By Danielle Kucera - Nov 23, 2011 12:01 PM GMT+0700
Amazon.com Inc. (AMZN) and EBay Inc. (EBAY), aiming to get more consumers to shop online this holiday season, are taking their fight to brick-and-mortar retailers’ home turf on Black Friday, the busiest shopping day of the year.
EBay is planning holiday “pop-up” locations in New York, San Francisco and London that will let consumers scan a barcode and buy products on the spot, using mobile phones. Amazon opened an online Black Friday deals store on Nov. 1. It’s packing the site with offers each day to keep shoppers checking in over the Web, instead of heading to the mall.
Internet sellers aim to spur more buying from couches and armchairs among the more than 95 percent of U.S. consumers who still shop in stores, ratcheting up rivalry with traditional retailers as economic weakness weighs on spending growth. EBay’s outdoor displays and shopping cafes, for example, seek to catch the eye of shoppers who are hurrying in and out of stores, offering an alternative to post-Thanksgiving crowds and lines.
“If people have a finite amount of discretionary dollars to lock up before Black Friday, it suits these retailers well,” said Sucharita Mulpuru, an analyst at Forrester Research Inc. (FORR) “Web retailers are better-positioned than store retailers. They in many cases can have better offers because their economics are more favorable.”
Internet Retailers Gain
Amazon and EBay shares have gained this year as more consumers use tablets such as Apple Inc.’s iPad to shop and look for deals they can’t get at physical locations, which incur more overhead. Amazon’s stock price has risen 6.9 percent in 2011 and EBay has increased 4.3 percent, while Best Buy Co. (BBY) has declined 24 percent.
Wal-Mart Stores Inc. (WMT), Target Corp. (TGT) and other retailers are also pouring on the discounts, some opening earlier than ever on the day after Thanksgiving. They’re eager to win over the 49 percent of consumers who last year chose to shop less in physical retail locations and more online as they looked for cheaper items, Mulpuru said. That trend will probably continue, she said.
“This is everyone trying to clamor for what’s going to be a difficult holiday season,” she said.
EBay’s London pop-up store, open from Dec. 1 to Dec. 5, will feature physical products -- examples of what’s available online -- with so-called QR codes consumers can scan with mobile devices to buy through EBay’s marketplace, the world’s largest. In New York and San Francisco, the company is letting consumers buy items online through storefronts that feature digital screens with scannable price tags. The displays also let users simultaneously make a donation to the Marine Toys for Tots Foundation, an organization that gives toys to kids in need.
Mobile Shopping
The temporary locations may help fuel sales and shopping over mobile devices, which EBay projects will reach $5 billion this year. EBay’s total revenue is forecast to increase 33 percent to $3.3 billion in the fourth quarter. The company bought the RedLaser barcode-scanning app in June 2010, part of a push to expand into mobile payments.
E-commerce accounted for 4.6 percent of the total retail market in the third quarter, according to the U.S. Department of Commerce. Even as they vie for a larger slice of overall retail sales, Amazon, EBay and smaller Internet vendors are also competing with one another in the existing e-commerce market, which may increase 15 percent to $59.5 billion in November and December this year, Forrester estimates.
Brittany Kim, a 29-year-old graduate student at Wheaton College in suburban Chicago, said she plans to increase her online shopping by about a third this holiday season. She said at least some of that will be on Amazon.
“They have everything,” Kim said while shopping recently in San Francisco. “They’re price-competitive.”
Reviving sales growth as consumer confidence improves will be a priority this holiday season, Mulpuru said. While confidence is climbing, the University of Michigan index of consumer expectations for six months from now was 56.2 in November, far below the 80.5 average of the previous expansion that ended in December 2007. Revenue at EBay jumped 29 percent from 2006 to 2007, compared with a 4.9 percent increase from 2009 to 2010.
The San Jose, California-based company is setting up cafes beside its New York and San Francisco storefronts with food trucks and free Wi-Fi where users can sit and shop on their mobile phones. Passersby will be given a gift guide with popular holiday items -- Apple (AAPL) iPhones, Activision Blizzard Inc. (ATVI)’s “Call of Duty” video games, Wusthof knives -- with a QR code that directs users to the mobile EBay holiday Web page to browse.
“We want to be present during those moments when that inspiration hits consumers, when they see the product that they want, and they want to get it then and there,” said Richelle Parham, chief marketing officer of North America at EBay.
Black Friday Deals
EBay will tussle with Amazon in its bid to lure customers from physical retailers. Amazon’s Black Friday deals store will offer customers exclusive deals each day, including Cyber Monday, the Monday after Thanksgiving. The idea is to lock in consumers before they make the decision to hit stores. Shoppers are getting the message.
“Amazon is a center point of our family universe,” said Shana Deane, a 42-year-old mother of three from Sunderland, Massachusetts. “We have an Amazon credit card. We will definitely not go shopping anywhere on Black Friday.”
Amazon, the biggest online retailer, also is promoting its Price Check mobile application, which helps consumers make sure they’re getting the best deals while they’re out shopping. The holiday revenue will contribute to sales that the Seattle-based company says will be $16.5 billion to $18.7 billion in the fourth quarter -- growth of 27 percent to 44 percent compared with a year earlier.
Spending More
Forrester, based in Cambridge, Massachusetts, estimates that 12 percent of the 15 percent growth in the e-commerce market this holiday season will result from increased spending per buyer, an indication that the market is attracting more consumers looking to get the right value for their time and money as the economy remains sluggish.
Groupon Inc., LivingSocial.com and other daily-deal sites also may benefit as shoppers look to the Web for discounted gifts.
U.S. consumers will spend $80 million to $100 million on daily-deal gifts between Thanksgiving and Christmas, estimates the website Yipit, which aggregates offers from a range of companies. That’s up from $15 million to $20 million during the same period a year ago, Yipit said. Some of the gains may be coming from shoppers who are seeking unique experiences and services, like those offered by deal sites, rather than toys or clothes.
“I don’t want to have to feel like I have to get the same thing every other mother is getting her 8-year-old,” Deane said. Taking part in the Black Friday craze “creates that false pressure,” she said.
To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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