Morning Report
Tue Nov 10
eSurfing Santa:
Holiday Season Could Be Turning Point for Etail
By Steve Harmon
Senior Investment Analyst
Internet.com
"Where Wall Street Meets The Web"
'Twas the month before Christmas and all through the Web etail stocks start stirring though some thought long dead...and up
on the rooftop click click click, down through the modem comes the new St. Nick.
Said another way: we predict this year's holiday buying will blow away expectations and forever change the gift-giving
season and estimate that as many as 10 million Web users in the U.S. may buy at least one gift online, about double last year.
Driving that belief is the belief that people don't want to drive. Don't want to battle other potential customers for the last
Beanie widget/gadget/whatchamacallit. Why when you can buy it on the Web, they wrap it, ship it, slap it, zap it right to its
destination and you probably got it at a better price than if you had stood in line.
We're seeing this pre-holiday fervor already push shares up of some more well-known etail stocks. So which etail stocks are
we keeping an eye on. The list:
Popular Products Web Consumers Buy
Item, rank
Stocks in this sector
Software
Egghead (NASDAQ:EGGS - news) ,
Beyond.com (NASDAQ:BYND - news) ,
Digital River (NASDAQ:DRIV - news)
Books
Amazon.com (NASDAQ:AMZN - news) ,
Barnes & Noble (NYSE:BKS - news) , Borders
(NYSE:BGP - news) _
PCs
Dell (NASDAQ:DELL - news) , ONSALE
(NASDAQ:ONSL - news) , Egghead
Music
CDnow (NASDAQ:CDNW - news) , Music
Blvd-N2K (NASDAQ:NTKI - news) , Amazon
Gifts
AOL (NYSE:AOL - news) , Yahoo, Lycos
(NASDAQ:LCOS - news) , Excite
(NASDAQ:XCIT - news)
Travel
Preview Travel (NASDAQ:PTVL - news)
Clothing
AOL
Electronics
ONSALE
Food
AOL, Peapod (NASDAQ:PPOD - news)
category source: Cyber Dialogue; stock list from Internet Stock
Report (c) 1998 Mecklermedia
There's Amazon.com (NASDAQ:AMZN - news) , ONSALE (NASDAQ:ONSL - news) , Egghead.com (NASDAQ:EGGS - news) , Beyond.com (NASDAQ:BYND -
news) , Digital River (NASDAQ:DRIV - news) , and more (see the table). Here's why we're watching this group closely:
Amazon - made books a top selling item. Books! Now books are great but before Amazon books were just books. Now they're cool. Added music sales this past
quarter and in one quarter surpassed leader CDnow (NASDAQ:CDNW - news) in sales. Wants to be the personal Web store for everyone. A long way to go but it's done
some remarkable stuff so far.
Software is a no-brainer for Web sales. Egghead (NASDAQ:EGGS - news) has done well in this realm, despite a lack of recognition by the general media. Almost
unnoticed in Egghead's offings, surplus auctions, similar to ONSALE (NASDAQ:ONSL - news) , which we believe has a lead in PC auctions. ONSALE also auctions
off hardware, consumer electronics, cars, and more.
DELL (NASDAQ:DELL - news) holds the distinction as a business PC seller but we think those same people go home and may think of buying DELL for gifts and
themselves this holiday season. DELL now reports selling $6 million per day of PCs via the Web. It was just $1 million a day a year ago and that was thought to be
phenomenal at the time.
Where DELL wins in brand name we think ONSALE wins in a better model--let the bidder decide what to pay, not the box maker. Similarly, we think eBay
(NASDAQ:EBAY - news) , already overheated in our opinion, could get more heat from its abundance of Beanie Babies that may prove a gift favorite. The Cabbage
Patch doll of the 1990s.
In music we're slating CDnow (NASDAQ:CDNW - news) and Music Blvd-N2K (NASDAQ:NTKI - news) ahead of Amazon for one reason: we want to see if the
exclusive etail deals the two cut with top traffic sites and services will pay off. N2K is the exclusive or preferred online music retailer for AOL, Netscape, Excite, WebTV,
@Home, iVillage, AT&T WorldNet, StarMedia, PointCast, CBS Cable's CMT, TNN, country.com, and MTV International in Europe, Asia, Japan, and Brazil.
CDnow has pacts with Yahoo!, Lycos, Lycos-Bertelsmann, Webcrawler, Tripod, Geocities, MTV/VH1, Rolling Stone Network, and CBS.com.
For holiday travelers there's Microsoft's (NASDAQ:MSFT - news) Expedia which gets good reviews and Preview Travel (NASDAQ:PTVL - news) . Preview has signed
up 5 million subscribers and has deals with AOL, Excite, Lycos, Snap and USA Today. It made its fare search engine available to other Web sites to use free of charge
Clothing lacks an etail leader (in a public Internet stock anyway) and for that we think AOL could get a lot of interest because of its general purpose appeal. Last year
clothing was the #1 selling product on AOL. While we're at it, check the top sellers on AOL in 1997-- 2. Food, 3. Books, 4. Flowers, 5. Electronics, 6. Music, 7. Toys.
For that reason we also think AOL could show strong food sales with the usual holiday non-perishable food exchanges. Let the fruitcake beware.
At the end of the sleigh bell ride, however, when sales get counted in January/February we don't think that every etail stock wins in the way they could if a fully-stocked
easy-to-use, well-known supermart of products was available.
One reason we keep a close eye on what Amazon plans to do with shopping comparison engine Junglee and what Inktomi (NASDAQ:INKT - news) will do with a similar
service it acquired. We believe 1998 will be a turning point but 1999 will be the main event as Web-based shopping grows up.
Your turn: Plan on playing "WebSurfing Santa" this year? Tell us what categories and which etail sites you favor buying gifts from, results next week... |
