For Immediate Release
Chicago, IL - November 28, 2011 - Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
Target Corp.
(
TGT
),
Best Buy Inc.
(
BBY
),
Macy's Inc
.
(
M
),
Amazon.com
(
AMZN
) and
eBay Inc.
(
EBAY
).
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free Profit from the Pros newsletter:
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Here are highlights from Friday's Analyst Blog:
Why Amazon Will Win This Season
With Thanksgiving drawing to a close and Black Friday shopping
gathering steam, this is clearly a retail weekend. Brick-and-mortar
outlets, such as
Target Corp.
(
TGT
),
Best Buy Inc.
(
BBY
) and
Macy's Inc
.
(
M
) opened their stores at midnight yesterday, vying with each other
to catch the first shoppers. Shoppers, too, have been lining up to
bust the doors for the best of the selection and deals.
While consumer dollars will no doubt pour in, this year is
different from others. Mainly because a number of traditional
retailers have not been doing so well and may not have promo offers
available for long. Consumers on their part are also more cautious
and have started comparing the offline shopping experience to the
online one.
The main (and possibly the only) advantage for offline retail is
the fact that shoppers can see, touch or feel their products before
purchase. But during rush hours such as this, the scope for this
connection also gets limited.
On the other hand, the online experience, while not allowing
this personal connection, does enable effective comparison shopping
without queuing, waiting and wastage of time. Okay, so actual
delivery does take a bit of time. But since Christmas is still a
month away, this is not such a big problem.
The convenience aside, there are many other reasons why
consumers are likely to do more shopping online this year.
Selection/Availability and Pricing
For one, the two largest online retailers,
Amazon.com
(
AMZN
) and
eBay Inc.
(
EBAY
) appear very well-stocked heading into the holiday season.
According to a study by Wall street analyst Doug Anmuth, of the 40
most-wanted holiday items under the consumer electronics ("CE")
(19%), home and garden (17%), books (12%), toys (10%), video games
(7%) and other (36%) categories, Amazon was the one with the best
product range and pricing.
A study carried out by a team of Deutsche Bank analysts reveal
that Amazon is the most cost effective supplier across categories,
followed by eBay and then Wal-Mart. According to the analysis,
Amazon is least expensive in the books, music & movies, CE
& software, and toys categories, lagging eBay in video games.
eBay trails Amazon in music & movies and CE & software,
while Wal-Mart trails Amazon in books and toys.
Amazon and eBay have the best product availability in the CE and
toy categories. In the CE segment, BestBuy has 90% of Amazon's
selection and Wal-Mart 65%. In the toy segment, ToysRUs has 70% of
Amazon's selection, while Wal-Mart has 65%.
Free Shipping
Most online retailers ship their wares for free. Amazon did this
sooner than eBay, but eBay has been making many changes over the
past year and the company is also expected to do well this season.
Despite the free shipping, online retailers are more profitable
because they do not have huge overhead costs that traditional
retailers are stuck with.
Fulfillment
This is a key feature at Amazon, which has warehouses all over
the country and now, increasingly, in important international
markets as well. This feature has enabled Amazon to leave other
online retailers behind.
Well in advance of the holiday season, Amazon ran a
qualification process, short-listing the most reliable suppliers
and temporarily taking other suppliers off the list. However, if
the suppliers used Amazon's fulfillment services, they would be
exonerated from many of the restrictions.
eBay has been repositioning its business and the company
recently bought GSI Commerce, which has warehouses for fulfillment.
However, eBay will take a little more time to get its act together.
So this season, it is very likely to be Amazon all the
way.
We think that having its own fulfillment centers is probably
removing product distribution inefficiencies and thereby helping
Amazon to cut costs and price its products even more competitively.
It is not without reason that products on eBay are 8.2% more
expensive than on Amazon this year compared to 1.8% more expensive
in 2010 (Deutsche Bank analysis).
New products
As if all these advantages were not enough, last week Amazon
launched a $200 tablet called the Kindle Fire. It is a very
effective tool for consumption of books, music and movies and also
for making online purchases. So it is basically the best device for
consumption of Amazon goods and services. And this is not a mean
thing, considering all Amazon has to offer. The fact that it comes
with a month's free Prime subscription is the icing on the
cake.
We think that this was a very good time to launch the
first-generation device, since people are likely to upgrade from
the Kindle e-reader. The price point being attractive, it will also
catch those buyers that want a little bit more than an e-reader,
but don't really want to spend as much as a tablet.
Relationships
Amazon has been extremely focused on building customer
relationships through the Prime platform. It is one thing to ring
up huge sales when everyone is buying, but the real winner is one
that gets buyers to come back time and again. And this is where
Amazon excels. When you already have a long-term relationship with
the leading online retailer with the best selection, availability,
pricing, deals and platforms, there has to be a very good reason to
buy elsewhere.
To summarize
One again this year, online retailers will grow at the expense
of brick-and-mortar sellers. However, with the expansion of the
online retail marketplace and the entry of many new players,
competition between different online retailers is also picking up.
At this point however, Amazon remains the one with the earliest
start, the best positioning and the best strategic planning, so it
should be able to enjoy its lead for a while.
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