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Posts Tagged 'e-commerce'

Amazon’s Incredible Infrastructure Growth for the Long Term

Published April 12, 2012 Uncategorized Leave a Comment
Tags: amazon.com (amzn), e-commerce, retail real estate, retail sales, retail trends

In its first shareholder letter as a public company in 1997, Amazon.com laid out its manifesto: “It’s All About the Long Term.” The company, which posted sales of $147.8 million that year, outlined the key areas it would focus on for the future:

“We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.”

Fifteen years later, the results are nothing short of extraordinary. In 2011, sales grew 40.6% to $48.077 billion, making it the 10th largest American retailer. The top line has grown by 31.4% compounded annually over the past 10 years. The company was recently named the most “relevant retailer” of any kind, the top U.S. retailer for customer service and without a single store has completely upended the retail industry.

click on below for comprehensive graphic

Yet this incredible success has not led to much in the way of profits. Operating income fell 38.7% in 2011 and operating margins were just 1.8%. Because of Amazon Prime and free shipping offers, the company lost over $2.4 billion on shipping as outbound shipping costs ($3.9 billion) dwarfed shipping revenue from customers ($1.5 billion). Fulfillment and marketing expenses both jumped 58% and represented 9.5% and 3.4% of sales, up from 8.5% and 3.0% respectively in 2010.

Even more impressive is the growth in property, including office space, fulfillment centers and warehouses, data centers and customer service facilities. Total leased property space soared 60.6% in 2011 to 48.3 million square feet and is up 138% from just 2 years ago. Continue reading ‘Amazon’s Incredible Infrastructure Growth for the Long Term’

Potential Retail Game-Changer as Off-Price Goes Online

Published February 24, 2012 Uncategorized Leave a Comment
Tags: e-commerce, off-price, retail trends, ross stores (rost), tjx

Already coming off a banner year which saw sales top $23 billion, off-price retail giant TJX Companies said it will be making a “substantial investment to start up e-commerce” in the near future as part of a plan to “become a company of $40 billion and beyond,”

“E-commerce is clearly in our future,” CEO Carol Meyrowitz said on the Q4 conference call. “We continue to see e-commerce as a major opportunity for TJX. We see it as a marriage between our stores and the Web. We plan to lever our $23 billion brick-and-mortar business and merchant organization that is over 700 people strong,”

So how big is the opportunity? The Commerce Department said total U.S. e-commerce sales jumped 16.1% to $194.3 billion in 2011 and comprised 6.8% of total retail (excluding restaurant, auto dealer and gas station) sales. Over the past 5 years, compound annual growth of online sales was 11.1% vs. just 2.2% for overall retail sales. Take a look at a few of the largest chains in the U.S. selling a significant amount of apparel:

Each company has built up its e-commerce operations to over 5% of total sales and are seeing much greater growth in the online channel than in stores. TJX, which operates 2,241 T.J Maxx, Marshalls and HomeGoods in the U.S, is already the fastest growing company of this group over the past 5 years. We see no reason why they can’t scale up relatively quickly and build an e-commerce business that complements the brick-and-mortar presence and eventually makes up greater than 5% of their total sales. Continue reading ‘Potential Retail Game-Changer as Off-Price Goes Online’

Chart of the Day: Best Buy vs Amazon

Published December 14, 2011 Uncategorized Leave a Comment
Tags: amazon.com (amzn), best buy (bby), e-commerce, retail trends

Over the past decade, Amazon.com has shaken up the retail world and forced traditional chains to re-think the idea of the shopping experience and what a ‘store’ is. No sector has been immune, but consumer electronics stores have been most affected as Circuit City can certainly attest to.

Yesterday’s results from Best Buy show that a combination of stiff competition and plunging tv prices continue to weigh, and have led many to claim that Best Buy is now just a showroom for Amazon. While we won’t get into that argument for now, today’s chart of the day shows that there is little doubt Amazon will overtake Best Buy in total sales sometime next year:

Retail Sales Miss the Mark in November

Published December 13, 2011 Uncategorized Leave a Comment
Tags: best buy (bby), consumer confidence, e-commerce, retail sales, retail trends

As we have been saying for several weeks now, the over-hyped Thanksgiving weekend results were not as strong as first reported, and the Black Friday bonanza was not enough to save an overall weak November as retail sales came in less than expected and the monthly gain was the smallest since June.

The U.S. Department of Commerce reported that Advance Estimates of U.S. Retail and Food Services sales for November increased 0.2% over the prior month to a seasonally adjusted $399.35 Billion, while sales rose 6.7% compared to the year-ago period. This was the 25th straight year-over-year gain after 14 consecutive months of declines, but the 0.2% monthly gain was the weakest since June and less than the 0.6% rise analysts were expecting.

For the month, only 7 of 13 categories saw growth over October: Besides Autos (+7.5% YoY, +0.5 MoM), which continue to recover off depressed levels, the only categories to show significant strength were Electronic Stores (+6.4% YoY, +2.1% MoM) and Online Retailers (+13.9% YoY, +1.5% MoM).

Click here to see detailed results by line of business.

Electronics chains were big beneficiaries of Thanksgiving weekend promotions such as flat-screen televisions for under $200, as Best Buy showed today with its Domestic same-store sales posting its first gain after 5 consecutive declines. However, those sales came at a cost as Black Friday promotions led to steep merchandise margin contraction. Continue reading ‘Retail Sales Miss the Mark in November’

Wednesday News & Notes: Shoppers Take a Break

Published December 7, 2011 Uncategorized Leave a Comment
Tags: chain store sales, e-commerce, holiday spending, retail news, retail trends

As expected, shoppers took a break last week as the typical lull set in after a record-setting Black Friday weekend.

Redbook Research saw same-store sales growth of 3.2% for the week ending Dec 3rd, a steep drop from the 5.4% gain the prior week. Noting that this is typical of post-Thanksgiving and momentum will slowly build up as we approach Christmas, Redbook Analyst Caitlin Levis said “This shopping pattern has intensified as customers have learned to shop at the last minute to exploit merchant markdowns.”

The ICSC reported that chain store sales declined by a steep 2.7% from the prior week, but still managed to post the 2nd-strongest year-on-year growth (3.8%) in four months.

Michael Niemira, ICSC’s vice president of research and chief economist, said, “Despite the weekly dip, the year-over-year pace continues to be healthy as the overall holiday-gift completion rate jumped in the latest week compared with the same period of 2010.”

According to the ICSC‐Goldman Sachs’ consumer tracking surveys, the average percentage of holiday shopping consumers have completed (excluding those who haven’t started shopping) jumped significantly over last year reaching 56.9%, compared to just 50.1% in the same week in 2010.

This tracks similar to other surveys we’ve seen which suggest many shoppers have already completed their holiday shopping and Black Friday weekend might have pulled sales into November from December, meaning retailers will now be counting on a late December push more than ever to meet plan.

E-commerce spending, however, doesn’t seem to have seen much of a lull as comScore says total online holiday spending to date has increased 15% to nearly $20 billion. Continue reading ‘Wednesday News & Notes: Shoppers Take a Break’