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Santa's Little Helper: Shopping From the Couch

23 November 2013 in Trading Ideas

As if it needed any more of a spotlight, this year’s holidays are expected to bear witness to another surge in all forms of online shopping.

A recent survey of roughly 5,000 consumers by Deloitte suggests that the Internet will be the top holiday shopping destination this year, with 47% of respondents saying they plan to purchase online.1

That’s the first time in the 15 years of Deloitte’s survey in which online destinations have been included that the Internet has come out on top.

Want more? Deloitte said it expects the November-January holiday selling season to top $963 billion, representing growth of about 4%-4.5%. However, non-store sales (that’s online as well as catalogs and interactive TV) are expected to increase 12.5% to 13% over the same period.

That double-digit growth in sales outside the store has become commonplace, as we show in our newest Taking Stock of Holiday Trends infographic. In the three-year period from 2010 to 2012, e-commerce sales for the entire year grew 16.2%, 16.4% and 16.3%, respectively.

Unsurprisingly, the saturation of smartphones and explosion in tablet sales has led to the surge in mobile devices being used for online sales. As our infographic shows, sales via mobile devices are expected to hit $8.4 billion in 2013, representing almost 15% of all online sales.

Still wondering why Amazon decided to carve out a niche in the tablet market?

couch commerceThe iconic online retailer, by the way, makes up a 21.7% weighting in the Couch Commerce motif, which is up 41.6% so far in 2013. Amazon has been a major contributor to that gain, especially with its shares having jumped almost 30% in less than three months.

As if confirming by proxy the entire paradigm shift of online retail, investors continue to bid Amazon’s shares higher, as hyper-growth in revenue continues to offset concerns about losses on the bottom line.

Away from the Christmas crunch, however, online shopping has continued to change the landscape in many retail subsectors, perhaps nowhere more significantly than in travel (does anybody even know a travel agent anymore?).

Shares of Priceline, which make up 20% of the Couch Commerce motif, have been one of the S&P 500’s top-performing stocks in 2013, climbing more than 80% this year. Meanwhile, shares of motif component Expedia exploded higher last month after the company beat Wall Street’s quarterly expectations.2

In the wake of recent stock run-ups, it may be for investors to eventually decide if growth in online shopping is continuing to justify increasingly higher prices being commanded by the sector’s top names.

1Deloitte Insights, “Online Channels to Dominate Holiday Retail Sales,” WSJ.com, Nov. 11, 2013.

2Rex Crum, “Expedia surges as results top forecasts,” Marketwatch.com, Oct. 30, 2013, http://www.marketwatch.com/story/expedia-surges-as-results-top-forecasts-2013-10-30, (accessed Nov. 19, 2013).