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Amazon issued a press release containing data about its holiday shopping performance. This isn't financial guidance: there's nothing in the press release about revenues or earnings. But analysts will comb the text for clues about how Amazon did during the peak shopping period of the year. Here are the data points they'll probably focus on:

  • Amazon's book business set new records.
  • Sales of consumer electronics surpassed sales of books over Thanksgiving Weekend, becoming Amazon's largest sales category.
  • This was Amazon's busiest ever shopping season, with new records in daily shipments and customers per hour.
  • More than half a million gift certificates were ordered between November 25th and December 24th.
  • Standard shipping deadline was extended two days from December 18th to December 20th.

What to make of these data points? Amazon's trumpeting of new
fulfillment, shipping and customer holiday records tells us little, as
we already know that online sales should be 20% to 30% higher than last
year. And Amazon already announced (after Thanksgiving) that
electronics overtook its books, music & video business in revenues.

The success of non-books/music/DVD categories is important.
Consumer electronics carry much higher prices than books, so success in
Amazon's consumer electronics business could imply upside for Amazon's
revenue numbers. Although margins are fairly low on consumer
electronics, the absolute dollar amount of gross margin is large per
order, and that's the metric Amazon focuses on. The press release also
suggests that some of Amazon's newer shopping
categories are doing well, particularly jewelry and home and garden.

The sale of half a million gift certificates is also important.
Amazon won't be able to book those as revenue, as accounting rules
stipulate that gift certificates are booked as revenue only when they
are exchanged for goods. But the volume of gift certificates sold
probably augers well for Amazon's first quarter. It's also consistent
with broader retail trends which suggest that gift certificates did
well.

Amazon's later shipping deadline explains the holiday shopping data.
Early surveys suggested that online shopping was weaker than expected.
But later surveys suggested that demand was strong, picking up later in
the season. Improved shipping efficiency - extending the deadline by
two days - from retailers like Amazon explains why the early surveys
probably underestimated the final online shopping numbers.

Source: Decoding Amazon's holiday shopping press release