|Tue Oct 6 2009 23:46:34|
Citigroup Research Reveals eShopping Cart Analysis
By: Ina Steiner
Mark Mahaney, Director of Internet Research at Citigroup Investment Research, issued a comprehensive report on Tuesday previewing Internet Stocks for the third quarter, 2009. I found the following section really interesting, as it shows which of four retail marketplaces has the highest discounts, by category (eBay, Amazon.com, Wal-Mart and Buy.com).
Here's how Mark explains the analysis (the entire text that follows is directly from his report).
Our Quarterly eShopping Cart analysis
We developed a basket of 60 items in our Q3 shopping cart analysis based on NY Times Bestsellers, Billboard 200 List, and Amazon’s Bestseller lists. In this iteration we also included a few pre-sale items in the DVD titles and Video Games segments, which are likely to be popular holiday items. As in quarters past, we focused on 4 leading Online retail sites: Amazon, Wal-Mart, eBay, and Buy.com. While not exhaustive, this snapshot survey compared prices & selection in: 1) electronics, 2) toys, 3) books, 4) CDs, 5) DVDs & 6) video games.
AMZN Continues To Be The Selection Leader And Remains Very Competitively Priced... - Amazon.com was the only site with 100% of the items on our shopping list (although part of this was due to self selection), while eBay, Wal-Mart, and Buy.com had 97%, 83% and 80%, respectively. In terms of pricing for new and in-season items, Buy.com was an average of 18% lower than MSRP, aided in part by two $50 mail-in rebates on xBox and Wii consoles. AMZN came in second with a 17% discount vs. full retail, and eBay and Wal-Mart tied at 15% discounts.
While Overall Discounts Appear Not As Material As Prior Quarters - For the limited sample of items in our shopping cart, prices were on average 15% to 18% below MSRP, vs. our Q2 shopping cart discounts of 19% to 25%. Interestingly, eBay pricing on fixed price items including shipping was not as attractive in aggregate vs. AMZN. The caveat here is that many of the items in the shopping cart are new or even pre-orders, making supply to the secondary market somewhat limited. While the read through from this suggests Q3 margins might be supported, we note the following caveats: 1) The items in our carts are the "new and in season" favorites, and discounting could be more severe on some of the more dated inventory, and 2) this is a very small sample and may not be representative of the pricing trends across the entire population of items.
All-in, given what is likely to be another competitive holiday season, we expect online retailers to begin to offer more promotions and coupons as the holiday season approaches.