For Immediate Release
Chicago, IL – July 03, 2014 – Today, Zacks Equity Research discusses the eCommerce, including Amazon (AMZN-Free Report), UPS (UPS-Free Report), Fedex (FDX-Free Report) and Macy’s (M-Free Report).
Since the industry is in evolution, the drivers are changing. For instance, the initial push came from the time savings and convenience of online transactions. To this were added the benefits of comparison shopping and personal recommendations. As technology required for personalized recommendations developed, became more available and its benefits more evident, most e-tailers started adding the feature until it is now considered a must-have.
The adoption of smartphones, tablets and other mobile Internet devices remains the biggest driver of retail ecommerce sales. In fact, trends indicate that consumers prefer mobile browsers when shopping, searching and entertaining themselves, while preferring apps for navigation and acquiring information.
Ecommerce sales through mobile actually dropped off slightly to around 10.5% in 2013 from 11% in 2012 (as deduced from recent findings by comScore). Earlier, comScore predicted that this share would go up to 26% in 2017. Mobile commerce is likely to benefit from the fact that screen sizes of mobile devices are getting larger (phablets and larger tablets).
eMarketer estimates that tablets generated 65% of m-commerce sales in 2013, with smartphones accounting for the rest.
While both tablets and smartphones are extremely convenient when on the move, tablets have several additional advantages. In fact, they are a boon to the ecommerce industry, since the larger screens offer better visibility of online stores and merchandise, thus facilitating purchases.
Average spending per user on tablets is therefore 20% higher than on smartphones but since more people have smartphones, their overall share of ecommerce spending is lower. Given the unique advantages of smartphones and tablets, it appears that they are working in conjunction to boost total online retail sales. Additionally, the inherent cost savings and convenience of “showrooming” ensures that the trend will continue.
Continued advancements in technology are improving navigation and customer experience on ecommerce sites, which is improving reviews and thus drawing more traffic to the sites.
The digital consumption of books, music, video and games all over the world is extending the reach of these goods and thereby boosting sales. Therefore, previously unconnected electronic goods, such as TVs and game consoles are now being modified to enable connectivity. On the other side of the fence, online versions of books, music, video and games that can be downloaded and consumed on a traditional computer or any other connected device are becoming available.
Since the shift in consumption patterns is resulting in multi-functional electronic gadgets that are no longer optimized for a particular activity, there is a great drive to develop technologies that could improve the quality of each experience.
Free shipping remains a major lure. However, shipping/logistics is a cost that ecommerce companies are required to absorb. So they are doing everything they can to take down costs. Some, like Amazon (AMZN-Free Report), are supplementing the “local” feature (customer pickup from nearby store at his/her own convenience) with a larger number of more strategically located fulfillment centers.
Amazon is systematically doing away with traditional package delivery companies like UPS (UPS-Free Report) and Fedex (FDX-Free Report) because it operates on very thin margins. Online marketplaces like Alibaba are teaming up with local delivery companies (in China) to create a massive distribution network.
With retail of all kinds gradually moving online, picking specific categories to focus on has become a challenge. Individual product categories can broadly be classified today as books/music/video, apparel and accessories, auto and parts, consumer/CE, toys/hobby, home furniture/furnishings, health, food/beverage, office equipment and supplies, and other.
A recently published ecommerce study indicates that all these categories will grow at a mid-teens percentage rate this year with the exception of books/music/video which will be somewhat stronger. But growth rates are expected to moderate across categories to the low double-digits by 2018.
Apparel is a huge market and although online sales are currently under 10% of total apparel sales, the category already generates the most dollars. Selling tools, such as zoom, color swatching and configurators are helping the process. Even primarily brick-and-mortar outfits like Macy’s (M-Free Report) sees that consumers purchasing through multiple channels (online and offline stores) tend to spend more. This is encouraging traditional retailers to offer an online store to supplement their physical stores. Online sales also show better conversions since searches usually draw consumers with a prior intention to purchase.
The increase in technology purchases over the Internet is driven by not only individual consumers, but also companies and governments. The efficient and timely processing of orders, choice of payment options, subscription-selling and sales under the SaaS model are all facilitators.
The Association of American Publishers (AAP) says that ebook sales in the U.S. flattened out in 2013 due to difficult comps, particularly in the children’s category. Publishers also took pricing actions, which affected revenues. Units however, grew 10.1% according to BookStats, a joint project between the AAP and the Book Industry Study Group. With a penetration rate in the mid-teens percentage range, the scope for market expansion is present.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on AMZN - FREE
Get the full Report on UPS - FREE
Get the full Report on FDX - FREE
Get the full Report on M - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.