Amazon Reports Jump in Sales During Holidays

Despite the looming recession putting a damper on the holiday shopping season, online retail giant, Amazon.com actually reported the best holiday season ever. The company said on Friday that it experienced a 17 percent increase in orders on its busiest day.

 

On Monday, December 15, Amazon customers ordered more than 6.3 million items, compared with approximately 5.4 million on its peak day last year. On its best day, Amazon shipped more than 5.6 million products, a 44 percent increase from 2007, when it shipped about 3.9 million on its busiest day.

 

Bad weather swept across the U.S. the weekend before Christmas, leaving many last minute shoppers worried they wouldn’t be able to make it to the mall to finish their holiday shopping. This gave online retailers like Amazon an even better chance of upping their sales for the season.

 

Amazon did not provide dollar figures and would not reveal whether the average value of orders had changed. The jumps it reported Friday match up with increases Amazon has seen since it started releasing the figures in 2002.

 

The online retailer’s most popular items include the Nintendo Wii game console, Samsung's 52-inch LCD HDTV and Apple's iPod touch.

 

According to analysts, Amazon's report was good news, but they were indecisive over whether the results show strength in overall online commerce.

 

Sucharita Mulpuru, an analyst for Forrester Research, explained that Amazon's leap in purchases shows the current economy is favoring discount retailers, both online and offline.

 

"The Amazon story doesn't surprise me because Amazon has always traditionally been a leader on price, and they're one of the first places consumers go when they're looking for things online," Mulpuru said. "In many ways they're like the Wal-Mart of the online world."

 

Wal-Mart is one of very few traditional retailers where revenue has increased this holiday season compared to last season.

 

Holiday sales usually make up 30 percent to 50 percent of a retailer's total annual earnings, but due to rising unemployment, home foreclosures, the declining stock market and other economic stresses, many shoppers were forced to drastically cut their shopping budgets this year.

 

SpendingPulse, a division of MasterCard Advisors, revealed its preliminary data showed that online dropped 2.3 percent compared with the 2007 holiday season, while overall retail sales overall fell 5.5 percent to 8 percent, including sales of cars and gasoline. The drop was 2 percent to 4 percent when auto and gas sales are excluded.

 

Although Amazon experienced a rise in orders, the company did not say whether orders were, on average, worth more or less than last year. Spokeswoman Sally Fouts said Amazon would release revenue results in its fourth-quarter earnings report, due out in about a month. She did say that this was Amazon's "best season ever."

 

Data released by Amazon revealed that on the peak day of its holiday season, sales have jumped in the double-digit percentage range for at least the past 5 years.

 

Last year, Amazon's orders jumped 35 percent to 5.4 million at their highest, from 4 million in 2006.

 

Stifel Nicolaus & Co. Analyst Scott Devitt stated that online retailers' sales typically grow much faster than those of brick-and-mortar retailers, but he said this year, the difference between them was less. This is mainly because shoppers tend to go to stores for necessities and online for discretionary purchases, he said. During a recession, consumers usually focus on their most-needed purchases and purchase frivolous items less.

 

According to Devitt, Amazon benefited from a vast infrastructure that allows for faster, and more reliable shipping than most of its online competitors offer. He called Amazon's announcement an "extremely positive data point" and said the company is "uniquely positioned to do well in an environment like this."

 

That environment has put many retailers in a challenging position. NPD Group Senior Retail Analyst Marshal Cohen revealed that in the coming weeks, they will be forced to resort to even more drastic measures to drive sales and raise revenues as much as possible.