From the Desk of MFAM: All Sales Are Online Sales

Online commerce is a big deal, and more companies than just are set to benefit.

May 4, 2014 at 10:30AM

Online commerce is kind of a big deal. The segment now accounts for approximately $250 billion of retail sales, or about 6% of total retail sales, and is growing faster than retail sales overall. With improving shopping, payment, and delivery technology, one should expect this trend to continue. But it's not just that will benefit. In fact, online capabilities are proving to be more and more of a differentiator in performance across the retail spectrum.

The tale of the tape
Compare, for example, Williams-Sonoma (NYSE:WSM), the parent of Pottery Barn and West Elm, and Pier 1 (NYSE:PIR). These similarly positioned home-furnishing retailers should both be benefiting from recent improvements in the housing market. Yet over the past 12 months Williams-Sonoma is up more than 20%, while Pier 1 is down more than 20%.

Although many factors have undoubtedly contributed to the success at Williams-Sonoma and the malaise at Pier 1, it's not a coincidence that the company that has done well is recognized as one of the best online marketers in its space and that roughly 50% of its sales are online. Pier 1, on the other hand, is just two years into its e-commerce strategy and gets just 4% of its sales online. For that to be true of a company in 2014 is flat-out embarrassing. Did Pier 1 think the Internet was a fad for the past 20 years?

Measuring up on the Web
Admittedly, for competitive reasons, most public companies are loath to disclose potentially helpful key performance indicators, so it can be difficult for investors to discern whether a company they are analyzing is good or bad at online commerce. But there are workarounds. One of the handiest I've found is to simply check how many Twitter followers and Facebook likes a company has -- watching for change over time and comparing their online presence with their overall sales.

Here, for example, is how five retailers targeting affluent women stack up:


TTM Sales

Twitter Followers

Facebook Likes

MFAM Social Score (0-10)


$2.5 billion




Chico's (NYSE:CHS)

$2.6 billion




L Brands (NYSE:LB)

$10.8 billion




lululemon athletica

$1.6 billion




Urban Outfitters (NASDAQ:URBN)

$3.1 billion




*This number is potentially juiced by the widespread appeal of the company's Victoria's Secret accounts.

Urban Outfitters is punching way above its weight when it comes to its online social-media presence, while Chico's is woefully behind. Of course, this is just one set of data among many that investors should look at when considering a retail-sector investment, but as more and more sales move online, it seems obvious that those who will be most successful are those who are already good at selling things online.

Put that competency together with a reasonable valuation, and that's why we recently concluded that Urban Outfitters may be a promising investment opportunity.

Tim Hanson has no position in any stocks mentioned. The Motley Fool recommends, Facebook, lululemon athletica, Twitter, Urban Outfitters, and Williams-Sonoma and owns shares of and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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