Retailers shift their ad spending from TV, radio and print ads to digital ads.
Beginning with Thanksgiving, analysts forecast mushrooming holiday sales for Amazon.
It’s only the beginning of Thanksgiving week, but it’s already shaping up to be another record holiday sales season for Amazon.com Inc., say analysts and others that follow the world’s biggest online retailer.
In its third quarter earnings release, Amazon, No. 1 in the Internet Retailer Top 500 Guide, forecast its total fourth quarter sales could range from $12 billion to $13.3 billion—an increase of 26% to 40% over Amazon’s fourth quarter sales of $9.5 billion in 2009. But based on the retailer’s advanced technology, wide merchandise selection and low prices, some analysts already believe that Amazon will end the fourth quarter with sales of about $13.3 billion, at the top end of Amazon’s own forecast.
“They are poised to have a great fourth quarter because with the full acquisition of Zappos.com now fully accounted for they have an even wider selection of merchandise, especially in apparel, than they did one year ago,” says Colin Sebastian, an analyst for Lazard Capital Markets, which follows Amazon. “They remain the e-commerce site everyone else will try to beat this holiday season.” Amazon acquired online shoe and apparel retailer Zappos last year.
Amazon over the long Thanksgiving shopping weekend and during the course of the holiday season stands to gain significant web sales in North America, especially in consumer electronics and general merchandise, says Sebastian. Based on a big selection of merchandise and other factors such as free shipping, Lazard projects Amazon’s fourth quarter sales in North America could grow year over year about 39%% to $6.8 billion from $4.9 billion, while sales for electronics, which include the Kindle electronic book reader and general merchandise, could grow 61.5% to an estimated $4.2 million from $2.6 billion in the fourth quarter of 2009. “Amazon had a lot of momentum already going into the holiday shopping season,” says Sebastian. “From Thanksgiving on, that momentum should only accelerate.”
In preparation for the Friday after Thanksgiving, also known as Black Friday, and the Monday after the Thanksgiving weekend, referred to as Cyber Monday, Amazon is rolling out new promotions and mobile technology. On Monday, Amazon began featuring deep discounts of up to 60% off some items available for sale on the Friday after Thanksgiving in conjunction with free “super saver” shipping on certain items and free two-day shipping for Amazon Prime, a members-only expedited delivery service.
As part of its Friday after Thanksgiving deals, Amazon is selling white gold round earrings for 75% off list price at $199.99, Pioneer home theater receivers for 40% off list at $299 and Lord of the Rings series Blu-ray disks at $7.99, a discount of nearly 70% off the full price of $24.99. To stay competitive with store-based retailers, Amazon on Monday also introduced a new mobile app for the iPhone—Price Check by Amazon—that enables iPhone users visiting stores to comparison shop and instantly order items from Amazon.com in one click.
“Customers can use the app to scan a bar code, snap a picture, or say or type a product name to receive instant prices for that item from Amazon.com and other online merchants affiliated with its marketplace,” Amazon says. Customers can then purchase the item and have it delivered directly to their home, office or other designated location. “This app makes it incredibly easy to quickly compare prices on millions of items before making a purchase,” says Amazon Mobile director Sam Hall.
Amazon is poised for a successful holiday sales season because in many instances it can offer lower prices than many other large online merchants, says Jeetil Batil, an analyst who follows Amazon for investment banking firm Deutsche Bank Securities Inc. In a new research brief, Deutsche Bank recently compared pricing on up 93 products on Amazon.com and several competing sites, including BarnesandNoble.com, BestBuy.com, eBay.com, ToysRUs.com and Walmart.com. For example, in the consumer electronics category, Deutsche Bank found Best Buy was offering certain items such as some 40-inch TVs, laptop computers and printers at prices up to 20% higher than at Amazon.com. “In our online pricing strategy survey, Amazon is the early winner,” says Batil in a recent research brief. “Although holiday e-commerce sales have started a little slower than our expectations, Amazon is positioned to capture a larger share of the online retail market owing to its low prices, large selection and fulfillment expertise.”
With cheaper prices and a wider selection of merchandise in categories such as apparel and accessories, Amazon.com began preparing for the holiday shopping season well ahead of many other online retailers, says ChannelAdvisor CEO Scot Wingo. “While everyone else was playing defense, Amazon was playing offense by lowering its prices, expanding its selection and expediting its free shipping offers,” says Wingo. “Everyone is going to be watching what Amazon says and does this Thanksgiving and for the rest of the holiday shopping season. They have plenty of room to run and will set some sales records in the process.”