Online Retail Sales Up in Q4

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Online retail sales improved 10.3% on a year-over-year basis in the fourth quarter of 2013, according to IBM's (IBM) latest Digital Analytics report. The report tracks approximately 800 e-Commerce websites in the United States.

Department stores were the biggest gainers during the three-month period. Online sales jumped 62.8% year over year as compared with 46.4% for home goods retailers, 14.7% for health beauty and 10.2% for apparel.

As per the report, online sales increased 19.7% year over year on Thanksgiving, 19.0% on Black Friday and 20.6% on Cyber Monday. The strong Cyber Monday sales figure reflects U.S. consumers’ growing appetite for online deals and promotions from e-Commerce providers such as Groupon (GRPN), eBay (EBAY) and Amazon.com (AMZN).

As per the latest IBM report, mobile sales were more than 16.6% of total online sales, an increase of 46.0% year over year. This was slightly higher than 16.0% growth forecasted by market research firm eMarketer. Mobile traffic surged 40.0% from the year-ago period to 35.0% of all online traffic.

Smartphones lead the traffic growth (21.3%, up from 12.8% in the year-ago quarter) comfortably beating the traffic generated by tablets. However, tablets accounted for 11.5% of all online sales, much higher than 5.0% of sales done through smartphones. Tablet users spent $118.09 per order compared to $104.72 spent by smartphone users.

Traffic from Apple’s (AAPL) iOS devices were 22.1% of all online traffic compared with 10.6% of Google’s (GOOG) Android users. Sales through iOS devices were 12.7% of all online sales compared to 2.6% for Android.

Among the social networks generating online sales, Pinterest users purchased ($109.93) more on an average compared with Facebook (FB) users ($60.48). However, Facebook referrals converted to sales 3.5 times more than Pinterest referrals. According to IBM, this was due to Facebook’s dominant position as the more established social network.

E-Commerce continues to flourish, particularly driven by continuing adoption of smartphones and tablets. eMarketer estimates retail m-Commerce sales of $41.68 billion in 2013. The market research firm forecasts that by 2017, retail m-Commerce sales will be more than $100.0 billion.

We believe e-Commerce firms such as Amazon and Groupon will continue to benefit from this trend over the long term. Currently, Amazon has a Zacks Rank #1 (Strong Buy), while Groupon carries a Zacks Rank #3 (Hold).

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