Cyber Monday was the busiest shopping day last year and is expected to set sales trend for online retailers this holiday season. Last year saw traffic to online retail sites increasing 29% to ~180 million visits on Cyber Monday. In 2011, online traffic on Thanksgiving and Black Friday closely matched those on Cyber Monday. The same has grown at about 3% on both the days this year and we expect the growth to be 3% or more today, a Cyber Monday.
Amazon.com ( AMZN ) seems to have the lead among e-retailers with sales increasing ~42% in the first two weeks of this month and it being the top visited site on Thanksgiving and Black Friday. The company had spread out its Black Friday Deals over several weeks and hence, we won't read too much in the rather small difference between the visits to Wal-Mart ( WMT ) and Amazon's website. With Cyber Monday deals also spread over three days, we expect the traffic to keep growing steadily over the period and help the company sustain its growth in what should be a blockbuster holiday season.
Did Amazon really gain this Black Friday?
Amazon was the most visited retail site on both Thanksgiving and Black Friday with traffic on the days being 25 million and 29 million. It's interesting to note that the sequential growth belied the overall trend. Its closest competitor in terms of visits on Thanksgiving, Wal-Mart, witnessed a decline of almost 25% on Black Friday while Amazon saw traffic grow by 15%. The next biggest competitor in terms of online traffic, Best Buy ( BBY ) witnessed a 20% decline. The dip in traffic to online sites of brick and mortar retailers is probably a result of them offering better deals at the stores than online. However, the better deals are generally for a day when compared to the Amazon offering good deals over a period.
We believe that the company's decision to spread out its deals over a time period and not focusing on a single day to have paid off with it gaining more customers and a greater share of sales over a period of time. Company's financial filings and press releases will help verify this over time. An expected ~15% of this holiday traffic is through tablets and we expect Amazon to have a major share gain in this 15% with its Kindle devices. As a whole, the online retail sales industry is expected to grow at 10-15% and Amazon is already growing at approx. thrice the rate. Hence, we expect Amazon to increase its share in US retail markets by about a percentage point this year.
Cyber Monday and not Black Friday t o set holiday trends this year
Almost 30% of consumers surveyed by Nielsen ahead of Thanksgiving state that they'll shop online on Cyber Monday. Combined, an estimated 82% who did not shop on Black Friday and the 17% who did shop but spent only an expected 50% of their holiday shopping budgets present a big opportunity for online retailers this holiday season. Amazon being the market leader and the default go-to website for someone looking to shop online is well poised to maintain its sales growth. Also, the company stands to gain from any unfinished shopping on Black Friday resulting from out-of-stock situations or because of the huge rush. Here too, the company's ploy of spacing its Cyber Monday deals over days should help it gain share from other online retailers.
We have a $218 estimate for Amazon which is 8% below the current market price.
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