A Bear Stearns analyst argues that e-tailers will be under pressure as consumers slow spending.
Bear Stearns analyst Robert Peck said in a research note Friday that e-commerce warning signals abound. "The season is clearly being impacted by the general consumer pullback, with concerns on oil, housing, and the stock market. Many consumers are actively pursuing bargains and may be waiting for further promotions," writes Peck.
It had been widely assumed that e-commerce giants such as Amazon, eBay and others wouldn't be affected too much by a broader slowdown. The big takeaway: There's still plenty of growth, but there are worries. This fact plays into the expectations game. Merely hitting growth projections may not be enough for e-tailers.
Peck, who on Thursday talked e-tail with ComScore Chairman Gian Fulgoni, cooked up the following conclusions:
- eCommerce growth started off very slowly (18%) vs. last year (25%). My take: Internet retailers are becoming just a sector of the broad retail sector.
- Several days including Cyber Monday & Green Monday (33%) were growth accelerators (Cyber Monday was up 21% from a year ago). My take: The law of large numbers is taking over.
- Accelerating growth over the last few days has helped QTD eCommerce spending grow closer to 20%, where comScore still expects the season's growth to finish. My take: Will that growth be enough to satisfy Wall Street?
- Promotions have increased substantially (72% of online retailers offered special deals on Cyber Monday, up from 43% a year ago), raising profitability questions on the growth. My take: Given those promotions were hit early and often why wouldn't consumers hold out for more?
- Dollars per buyer have dropped 12% YoY. My take: A recession is not out of the question.
- Lower income brackets have pulled back more on spending. My take: Subprime creep.
- Video games & consoles remain the fastest growing area, while toys lag. My take: After the China lead paint fiasco is this surprising?
- Search continues to drive significant navigation. My take: Google gains as gatekeeper.
- Amazon appears to be taking traffic from eBay. My take: In a market where demand is sketchy it only stands to reason that the Christmas store of last resort (eBay) would suffer. Few are willing to ramp up spending just to secure a hard to find toy.
- Pure-play online retailers (i.e. Amazon) have caught up in growth to multi-channel retailers growth (i.e. WalMart). Large portals are doing well relative to smaller players. My take: No real surprises here.