Citigroup Internet analyst Mark Mahaney published an interesting report on the online retailers that showed overall pricing have improved from the fourth quarter of 2008 suggesting that the heavy discounting may have subsided in the first quarter. If true, this would have positive implications for the broader economy and not just e-Commerce companies.
• We Priced Out The Top 10 Items In 6 Categories - We revisited the items in our Holiday shopping cart, using Yahoo! Shopping's Top 10 Lists. We focused on 4 leading online retail sites: Amazon, Wal-Mart, eBay, and Buy.com. While not exhaustive, this snapshot survey compared prices & selection in: 1) electronics, 2) toys, 3) books, 4) CDs, 5) DVDs & 6) video games.
• eBay Tops List With Deepest Discounts - Search Experience Still Lacking -Both eBay and Amazon.com had 100% of the items on our shopping list, while Wal-Mart and Buy.com had 87% and 85%, respectively. In terms of pricing, eBay was on average 18% lower than MSRP followed by AMZN at 15% discount, Buy.com at 14%, and Wal-Mart at 13% off MSRP. While eBay had the best deals, we found that the search experience on AMZN, WMT and even Buy.com was more shopper friendly than on EBAY - still more work to do here.
• AMZN's Relative Advantages - In terms of AMZN's three key bedrocks - Price, Selection & Convenience - our snapshot survey suggests the company's greatest differentiation to be in Convenience (best overall shopping experience), then in Selection, and least so in Price. The last point would seem to support the "Price To Tie" strategy we detailed in our 3/31 AMZN report.
• Prices Up Vs. Q4 = Positive Margin Tailwind - We compared current prices for AMZN & WMT vs. our Q4 shopping carts -- prices are up approximately 5% Q/Q on average. While only a snapshot, implication is that heavy discounting may not have continued into Q1, a potential positive for gross margins.
Saturday, April 4, 2009
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