Market Overview

What Will Be the Biggest Shopping Day of the Year?

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Cyber Monday, Black Friday, Turquoise Tuesday…okay, I made that last one up.

There was a small amount of hype for last week's much-anticipated day of online sales, Green Monday. Though few retailers failed to call the day by its (formal?) name, Green Monday – a term coined by eBay (NASDAQ: EBAY) just a few short years ago – was jam-packed with the usual batch of pre-Christmas sales.

According to comScore (NASDAQ: SCOR), the sales worked, pushing Green Monday into what is currently the number-two spot for single-day online sales:

comscore_green_monday_results_1.jpgSource: comScore

Cyber Monday still holds the top spot with $1.25 billion. But that's not the only dollar amount worth noting. Take a good look at the overall amount cash expenditures from November 1 to December 16. At nearly $31 billion, consumers are spending 15% more online this year than in 2010.

Other online shopping increases include Thanksgiving Day, which saw an increase of 18%, and Black Friday, which rose 26%.

And then we have the all-mighty Free Shipping Day, which occurred on Friday, December 16. In 2010, consumers spent just $942 million ordering Christmas gifts online. This year, they spent nearly $1.1 billion.

“More than $1 billion in spending on Free Shipping Day put the exclamation point on what will almost certainly be the heaviest week of the online holiday shopping season,” comScore's chairman, Gian Fulgoni, said in a company release. “Four individual days surpassed $1 billion in spending this week, with Green Monday leading the way at $1.13 billion. While next week may see another strong day or two at the beginning of the week, it's clear that we have now reached the crescendo for this season and that spending will begin to slow as we get closer to Christmas, leaving Cyber Monday as the top ranked shopping day for the second year in a row.”

comScore expects Cyber Monday to maintain its spot at the top now that we are past the biggest shopping week of the year.

Those who have yet to finish their Christmas shopping have just one day left to place an order from Amazon (NASDAQ: AMZN); even now, the retailer does not guarantee shipping in time for Christmas. Procrastinators can subscribe to Amazon Prime and take advantage of the site's free two-day shipping option and make purchases tomorrow and Wednesday (deadline: 8:00pm PST), and while Amazon does not say that any restrictions apply, I doubt that every item is guaranteed to arrive on time. But if you'd like to push your luck, Amazon Prime subscribers can take advantage of the cheap ($3.99) one-day shipping and order presents as late as Thursday. Then there's a last-minute delivery option that runs for $9.99, allowing Prime subscribers to order as late as Friday. And if you really want to take a risk, there is local express delivery on Saturday, which just happens to be Christmas Eve. If you intend to be that late, however, you might as well run to Best Buy (NYSE: BBY) or Target (NYSE: TGT) and pick up the item in person.

“Further analysis of retail e-commerce spending trends suggests that holiday deals, such as discounts and free shipping, may have been frontloaded during the earlier portion of the season,” comScore wrote in its company release. “We analyzed the year-over-year growth rates for the Mondays and Fridays, which represent the majority of the key promotional days for the season, between Thanksgiving and Free Shipping Day. The results showed significantly higher growth rates during the days nearer to Thanksgiving, with growth rates in the mid-20s, and more modest growth rates in the teens in the middle part of December.”

“comScore's analysis of e-commerce transactions including free shipping indicated that following a decline in the second week of December, free shipping rebounded during this most recent week, which concluded with Free Shipping Day,” comScore added. “Each week of the online holiday season-to-date has seen free shipping occur on at least half of all transactions. For the five-day week ending with Free Shipping Day, the percentage of transactions with free shipping reached 56 percent, nearly 4 percentage points higher than the corresponding time period last year.”

Further, Fulgoni said that free shipping is “undoubtedly one of the most important incentives for consumers and has become a key driver of online buying activity” in recent years. “This season has seen a continuation of the trend where an increasing percentage of transactions involve free shipping, as more consumers demand it and more retailers provide it,” he said. “During the week of Thanksgiving and Cyber Week we saw at least 3 in 5 transactions use free shipping, significantly higher rates than we've ever previously observed.”

Fulgoni was indeed speaking the obvious when he said that free shipping was a key driver of online buying activity. Free (and fast) shipping is so important to consumers that they are willing to pay $79 a year to subscribe to Amazon Prime. The service has slowly branched out and now features free streaming videos and one free Kindle book per month. But the service began as a mechanism for what could essentially be described as pre-paid shipping – and consumers ate it up.

Follow me @LouisBedigian


ACTION ITEMS:

Bullish:

If nothing else, 2011 looks to be a record-breaking year for online consumer spending, which means that:

  • Amazon will maintain its place at the top and continue to steal market share from more traditional retailers like Target, Wal-Mart (NYSE: WMT), Best Buy, and Costco (NASDAQ: COST).
  • Department stores like Macy's (NYSE: M), Kohl's (NYSE: KSS), and J.C. Penney (NYSE: JCP) will have to elevate their online presence to compete with cheaper, online-only outlets.
  • Traders who subscribe to Benzinga Pro will be instantly alerted to any earnings updates, stock price adjustments or any other changes that occur within these retailers.
Bearish:

Which online retailers are less likely to be negatively impacted by the growth of online sales?:

  • Specialty apparel shops like American Eagle (NYSE: AEO) and Aeropostale (NYSE: ARO) can maintain a degree of security by offering their own (exclusive) merchandise in-store and online via their own respective websites.
  • While more and more consumers are accepting the idea of buying games online (snail mail and digital downloads), the majority would still prefer to shop in-store. And those who shop in-store repeatedly return to GameStop (NYSE: GME).
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
 

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