumers.
If we did not re-normalize our data our indexes would continually grow as a
result of the growing internet consumer base. Our renormalization process
simply addresses that issue. We don’t ever “reset” our indexes back to 100,
nor do we change the historical values of our indexes after they are

Thanks again for your interest,

Rick Davis
Consumer Metrics Institute

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