Amazon sports some pretty startling numbers. Let’s dive into various reports for a close look.
Amazon captured 31% of online spending over Cyber Weekend
CNBC reports Amazon captured 31% of online spending over Cyber Weekend
According to new data by Slice Intelligence, which scanned more than 1 million online shopping receipts from Thanksgiving through Cyber Monday, Amazon accounted for 30.9 percent of sales. It was followed by Best Buy at 7.4 percent, Target at 4.4 percent, and Wal-Mart at 4.1 percent.
Amazon Prime
Barrons reports Amazon Prime Grows to 50 Million Members
Amazon’s Prime membership is up 23% from a year ago, according to new data from Cowen & Co.
Amazon.com doesn’t disclose its Prime membership count, so Cowen bases its estimate off a panel of 2,500 U.S. consumers. Some 45% of that panel now has Prime, which translates to 49.5 million total consumers, Cowen estimates, up 23% from a year ago, when the firm estimated 40 million Prime subscriptions.
Prime costs $99 a year. It gives Amazon shoppers free two-day shipping, plus free access to the company’s growing library of streaming TV and music.
Other Data from Cowen’s Report
- 83% of Prime members purchased an item from Amazon in October versus 49% of U.S. consumers that don’t have Prime.
- The number of people making “Grocery and consumable” purchases at Amazon are up 12% from last year, Cowen estimates.
- Meanwhile, those making the same kind of purchases fell 2% at Wal-Mart and rose just 1% at Target.
Online and Mobile Sales
The Chicago Tribune reports Cyber Monday sales spike 9.4%, early data show.
- 55 percent of visits to retail websites on Black Friday were made from mobile devices.
- Data released this weekend offers evidence that online spending was strong on Thanksgiving and Black Friday. Adobe, which analyzed 22.6 billion visits to retail websites, reported that a record $3.34 billion was spent online on Black Friday, up 21.6 percent from the previous year. Sales on Thanksgiving were up 11.5 percent to $1.93 billion.
Black Friday Record Breaking Sales Online
Tech Crunch reports Black Friday online sales to hit a record-breaking $3 billion, over $1 billion from mobile.
- Adobe’s final numbers indicate that Black Friday surpassed estimates, with $3.34 billion – 21.6 percent growth, year-over-year. Mobile accounted for $1.2 billion, a 33 percent increase from the year before.
- Walmart said that 60 percent of Black Friday orders on Walmart.com came from mobile devices, for example.
- Mobile was also driving the majority of retail sites visits on Friday at 56 percent, Adobe noted. Most of that (47%) was from smartphones, as opposed to tablets (9%).
- In addition, mobile accounted for 40 percent of sales, with 29 percent from smartphones, and 11 percent for tablets. By 3 PM ET, mobile alone had accounted for $680 million in online sales.
Online Sales Growth
In 2015 Amazon accounted for 60% of U.S. online sales growth.
Amazon.com Inc. generated about 60% of total U.S. online sales growth in 2015 far outpacing the competition, according to data compiled by Forrester Research.
The retail giant tallied $23 billion more in U.S. e-commerce sales in 2015 than 2014, the report found.
“Amazon makes up a larger percentage of e-commerce in the U.S. than any other player, and its retail growth has outpaced overall online retail,” Forrester Research wrote in a recent report, titled “U.S. Online Retail Forecast: 2015 to 2020.”
Amazon Share Price Stats
Above data from Yahoo Finance.
Amazon Stats Synopsis
Good companies don’t necessarily make good stocks.
Mike “Mish” Shedlock
The market cap of Amazon is roughly equal to that of Walmart + Cisco.
Their strategy is to forego profit to grab market share. And then what?
As soon as they try to raise prices everybody starts leaving. On the cost side, they are already squeezing partners so much they are leaving. And with such a small profit, any slight downturn can become a crash.
Their *real* strategy is to give executives stock options, then ramp up the price so they get rich. To do that, you act more like a charity than a business, because that puts up big sales numbers. It’s good for execs, good for consumers — but bad for shareholders and bad for competitors (including their affiliates who finally catching on).
With all those sales and revenue…
Amazon still barely makes any money.
How do they keep growing?
What happens when that growth stops?
They pour the money they could have “made,” back into growing. At both ends: Low margins, and high investment/spending.
The theory being, and the rapid uptake of “Prime” customers kind of validate this, that beyond a certain size ubiquity, along with economies of scale, becomes a competitive advantage in and of itself. Allowing for slightly more comfortable margins without massive defections.
Innovators has a great advantage in competitiveness, but also become easy targets for those looking to knock them off. Ultimately once a platform is developed and matured, it becomes simply a matter of money to sustain it. If another potential competitor can come in and with fat pockets buy into your technology and concepts, they can many times buy it for much less than what it cost for you to develop. I can’t help but wonder who will step up that challenges Amazon….maybe in China. Alibaba? What is it that Amazon does that can’t be done out of China or anywhere else?
Amazon is trying to dominate, monopolize, their market, being the middle man for every online purchase. The only way that can hold is if we simply ignore antitrust laws.
They do make a lot of money, but it is given away as customer discounts to continue acquisition of greater volumes.
As you can see, the healthy increase in Prime implies indication of increased volumes within the Amazon ecosystem, possibly more upsell and crosssell. This means competition across on/offline will be further weakened.
As long as the shift of offline to online continues, Amazon will benefit from the double whammy of market size as well as market share increase.
This will take quite a while (perhaps a few years). Meanwhile several things can happen. Economy can start really taking off, which means increase in lease of life for Amazon.
When all this eventually tapers, Amazon will pull some other rabbit out of its hat, since it will have several years to figure out what that rabbit would be.
We are nowhere near the end of that taper.
Great comments from both Stuki and Ram. Amazon is also positioning itself as the “trusted” portal for shopping on the Internet. It is doing this by being the go to source for trust relationships between buyers and the 10s of thousands of partners who are being forced to compete for razor thin margins while Amazon gets a cut of every transaction.
Amazon is also the by far the dominant player in cloud computing, and is making money hand over fist in this market.
While I did not buy anything from Amazon (I already find there prices as being too high), I did purchase a number of products on-line. Interestingly 2 of those vendors asked me if I wanted free fulfillment insurance from Amazon. Which goes back to that trust issue and, I’m sure, Amazon getting a cut.
All true.
(imo) investors think Bezos the next Jobs … and don’t want to miss out on the next Big Thing.
But if something ever happened to Bezos … or DJT follows thru on his prior comment that Amazon faces anti-trust problem ….
Amazon price anecdote from this past week. I run and wear New Balance shoes. The model I wanted full price $159/pair … on “sale” at amazon for $129/pair … bought from Joes new balance outlet for ….. $29/pair.
Facebook w/marketcap @ 332 billion, 0.46 beta, 2.59 EPS, and PE of 44.37, seems like a bargain. I laughed at the $38.00 IPO price in 2012… it’s 2 about $118/share today. WTF was I thinking when I figured it would level out at 10-20 bucks a share? Well, I still fail to see any real value… or maybe it’s just that I fail to be hypnotized.
31% of all online sales this past weekend?
In the past DJT has said Amazon has a big anti-trust problem.
No wonder Bezos attacked him so voraciously all year via his media outlet (Washington Post) to keep him out of the White House.
Payback coming?
The masses have no $$s. Consequently –
“Dollar General Chief Executive Todd Vasos said the company is trying to boost performance by cutting prices to boost store traffic, with some promising early results, though he warned that a full benefit to same-store sales “will not be immediate.” He said headwinds due to changes to food-stamp programs around the country, which crimped performance in the second quarter, accelerated in the latest quarter.”
http://www.marketwatch.com/story/dollar-general-misses-profit-and-sales-forecasts-2016-12-01
…
In the Orwellian Department – you can’t say price cuts … they are now price investments –
“Dollar General Corp.’s disappointing results Thursday can be attributed to a few factors, including deflationary forces, a decline in food stamp benefits, and, according to analysts, price investments from Wal-Mart Stores Inc.”
…
“Dollar General says it made price investments in approximately 450 items in about 17% of its store base during the third quarter.”
http://www.marketwatch.com/story/dollar-general-hurt-by-deflation-wal-mart-food-stamp-decline-2016-12-01
It should be noted (as by this Prime member) that Amazon is already showing signs of growing too fast. Several of my orders are not shipping within the 2 days they promise. A word to the wise with respect to purchasing from Amazon without checking from the manufacturer. I purchased some computer speakers from Amazon and the order fulfilled in a few days (not the 2 Prime promises) but when I had a technical question and went into the manufacturer’s web site I found that I had paid $30 more for the speakers when the manufacturer was also offering FREE shipping…should have done my homework!
I’d be curious as to what the percentage of online sales represents to all sales. It used to be about 5%.
8.4%
The Census Bureau of the Department of Commerce announced today that the estimate of U.S. retail e-commerce sales for the third quarter of 2016, adjusted for seasonal variation, but not for price changes, was $101.3 billion, an increase of 4.0 percent (±1.1%) from the second quarter of 2016. Total retail sales for the third quarter of 2016 were estimated at $1,212.5 billion, an increase of 0.9 percent (±0.4%) from the second quarter of 2016. The third quarter 2016 e-commerce estimate increased 15.7 percent (±1.9%) from the third quarter of 2015 while total retail sales increased 2.2 percent (±0.7%) in the same period. E-commerce sales in the third quarter of 2016 accounted for 8.4 percent of total sales.
https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
For anyone thinking whoa! that is a low number … remember total retail includes new vehicles sales, gasoline, grocery stores, restaurants, etc.
Little tidbit for you: Yes, I used Amazon to buy nieces and nephews something for Christmas. I went to a local big box store, but they didn’t have the items in store, though I could order it online from them. Ship to store is free, the worker told me, but I figured it was through Amazon right now anyways, so I declined. Big box stores, for all the worthless crap they keep in-store, didn’t have the things I was looking for.
Other than groceries, hardware stuff, little things from a Dollar Tree (usually grade school related), or noncritical emergencies (think car repair), I can get it online for less and shipping is nominal or free if I’ve hit a targeted amount. Easy to do if you wait and lump it all together for one shipment.
I’ve never had much use for Kohls, Macy’s, or any other large retailer selling fluff stuff. Personally, I’d love to see a resurgence of small “niche” market shops with specific specialties. But unless commercial retail landlords come back from fantasyland and quit eye-gouging potential renters, I’ll never see that happen in my lifetime.
I remember when most places were small, niche retailers. The problem is that it requires a certain scale of local population to support them. When 80% are going to get cheap crap from WalMart, the other 20% can’t support the local guy. So he goes out of business. Only the largest cities can support both. For the rest of America, once WalMart moves in, choice goes away.
I use amazon on a weekly basis and have a prime membership, but I hate Bezos. The Washington Post has to be the most left major newspaper in the world. Some may be able to tie it, but it would be difficult to surpass it. What’s worse is many (most?) of it’s readers actually think it was biased against Clinton. They think the only reason Trump won was because his voters were easily brainwashed morons. That and Russia.