E-Commerce Spending Can Buoy AMZN Stock
With Thanksgiving just around the corner, analysts are eagerly awaiting holiday sales numbers from retailers like Amazon.com, Inc. (NASDAQ:AMZN). The good news is that recent history shows that “Amazon Cyber Monday” could be the biggest winner of all.
While revenue from “Amazon Black Friday” sales usually double that of any normal day, it still falls short of e-commerce activity on Amazon Cyber Monday. Just look at the numbers from 2015 and where the trend is headed. (Source: “The Black Friday shopping frenzy is moving further online,” Business Insider, November 23, 2016.)
Instead of the regular $702.0-million-worth of goods being sold, e-commerce retailers shipped out $2.28-billion-worth of goods on the last Cyber Monday. As the 800-pound gorilla of e-commerce, there’s a fair chance that AMZN stock gobbled up the lion’s share of these gains.
Here’s what the long-term picture looks like:
There are two main takeaways here. One is that the growth in Black Friday sales is decelerating, and the other concerns the more obvious trade-off between physical and online retailing.
The fall of America’s biggest shopping day has been chronicled pretty extensively by Business Insider.
For instance, the publication showed that between 2012 and 2015, there were 42 million fewer people walking through brick-and-mortar stores on the shopping holiday. That foot traffic is expected to decline another 3.5% during this year’s Black Friday. (Source: “Black Friday is dying a slow death,” Business Insider, November 20, 2016.)
However, analysts don’t think that shoppers are just pulling back on their materialism. They believe that consumers are instead saving that cash for better deals on the following Monday, which leads into the second interesting observation.
Shoppers are increasingly likely to spend their money online, as is obvious from the chart shown above. This trend may hurt traditional retailers like Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT), and Macy’s Inc (NYSE:M), but Amazon Cyber Monday sales are up considerably.
“Overall spending during the holiday period is expected to increase 3.6% over last year to $655.8 billion,” read the Business Insider story. “Online sales are forecast to grow between 7% and 10% over last year to as much as $117 billion.” (Source: Ibid.)