Print 52 comment(s) - last by jay401.. on Feb 2 at 9:22 AM

The holiday season treated very well

Both online and B&M retail sales plunged over the holiday season.  Layoffs abounded and there was no definite sign of an end in sight.  However, amid all these financial woes, a few lone stars did brighten the picture for the retail market.

One of the brightest stars was online retailer Amazon, who continued to post strong growth.  It made good on its claims of a seemingly implausible "best ever" holiday season when it posted its quarterly earnings this Thursday. 

Amazon posted a $225M USD profit, a growth of over 9 percent from the same quarter a year before.  Revenue climbed a whopping 18 percent to $6.70B USD.  The revenue handsomely surpassed analyst predictions which called for a more paltry $6.44B USD.  Amazon's electronics division was one of the greatest successes, growing to $2.89B USD, up 31 percent from the previous year.

Jeff Bezos, founder and chief executive of Amazon, states, "We remain relentlessly focused on serving customers with low prices, great selection and free shipping offers, including Amazon Prime."

Mr. Bezos cited the strong demand for Amazon's eBook reader Kindle as one reason why Amazon profits rose when overall the online community sunk.  On February 9, 2009 Amazon will introduce a new version of the best-selling gadget at a New York news conference.

Innovative products aren't the most important factor in Amazon's success believe some analysts.  They say it benefits from customers with reduced budgets looking for bargains, with Amazon's prices often being lower than retail stores.  Describes Mark Mahaney, an analyst at Citigroup, "Amazon may be enjoying a Wal-Mart effect, with people trading down to Amazon to get better prices over the holiday.  Amazon must have dramatically taken market share (from other retailers)."

The lone trouble sign for Amazon was its operating margin, a measure of real earnings left after expenses such as employee wages, discount costs, and other operating costs.  Amazon saw this margin sink from 4.79 percent the year before to 4.09 percent.  This was partly due to heavy discounting.  While it’s good that this raised sales, it’s a bit of a concern for Amazon when it looks at its bottom line. 

Amazon also had the misfortune of losing a key suit which allowed the state of New York to charge tax on its sales and possibly destroying the previous legal precedent of nexus protections.  As more states adopt such provisions, Amazon may see its revenue after taxes take an even bigger hit.

Many challenges await this year for Amazon, however, it certainly seems better prepared to handle them than most retailers given its strong performance over the holiday season.

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By jay401 on 1/30/2009 10:26:20 AM , Rating: 2
And apparently the first thing they did was ratchet the prices right back up. An HDTV i was keeping my eye on went down to around $830 the week of Christmas and is now back up over $1100. No thanks! Not for an HDTV that's over a year old product-line-wise, and not when I know you're willing to sell it for $830!

See this is what you lose with online shopping over B&M: The ability to negotiate pricing. Not that most people today bother to negotiate at B&Ms, just that they at least have the option to do so. With an online store, the price is the price and you are at the mercy of their timing and decision to run a sale when they want to and on which items they want to.

Maybe if Amazon started up a "email/fax us a competing offer and we'll match it" policy, they would be more interested for big-box items that aren't on sale at a given time.

RE: yeah
By Spectator on 1/30/2009 10:45:07 AM , Rating: 2
On the HDTV.

It could also be that manufacturer had discount. and now Amazon cant get that price anymore.

But i Agree with the logic. Some fooker was happy to sell it for 830 making a profit. and now they want 1100.

Just shows how much profit is in it; either way. just wait some for Ressesion prices? :)

RE: yeah
By TomZ on 1/30/2009 10:46:57 AM , Rating: 2
The online equivalent of being able to negiotiate prices is being able to shop at 20 stores within 1 minute and compare prices.

I can only rarely find better prices at B&M - almost always I can find a far better deal online.

Amazon's had some good pricing on things I've checked of late, so it doesn't surprise me that their sales are up.

RE: yeah
By Nfarce on 1/30/2009 11:56:37 AM , Rating: 2
Wild price fluctuations on TVs at Amazon have been par for the course as long as I've been shopping there. Also, you need to keep in mind that sometimes that price includes shipping, and other times, it does not. I've seen the same Panny Viera plasma go from $1049 with "free" shipping to $899 with $119 shipping (!).

That said, on such a large ticket item, I just don't trust the shipping supply chain involved in getting it to my door. Oh I'm sure it will get there, but only God knows how well it was handled in the chain. I'd rather pay another hundred or even a little more and buy directly from a B&M, not to mention the ease of return and instant replacement availability. I am the same way about LCDs for my PCs - most e-tailers have a seriously lame dead pixel return policy that B&Ms don't adhere to. I consider the increased price insurance.

RE: yeah
By superflex on 1/30/2009 1:01:31 PM , Rating: 2
I've bought 3 HDTV (42" panny, 37" aquos and 26" aquos) from Newegg. The 26" was a freebie since the local B&Ms wanted over $450 more for the 42" and 37"
Never had a problem with shipping. All was free.
Hopefully, my purchases helped put CC in the tank. They truly sucked.

RE: yeah
By theapparition on 1/30/2009 1:05:46 PM , Rating: 2
How do you think those TV's get to your local B&M's. Yep, they are shipped.

That's why companies (at least the good ones) spend so much money on packaging engineers and all the styrofoam and packing peanuts. It's designed to survive rough handling.

RE: yeah
By Jimbo1234 on 1/30/2009 2:06:53 PM , Rating: 2
Yeah, I got about $200 off Best Buy's sale price on my TV a couple years ago. I just told them I was going to get it at Circuit City and started walking. It wasn't even a matter of price matching.

So much for that now. At least we still have "American" in town, so I can still haggle at the B&M.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
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