As we head into the end of the holiday retail season, traders and investors are in some need of some R&R. Tough comparables, and mixed data from both the low and high end have confused much of the street including myself. Everyone was looking for the high end to outperform, rising asset prices have increased household wealth and dramatically helped the upper echelon consumer. In contrast, a stagnant employment market with low wage growth has continued to weigh on the low end. Unfortunately, as the third quarter earnings season ended, both sides reported mixed guidance and results.
However, we can count of one thing for certain this season. That is, strong online sales data. Online sales have been helped by the compressed holiday sales season, with six fewer days between Thanksgiving and Christmas this year than in 2012. It has been reported that analysts are expecting online shopping to account for as much as 33 to 34 percent of total holiday sales this season. Up significantly from 26 percent in 2012. In recent months, I have actively monitored relative search interest as a barometer for brand strength. Google (NASDAQ:GOOG) allows anyone to find the relative search interest over time for any keyword. In this article I would like to look at the relative strength of couple relevant online shopping keywords:
Above is a graph of the relative search interest for the keywords "online shopping" on Google. Google is expecting a score of 100 in December, meaning all time high relative interest for online shopping. The numbers on the graph reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over time. The output uses a scale from 0 to 100, a score of 100 represents the highest level of search interest for the searched keyword. Among the online retailers set to benefit, Amazon stands in perhaps the best position. Let us take a look at the relative search interest for "Amazon" on Google:
Google is expecting all-time relative high search interest for the company in December with a forecasted score of 100.
So what does this mean? Well, I think we can confirm that Amazon (NASDAQ:AMZN) is going to have a great holiday season, in relative measure to its online competition. The company does sell everything from a to z, giving the time-pressed consumer an easy option for shopping under a little more pressure this season.
Lastly, let's take a look at the search interest for a couple other relevant online commerce companies. Below is the relative search interest for "eBay" (NASDAQ:EBAY), another popular online shopping company:
Somewhat of a different story in comparison to Amazon. Google is predicting the company will see a predicted search interest score of 74 in December, well off the highs seen back in 2007 despite the drastic rise in online shopping. Finally, the following graph shows the relative search interest for "Overstock":
A clear seasonality pattern has developed over the last decade for Overstock.com (NASDAQ:OSTK). This holiday season, Google is predicting a relative search interest score of 81, slightly better than eBay but well below Amazon.
It looks like Amazon will be the clear winner this holiday season. I feel it is logical to assume relative search interest on Google does give a unique picture of brand strength. In only a few short weeks we should have a better idea of what goods were selling, at least we know now that consumers are interested.