This article seems almost anticlimatic given the action today. But as I don't remember it being posted, here goes.
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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.
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