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Can Amazon and Ebay save Christmas?
Wednesday, October 24 2001
by Matthew Clark


Conflicting information has emerged regarding expected holiday shopping as firms
such as Ebay and Amazon.com look forward hopefully to Christmas.



Following the terrorist attacks in the US and the subsequent action in the Middle
East, it was expected that on-line retailers might benefit from the reluctance of
shoppers to muddle through the high street or head out to the mall. Research
firms have fortified this notion, but the e-tailers are more pessimistic. 



According to a new report by NextCard, an on-line credit card company, Internet
retailers such as Amazon and Ebay will benefit from an early start of holiday
sales. In its survey of almost 2,500 on-line shoppers, which was carried out by
Harris Interactive, the company claimed that nearly one third (32 percent) of
on-line shoppers would begin their on-line holiday shopping before November. 



The survey also said that Amazon.com will once again dominate the on-line
shopping arena this Christmas as nearly half of all on-line shoppers (46 percent)
intend to shop there this holiday season. Scott Lascelles, group vice president
of loyalty marketing at NextCard, said that Amazon's performance in the
e-shopping market is in line with the NextCard eCommerce Index, which has ranked
the company number one for more than two years. 



Gartner, the US-based research firm, confirmed NextCard's figures, which suggest
that on-line retailing will hit new highs as the year draws to a close.
GartnerG2, a unit of Gartner Inc., said that worldwide on-line holiday sales are
forecast to reach USD25.3 billion this year, a 39 percent jump from the previous
year. "The increase in on-line holiday shopping sales will be driven by
increases in on-line users, buyers, and most importantly, the experience level of
on-line buyers," said Mike Cruz, senior analyst for GartnerG2.



The GartnerG2 survey of 16,449 US respondents showed that 80.5 percent said they
are inclined to shop at the same rate on-line this year, 13.6 percent said they
will spend less on-line this holiday season and six percent said they will spend
more.



Growth in Web users has been paralleled by growth in the number of e-tailers. In
Europe, there has been a rapid increase in brick and click retailers coming
on-line and improving their proposition in 2001, Gartner said. "E-tailers
continue to improve their Web site functionality by offering stock checking,
order tracking and keeping their customers informed by e-mail," said Gill
Mander, business analyst for GartnerG2 Europe. "More flexible delivery times
and new delivery methods are also encouraging customers to buy on-line."



These figures have arrived in the same week that Amazon.com Inc. reported its
losses for the third quarter. Although Amazon is now steadily on the path to
profitability, the company's revenue grew only slightly from last year. 

Furthermore in a somewhat ominous sign for e-tailers, Amazon lowered its revenue
forecasts for the Christmas season saying revenue growth would be no more than 10
percent higher in the fourth quarter. Another grave concern for Amazon was the
revelation that sales in its books, music and videos business dropped 12 percent
from a year ago. 



Meanwhile Internet auction site Ebay reported its Q3 results last week with
strong earnings, but warned that the current quarter may fall behind estimates as
the company comes to terms with the economic slowdown. Until now the firm seemed
to be immune to the impact of the slowing economic on the retail sector, and Ebay
said it expected to report Q4 revenues between USD200 million and USD210 million.