Brian Pitz, Managing Director and Senior Research Analyst at Jefferies & Company, Inc., Interviews with The Wall Street Transcript: Internet Giants Continue Outperforming Smaller Competitors

Wall Street Transcript

67 WALL STREET, New York - May 20, 2013 - The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increased Mobile Content Traffic - Chinese Online Monetization Trends - Internet Infrastructure and Services Consolidation - Social Networking Economics -

Companies include: Google Inc. (GOOG), Amazon.com Inc. (AMZN), eBay Inc. (EBAY), Nordstrom Inc. (JWN), Yahoo! Inc. (YHOO), Apple Inc. (AAPL), Microsoft Corporation (MSFT), Activision Blizzard, Inc. (ATVI), Sony Corporation (SNE) and many more.

In the following excerpt from the Internet Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You're focused on fulfillment and omnichannel capabilities as the next high ground in the e-commerce war. Can you talk a bit about that, including your assessments of both Amazon's and eBay's competitive positions, and who you think could be other significant players?

Mr. Pitz: Generally, we believe the challenge will be the largest for a variety of offline retailers. However, we do not cover these names, so cannot comment more specifically. We believe as companies including Amazon continue to build out their capabilities in same-day delivery, same-day delivery eventually becomes a have-to-have for the average consumer, although that customer may not even know it yet. We believe same-day may follow the same trajectory as two-day delivery did post its launch by Amazon many years ago. We believe the average consumer has been positively impacted by two-day shipping, and now even may come to expect it, or clearly view it as a value add, along with product selection and price.

So we believe Amazon will continue to raise the bar and provide consumers with the merchandise that they thought they would receive in two days, but actually receive in one day or less. Amazon already delivers this level of service in many markets such as New York or San Francisco. We have witnessed consistent best-in-class, one-day or even same-day delivery on products from some of Amazon's Quidsi brands such as Diapers.com or Soap.com, or even Zappos.

Quidsi is a company Amazon bought, and they have expanded the number of brands under that label since the purchase. We think the differentiator with the Quidsi and Zappos properties is the use of the Kiva System, also bought by Amazon, in their fulfillment centers. We wrote about this in our detailed fulfillment/same-day shipping report. Kiva is optimized for standard-sized packaging, and so it tends to work better with fulfillment centers and boxes that Diapers, Soap or Zappos maintain. But the bottom line is that there are a ton of productivity improvements with a Kiva-based system, and we believe that Amazon will continue delivering items to consumers in a shorter duration than they expect through those properties in a growing number of markets.

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For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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