Amazon seen beating rivals in holiday season

Mon Dec 1, 2008 8:28pm EST
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By Alexandria Sage - Analysis

SAN FRANCISCO (Reuters) - Inc may outperform other Web retailers this holiday season as its scale, flexibility and popularity help it stand out in an online price war.

As online retailers vie to outdo each other and their brick-and-mortar rivals in offering deals that consumers will be hard pressed to pass up on, analysts said Amazon's market share could grow. A survey showed the online retailer was "the clear leader" in Web commerce.

While Amazon shares dropped 5.22 percent on Monday, that was better than the 8.95 percent decline in the Standard & Poor's 500 index and 6.85 percent drop in Internet rival eBay Inc. Some smaller online retailers, such as Inc and Blue Nile Inc, suffered bigger falls of 15.35 percent and 12.74 percent, respectively.

The declines were a bad omen, particularly on the first Monday after the holiday shopping season officially began last Friday.

Web traffic to online shopping sites is supposed to rise on so-called "Cyber Monday" as consumers log on from work to find better deals than they saw on visits to physical stores. However, some investors feared deep discounts from traditional retailers may have stolen the thunder from online rivals.

Amazon, though, is seen by many as the surer bet online.

A J.P. Morgan Internet survey showed Amazon to be the "clear leader in U.S. eCommerce," with nearly half of the respondents planning to shop at Amazon, and 59 percent of users with incomes over $100,000 saying they shopped there. No other site captured more than 33 percent.

"It seems they (Amazon) have done so much better than everyone else, or better than the market seems to be indicating," said Pacific Crest analyst Steve Weinstein.   Continued...