Tag Archives: amzn

Will Amazon.com Surpass Wal-Mart This Year? Maybe Sort Of

Third-party sellers drive big sales for e-commerce leader  Amazon.com ( AMZN ), so much that if you take a look and add them up, Amazon is getting very close to catching up with longtime retail king Wal-Mart. At least, so says  ChannelAdvisor ( ECOM ) Executive Chairman Scot Wingo, after looking at the numbers in a blog post this week  that he called a deep dive into Amazon’s financials. Looking at third-party sales and what he says is the 10% commission that Amazon takes and includes as revenue in its quarterly financials,  Amazon’s the total transactional value — the amount of goods the company moves — might surpass  Wal-Mart ( WMT ) as soon as this year, Wingo says. ChannelAdvisor works with third-party sellers on Amazon and other platforms, and provides a range of related strategic services and technologies. One caveat is that Wingo excludes groceries, a small business for Amazon at this point but a big one for Wal-Mart. Excluding groceries, Wingo calculates that Amazon’s total transactional value — Amazon revenue plus third-party sellers — was close to $225 billion in 2015. Amazon reported 2015 revenue of $107 billion, but of course that does not include the great majority — 90%, says Wingo — of third-party revenue. Wingo estimates third-party sellers added $131.8 billion to Amazon’s total transactional volume last year, for the total of $225 billion. Wal-Mart hauled in $242 billion when you exclude groceries, which accounted for half of the company’s total revenue of $485 billion in fiscal 2015, Wingo said. He used data for Wal-Mart’s fiscal 2105 ended Jan. 31, 2015, but the company’s final fiscal 2016 revenue is  expected to be roughly the same, with analysts expecting $483 billion. Amazon, on the other hand, has been boosting its annual revenue at a 20% clip. “Amazon has twice the economic impact people think,” Wingo told IBD via email, when we asked about his blog post. Since 2009, Wal-Mart has had a third-party sellers program open to “select” retailers. The company does not break out its revenue for its third-party sellers, and Wingo contends it is not significant. Add it up, and by these metrics, Amazon is heading to surpass Wal-Mart this calendar year. Said Wingo, “unless something slows down at Amazon, it will put considerable pressure on other offline and online retailers.” Amazon did not return several requests for comment. Amazon Pressure On E-Tail Only Getting Worse Yet, Wal-Mart has been “vocal” about its plans to aggressively build-out its e-commerce platforms. In December, Wal-Mart spokesman Dan Toporek told IBD that the firm has been building “dozens” of online fulfillment centers, and has made a big bet on its digital sales platform through its now 2,500-strong workforce in Silicon Valley. Half the company’s online sales are on mobile devices, he said. Nonetheless as Amazon expands, Wingo says other sellers will suffer. In his blog post, he said “we also expect that as Amazon ‘absorbs’ the next $100 (billion) in (market) share, a lot of retailers will lose share as a consequence — some will cease to exist entirely.” It’s going to take Amazon a lot less time to reach its next $100 billion in revenue than it will take Wal-Mart, Wingo wrote. Wingo says in the blog post that Amazon added $20 billion in gross merchandise volume (GMV) in Q4 above Q4 2014, and that those additions alone were near the total Q4 GMV for  eBay ( EBAY ). An eBay spokeswoman has told IBD that third-party sellers are often in danger of being shoved out by Amazon as a result of Amazon deciding to start offering a seller’s product itself. Some observers have said Amazon can learn what is popular by data it gathers from its third-party sales. Wingo, though, says third-party sales are becoming more profitable for Amazon, thanks to the company’s infrastructure expansion and improvements, and that third-party sales are rising much more quickly on Amazon than are Amazon’s sales of its own goods. Amazon’s surging growth has propelled the company to a position in e-tail that in some ways makes it appear  impenetrable  — though the firm’s Q4 earnings  did not meet  lofty expectations . Image provided by Shutterstock .

Crowded Stocks Apple, Alphabet, Microsoft Still A Buy: Bernstein

Alphabet, Facebook, Intel, Amazon.com and Apple ( AAPL ) rank among the most “crowded” technology and telecom stocks globally, says a Sanford Bernstein research report, which notes that Hewlett Packard Enterprise and Sprint are among the least-crowded large-cap stocks. The Bernstein report says investors should keep in mind what stocks are “crowded,” or highly concentrated, amid market volatility. Still, being among the most crowded doesn’t rule out a favorable stock rating for a stock. So-called crowded stocks are often called growth and momentum stocks. And high institutional ownership is usually a good thing, as IBD’s Investor’s Corner can tell you. “We believe it’s important for investors to include ‘crowding’ as a consideration for their portfolio strategy, especially for technology (which is very crowded), to improve diversification, mitigate downside risk and potentially enhance returns,” said Bernstein analyst Mark Moerdler in the report. The worry with heavily owned stocks is that, given high valuations and high growth expectations, they might take a hit if investors exit the stock market during a broad sell-off. Other analysts at Bernstein rate Alphabet ( GOOGL ) and Amazon ( AMZN ) stocks as a buy, Facebook ( FB ) neutral and Apple outperform, even though Apple also is on the crowded list. Intel ( INTC ) has a hold rating from Bernstein, while Microsoft ( MSFT ) has a buy. On Apple, Moerdler wrote: “The stock has underperformed over the last quarter due to fears of iPhone weakness, which we believe is now largely priced into the stock.” Microsoft “has become increasingly crowded over the last few quarters as investors and sell-side analysts have come to realize the massive opportunity for Microsoft to grow long-term EPS as the company moves to cloud and subscription revenue,” Moerdler said. Among software stocks, he says, “companies that have greater exposure to cloud and recurring revenue (are) showing the most crowding.” According to Moerdler: “Crowded stocks react less positively to good news than un-crowded stocks, but overreact negatively to bad news more so than un-crowded stocks.” Sprint ( S ) and Hewlett Packard Enterprise ( HPE ) have  market perform ratings at Bernstein Research.

Amazon Bookstore Buzz Signals Alibaba-Style O2O Push

Amazon.com ( AMZN ) will open 300-400 bookstores in the coming years, according to Sandeep Mathrani, CEO of mall operator  General Growth Properties ( GGP ) in an earnings call late Tuesday. While that may seem an odd choice for the e-commerce giant, which that has driven brick-and-mortar bookstores out of business, Amazon could be taking a page from Alibaba ( BABA ) and fellow Chinese Internet giants Baidu ( BIDU ) and JD.com ( JD ) as they invest heavily in online-to-offline channels. Amazon opened its first bookstore in Seattle last November. It also has permanent kiosks in many Westfield malls. The Seattle location promotes Amazon tech products, such as Kindle tablets and Fire TV streaming devices. A big bookstore-and-gadget store push would suggest that Amazon, which has long benefited from shoppers checking out goods at Barnes & Noble ( BKS ), Best Buy ( BBY ) or other locations before making purchases at Amazon, wants to become its own showroom. But Amazon likely sees the stores as being more than a showroom. While Amazon has made a huge push to ship faster — offering 1-hour deliveries in about 20 cities —  the company still would like to be faster. The bookstores would let people make instant purchases, or pick up online buys. They also could serve as mini-distribution centers. Alibaba Leads China O2O Rush Online-to-offline, or O2O, retailing, already is a huge trend in China. Alibaba spent $4.6 billion last August for 20% of Suning, a major Chinese consumer electronics chain. Of the four largest Internet companies in China, Alibaba has been investing the most money in growth. The No. 1 provider of e-commerce services in China, Alibaba last year invested about $11 billion in acquisitions. This includes $4.63 billion for a 20% stake in Suning, one of the largest consumer-electronics retail chains in China. JD.com that same month invested $700 million in supermarket chain Yonghui Superstores for a 10% stake. JD.com has a strategic alliance with messaging and mobile giant Tencent ( TCEHY ), which owns a big stake in JD. Tencent and China search giant Baidu have teamed up with Dalian Wanda, a sprawling property and entertainment giant. Baidu has vowed to spend $3.2 billion on O2O over three years. These investments have curbed profit growth at Alibaba, Baidu and others. But that likely wouldn’t stop Amazon. CEO Jeff Bezos has always invested heavily to promote future growth. Q4 earnings growth failed to meet lofty Wall Street projections in large part because Amazon fulfillment costs leapt 33% to $4.55 billion. Amazon stock fell nearly 4% on the stock market Tuesday to its lowest close since Oct. 14, part of a 13% 3-day tumble since its Q4 earnings shortfall Thursday night. Amazon fell 3.3% Wednesday morning, undercutting its 200-day moving average for the first  time in a year. Alibaba fell 4.6% intraday after losing 2.9% on Tuesday. Baidu lost 2% following Tuesday’s 3.9% retreat.  JD.com sank 4% after Tuesday’s 3.6% fall. Tencent gave up 2.9% intraday after a 2% slide Tuesday.