Is This What Saved Christmas for Online Retailers?

Don't call it a comeback. After a mid-holiday-season shopping lull sparked worries about a drop in online spending, Web retailers pulled off a late-December surge to get those revenue figures back on track.

That's good news for retailers' top lines, but profit margins probably took a hit in the process.

According to comScore, last week's five-day online haul was up a massive 53%, led by $1.01 billion in sales booked on Monday, Dec. 17. That marked the 12th billion-dollar sales day of the season. And it helped boost total holiday growth by 16%, better than the 13% rise that the industry was on pace to set just a week before.

A late-season surge like that isn't typical. ChannelAdvisor noted last week that cyber sales had slowed down appreciably after the Black Friday bounce. The e-commerce watcher estimated Amazon.com's (NASDAQ: AMZN  ) early-December same-store sales results as up just 26%, compared to a 41% boost in November. eBay (NASDAQ: EBAY  ) also saw sales growth tick down for the first two weeks of December, up 23% versus the 27% bounce last month. Overall, sales looked to be following the multiyear trend of moving earlier in the calendar, making for a front-loaded shopping season.

But the pullback was reversed last week as retailers offered aggressive free shipping deals and guaranteed delivery by Christmas. Wal-Mart (NYSE: WMT  ) gave online shoppers free shipping on most orders over $45, while Target (NYSE: TGT  ) waived shipping fees for most orders over $50. Costco (NASDAQ: COST  ) guaranteed delivery by Christmas Eve for orders placed as late as 11:59 PST last Thursday night.

And for Amazon's part, the e-tailing giant has been more generous with shipping charges than Santa himself. The company ate about $2.5 billion in shipping costs last year and is on pace to hit $3 billion this year, in what's become a huge drag on profit margins.

Last week's online spending bounce suggests that other retailers are following that pricey example. They kept their sales flowing through what should have been a down week, even if it meant taking a bath on shipping costs.

More expert advice from The Motley Fool
Everyone knows Amazon is the big bad wolf in the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. We'll tell you what's driving the company's growth, and how to know when to buy and sell Amazon in our new premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2168836, ~/Articles/ArticleHandler.aspx, 10/25/2014 6:35:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement