The spread of estimates of how holiday sales did over the period from Black Friday through Cyber Monday is wide. NRF reported that Thanksgiving Holiday spending reached $57.4 billion, which was a slight disappointment. Comscore reported that online spending from the start of November through December 11 was higher by 9% to $31.5 billion. (The research firm added that the number of weekends in 2013 was different from last year, so perhaps online spending was really up 25%). Individual retailers have reported numbers which range from fantastic to horrible. Whatever the correct data are, the holiday retail sales season has gone from a marathon which started on November 1 to a sprint with only 10 days to go.
If the level of discounts offered by Walmart (NYSE: WMT) is any indication, the largest retailer in the world has decided to continue to use free shipping, which can be costly for the retailer, as a means to gain customers. Its most attractive offer, at least for people who do not want to wait until the very last moment, is free shipping on any order of $35 or more. The catch, and there are several, is that it will take 6 to 9 business days for those orders to arrive–which means they may barely make it before sundown on the 24th. Walmart does not say what it costs to get orders as fast as it can deliver them–1 to 2 business days, Customers have to check directly with the retailer. The cost may be too shockingly high for most Walmart shoppers. So, does Walmart really take much of a financial risk on shipping? Maybe not, when the fees are broken down by category.
Best Buy (NYSE: BBY), which unexpectedly resurrected its fortunes, has finally found a way to hold off another holiday beating from Amazon (NASDAQ: AMZN). Or, at least based on what Best Buy management claims, this year its fortunes have turned. The New York Times summed up the improvement. New CEO Hubert Joly told the paper, "We believe that price-competitiveness is table stakes. The way we want to win is around the advice, convenience, service.". Stock analysts have taken Joly’s side, and Best Buy is one of the best performing stocks in the S&P 500 so far this year. In theory, Joly’s approach should work online, where Best Buy has found it impossible to compete with Amazon, and in its stores as well.
But, by the measure of Amazon’s claims, it is hard to see how it cannot take more market share from its bricks-and-mortar competition. Amazon has forecast revenue for the current quarter will be as high as $26.5 billion–as much as 25% above the same quarter last year. It has set a series of tactics to bolster holiday sales. Among the most clever is 1 cent shipping. However, that deal is only good for Amazon Wine orders. It is a clever headline, which is likely to draw some measure of attention for people shopping for other items.
Beyond Amazon’s daily deals, the foundation of its success continues to be that it is the most visited e-commerce site in America. And, just as important, it uses it wildly popularly Kindle, and has for years, as the front door to sales of multimedia products like streaming media and MP3s. The Kindle is leverage which no other retailer can touch. Amazon is set to post another quarter of spectacular results, so long as the direction it has taken in the past is the right one again this year
10 shopping days until Christmas and the labyrinth of deals and offers seems to get more complex by the hour.
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