As a holiday sales season charged with challenges gets
underway, "online shopping" has become a hopeful buzzphrase.
Brick-and-mortar retailers are opening earlier than ever,
staying open longer and planning deep discounts to compensate for
weakened consumer spending and a shopping season that is six days
shorter than last year's -- a scenario that will pit retailers'
results against tough comparisons from the year-ago period.
Despite the hurdles, the National Retail Federation forecasts
that sales during 2013's 26-day season will hit $602.1 billion,
up 3.9% over the $579.5 billion tally from last year's 32-day
shopfest. The NRF expects online shopping to jump 13% to 15%, to
as much as $82 billion. That would equal about 14% of the total
retail haul -- up from 12% for the 2012 season.
Aggressive strategies from Internet retail
) andEbay (
) reflect the tone of the season. But competing efforts through
retail and online channels -- fromWal-Mart (
) toGroupon (
) -- pledge a lively joust.
And They're Off -- Early
By end of the first week in November, 54% of Americans had
started holiday shopping, according to the NRF. Some 46% had yet
to start, the smallest percentage to get an early start in the
NRF Vice President Artemis Berry says marketing to users of
mobile devices -- smartphones and tablet computers -- has become
a key factor.
"We are not only seeing continued growth (of online shopping),
but a vastly different landscape, with major adoption from both
large companies and mainstream companies," of mobile technology,
Berry told IBD.
Sales via smartphones and tablets are growing faster, but PC
sales still rule the online roost.
Last quarter, total sales via desktop PCs grew 13% vs. the
same quarter a year ago, to $47.5 billion, according to market
tracker ComScore. Sales via smartphones and tablets vaulted 26%,
but to a much smaller $5.8 billion,
That put mobile sales at just over 10% of e-retail's total
$53.3 billion take for the quarter.
Although the 13% rise in desktop sales was in line with gains
since Q2 2011, it was down from 16% the prior quarter.
The report offered an additional caution, noting that larger
economic indicators also suggested softening discretionary
spending. ComScore Chairman Gian Fulgoni said the change "offers
some cause for concern as we head into the holiday season."
In the third quarter, Amazon.com saw revenue of $17.1 billion
and Ebay sales were $3.9 billion, giving the two roughly a third
of the total online take.
Despite its dominance, Amazon.com took no chances. It launched
its revolving Black Friday promotions five days early on Nov. 24
instead of what's typically expected to begin early on the day
after Thanksgiving. Ebay waited to see the whites of shoppers
eyes -- on Thanksgiving Day -- to begin its promotions for the
In the shade of the big e-retailers, an infestation of
competitors is striving to carve a share of the e-pie.
Eric Lefkofsky took the chief executive post at Groupon in
February and is using mobile technology to help transform the
one-time daily deals site into a full e-commerce marketplace in
the image of Amazon.com. On a Nov. 8 earnings call, Lefkofsky
said more than 60 million mobile consumers had downloaded its
Groupon shares have rebounded 87% so far this year, but remain
71% below the Nov. 2011 high, set on the day of the stock's
Other players chiseling out smaller niches are producing mixed
results. Los Angeles-basedStamps.com (
) provides online mailing and shipping services targeted to home
offices and small business. Analysts project a 36% earnings gain
for this year, slowing to 6% growth for 2014. Still, shares are
up 83% year-to-date.
Moms, babies and kids-wear retailerZulily (ZU) offers daily
sales. The Seattle-based outfit launched its initial public
offering Nov. 15 at $22 a share. It popped 38% its first day
before pulling back. On Friday at 35, it was trading 15% below
its opening day high, but still 59% above its IPO price.
Meanwhile, traditional brick-and-mortar retailers such
asMacy's (M) andWalgreen (WAG) are expanding their digital scale
through acquisitions and partnerships, blurring the line between
online and in-store sales.
On Sept. 19, Macy's announced it will partner exclusively
withApple (AAPL) for its iTunes Radio launch. In 2011 Walgreen
broadened its online footprint with the $429 million purchase of
online retailer Drugstore.com.
Looking to capitalize on the Cyber Monday surge in consumer
electronics sales, Wal-Mart was launching its electronics
campaign on Saturday, Nov. 30, and extending the promotions
through the week. Both Wal-Mart and Amazon.com offer free
shipping on sales above $35.
Ebay last-year christened its Ebay Now service, which partners
withTarget (TGT), Macy's,Best Buy (BBY) and others to lure mobile
shoppers specifically. Introduced in San Francisco and still in a
testing stage, the service pledges one-hour delivery on items
bought from those physical stores by mobile shoppers via Ebay's
marketplace. The company plans to make it available in 25 metro
areas by 2014.
Amazon announced Nov. 11 it has partnered with the U.S. Postal
Service to provide Sunday deliveries in Los Angeles and New York.
Plans call for rolling that expanded service out to most of the
country in 2014.
The whole crew is feeling increased rapid-delivery heat from
search leaderGoogle (GOOG). The Mountain View, Calif.-based
juggernaut is beta-testing front-door delivery in the San
Francisco and Silicon Valley areas of items sold by partners
Target, Walgreen,Whole Foods Market (WFM) andStaples (SPLS).
Researcher ShopperTrak provides data on brick-and-mortar
retailers, not e-commerce. But founder and Executive Vice
President Bill Martin says effects of the shift to e-commerce on
department store operators are obvious.
"In 2002 we saw close to 10.02 billion store visits (for the
year). In 2012 we were seeing 8.59 billion visits," as shoppers
migrated online, Martin told IBD, adding that today, "Mobile is
what it's all about."
The Worldly Wise Web
Beyond the U.S. holiday season, Amazon dominates the global
Internet retail market. Its rising competitors include China's
Alibaba. The retailer is part marketplace like Amazon, part
online auction house and payments processor like eBay.Yahoo
(YHOO) owns about 24% of the company. Japan's SoftBank owns
Alibaba is expected to see $5 billion in revenue this year, a
fraction of Amazon.com's projected $75 billion take. But during
its annual shopping festival, held Nov. 11, Chinese shoppers
reportedly spent more on Alibaba than U.S. consumers will via all
online channels during both the Black Friday and Cyber Monday
Taobao and Tmall, Alibaba's two main shopping venues, reported
merchandise volume last year totaled about $160 billion, more
than Amazon.com and eBay combined. Chief Executive Jonathan Lu
has said the company plans to triple its volume by 2016.
Alibaba is planning an initial public offering, and news
sources say it is leaning toward U.S. exchanges after talks with
the Hong Kong Stock Exchange folded in September. Analysts
estimate the offering could raise $10 billion to $15 billion.
Estimates for valuation ranging from $75 billion to $100 billion,
making it potentially the largest IPO sinceFacebook's (FB)
controversial May 2012 send off.
On a much smaller scale, China'sVipshop (VIPS) is an online
discounter of brand-name goods, with projected annual sales of
about $1.6 billion this year. That's almost equal to Alibaba's Q3
revenue, and a fraction of Amazon's forecast total sales of $75
billion this year.
Vipshop currently sells only in China. But its goal is to
"make great efforts to help the south China area become the
international e-commerce hub." Among its top labels areDisney
(DIS) branded children's clothes, Italy's Giovanni Valentino
leather bags andPhilips (PHG) electric razors.
Vipshop went public on the NYSE last year at $6.50 a share. On
Friday it traded more than 1,100% above that price.
Argentina'sMercadoLibre (MELI) is sometimes called South
America's Amazon. Its rapid growth in its primary market, Brazil,
prompted JP Morgan to raise its price target to 112 from 109 on
Nov. 18, although it maintained a neutral rating. With annual
sales of about $442 million, it has yet to break out on to the