Are you one of the many consumers shopping online for the holidays this year?
According to some analysts, you will be spending more of your holiday budget online this year. Online sales are expected to get a boost this season as a result of the compressed holiday sales season. This year there are six fewer days between Thanksgiving and Christmas than in 2012. As a result consumer are going to be under greater time pressure to get all of their holiday lists completed.
Moreover, shoppers have been pushed to find more convenient ways to shop away from the conventional brick and mortar experience. It is expected that online shopping will account for as much as 34% of total holiday sales this season, up from 26% in 2012. One analyst in particular, Marshal Cohen, believes online sales will account for closer to 40% of total spend.
As investors we are looking to capitalize on sales trends, and in this article I would like to highlight three names in a great position to benefit from the move towards online shopping this year. Let us first take a look at the most obvious candidate: Amazon.com (NASDAQ: AMZN )
From a to z
Heading into the key time period from Thanksgiving through Cyber Monday, all eyes were on the company. ChannelAdvisor, an e-commerce sales and data provider, gives Wall Street some interesting data points to chew on each year following the sales period. Channel Advisor data suggests that Amazon saw a 34.9% increase in same-store sales for the Cyber Five period, compared to a 37.7% increase in sales in 2012. Moreover, the research group thinks Cyber Monday sales rose 46.2% year over year, compared to 42.4% last year.
In recent years, Amazon has pioneered the concept of fast shipping and service through its Prime platform, which has seen great success. The company made headlines around the world in a controversial way when 60 Minutes reported Amazon's idea for drone delivery, the night before Cyber Monday. This publicity most assuredly helped the company generate traffic the next day, and hopefully kept users coming back in the following days.
So with online shopping as strong as ever, who else could possibly benefit?
The package delivery and logistics companies stand in a great position. Both Fedex (NYSE: FDX ) and United Parcel Service (NYSE: UPS ) are looking to capitalize on your shipping needs this holiday season.
The time-pressed consumer should be more inclined to purchase an expedited shipping option this year as a result of the compressed shopping season. Of course that means higher shipping price tags for consumers and higher revenues for the delivery companies.
The quantity of packages the two companies will be delivering this holiday season is truly astounding. Following Cyber Monday, it was reported that UPS' volumes peaked on Monday, Dec. 16, when it picked up 34 million packages. Meanwhile FedEx peaked a bit earlier, sending out 22 million packages on Dec. 2.
Everything is pointing towards strong online holiday sales this year. A shortened season in combination with deal-loving consumers should benefit all the players involved, including Amazon, Fedex, and UPS. Amazon has already delivered strong initial comparables, I would expect more of the same to come this reporting season. Fedex and UPS stand in the background to get these orders there in time, for their price.
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