A NAICS codes is a categorization under the North American Industrial Classification System (pronounced NAKES). To gather, analyze, and disseminate statistical information about the US economy, Federal Statistical Agencies established the NAICS System. In collaboration with the statistics offices of Canada and Mexico, it was approved in 1997 to replace the Standard Industrial Classification (SIC) system. A North American standard was to be created. As the first economic categorization system built around a single economic idea, they created the NAICS.
Why do companies need these NAICS Codes?
While it was designed for statistical analysis, several governmental organizations, industry groups, and regulatory bodies have customized the NAICS categorization system to suit their requirements. Some of these organizations, like the SBA through the System for Award Management, publish contract bids to any company inside a certain NAICS code (SAM).
Various governmental organizations could provide tax breaks to companies that fall within a specific NAICS classification. Businesses use the NAICS code to categorize their own clients’ industries. Several Companies inside a certain NAICS Code are the focus of their marketing efforts. They may concentrate their targeted marketing efforts on businesses in identical industries thanks to NAICS Codes.
How NAICS Codes is useful for e-commerce?
These businesses are situated in regions where the primary activity is the sale of goods of all kinds through non-retail channels like telephones, catalogs, or electronic media like interactive television or the Internet. These businesses include those whose main concentration is on catalog showrooms, online shopping, and mail-order houses. Shopify and other e-commerce and mail-order companies are well-known for hosting online retail sites for new and used goods that operate either on an auction (like eBay) or non-auction basis. In today’s post-COVID economy, mail order and electronic shopping have taken over as the norms.
The same business that has a physical clothes store also frequently offers shopping, mail orders, online shopping, and mail-order retailing.
This industry comprises establishments primarily engaged in retailing all types of merchandise using nonstore means, such as catalogs, toll-free telephone numbers, or electronic media.
Included in this industry are establishments primarily engaged in retailing from catalog showrooms of mail-order houses.
Establishments that focus on in-person new and used goods shopping fall under the category of Other Clothes Shops (448190). For electronic retailers and mail-order businesses that largely rely on mail-order sales, the NAIS code 454110 is utilized. This last-level code category also includes online retail sales sites, physical auction sites, home shopping, and any other non-store retailing. Mail-order houses that primarily use toll-free telephone numbers to place orders, despite their dwindling popularity, are also included in the naics code 454110 category. Other miscellaneous shop merchants, often known as miscellaneous store retailers, are frequently misclassified under the NAICS code.
What rules govern the sale of clothing under the NAICS Codes?
These sectors are made up of companies that specialize in the retail sale of certain lines of brand-new apparel, except generic lines for men, women, babies, and families. The same businesses that specialize in in-person clothes retail are frequently the same businesses that also operate mail-order houses or internet retail, and as a result, they have several NAICS codes. Instead of using the naics code 454110 for clothing mail order houses, firms that are primarily involved in physical apparel selling should use the naics number 448190.
454110 – Mail-order and online retailers in Canada
This Canadian industry consists of businesses whose main activity is selling all kinds of goods utilizing print and electronic media to elicit a direct reaction from the consumer. To exhibit their products and contact their clients, these businesses might use techniques including airing infomercials, broadcasting and publishing direct-response advertising, and publishing conventional or electronic catalogs. Also, they can offer websites that enable online auction-based commerce in new and old commodities between individuals or businesses. NAICS Code 454110 – Electronic Shopping and Mail-Order Houses is a final level code of the “Retail Trade” Sector. There are 8,441 companies verified as active in this industry in the USA with an estimated employment of 534,983 people.
The delivery of goods is often handled by mail or courier, and transactions between these merchants and their consumers typically include the use of information technology (telephone or computer network). Establishments that are primarily involved in retail sales from empty showrooms for catalogs are featured.
Illustrative Examples – NAICS Codes
- Catalog (i.e., order-taking) offices of mail-order houses
- Collectors’ items, mail-order houses
- Computer software, mail-order houses
- Home shopping television orders
- Internet auction sites, retail
- Mail-order book clubs (not publishing)
- Mail-order houses
- Web retailers
Businesses primarily involved in
- Based on the categorization of the storage element of the activity, store retailing or a mix of store retailing and nonstore retailing in the same location is categorized in Sector 44-45, Retail Trade;
- The U.S. Industry 453998, All Other Miscellaneous Store Retailers (Excluding Tobacco Shops), classifies businesses that sell a broad range of new and used goods via physical auction sites;
- Industry 425110, Business-to-business Electronic Markets, is responsible for facilitating business-to-business electronic sales of new and used goods through online auctions.
- The U.S. Industry 561422, Telemarketing Bureaus and Other Contact Centres classifies those that provide telemarketing (e.g., telephone marketing) services for others;
- Hosting Internet retail sites without carrying out associated tasks like payment processing or fulfillment is classified as Industry 518210, Data Processing, Hosting, and Related Services. Providing Internet publishing of classified ads is classified in Industry 519130, Internet Publishing and Broadcasting, and Web Search Portals.
Conclusion
E-commerce and postal outlets are classified under NAICS Code 454110, the third-level code for the Retail Trade sectors. Among the 8441 recognized businesses in this industry, the United States employs more than 534,893 individuals. With increased employment expected, this is an expanding industry. By offering internet publication and online payment processing, online businesses provide electronic media-based shopping and mail-order experiences. With these activities comes a focus on social networking, online classifieds, and keyword search tools. In 2017 the annual payroll for Electronic Shopping and Mail-Order Houses was $25,639,679,000. 8,441 verified business locations are operating primarily in this industry. In 2017 the total revenue for electronic shopping and mail-order houses was $522,463,420000.
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