How To Invest In The Age of E-Commerce
Black Friday has come and gone.
Another historic year of sales is in the books.
Every week it seems like another department store reports that it’s closing locations. The media continues to talk about the death of brick and mortar retail stores.
And Jeff Bezos’ beast of Amazon is only going to continue to grow (until it quite possibly rules the world). Where’s that leave us trying to diversify and capture gains in the retail space?
Transfer of Power
Retail store sales continue to decline this year. E-commerce giants like Amazon ( AMZN), Alibaba ( BABA), and Shopify ( SHOP) threaten to put brick-and-mortar stores out of business. In 2016, foot traffic on Black Friday was at 99.1 million people, dropping from 2015’s number of 101 million.
This trend is expected to continue. This year, the number of customers who deal with the long lines and late-night chaos continues to decrease. Customers are taking the night off. They’re looking towards the online world of savings to help out their holiday season budgets.
In 2016, Thanksgiving online sales amounted to $1.93 billion compared to Black Friday’s $3.34 billion. They are expected to jump to nearly $2.8 billion and $5 billion respectively in 2017.
Customers enjoy the ease of ordering from home; and it is reflected clearly in transfer of sales over the past several years.
But how are the market movers responding to these trends? Let’s take a deeper look as we inch closer towards understanding financial fluency.
And The Ever-Changing Industry
Some retail giants, like Wal-Mart ( WMT), are attempting to curb this trend by attacking it head-on. Like in August 2016, Wal-Mart purchased Jet.com for $3.3 billion in an attempt to compete with Amazon’s ever-growing customer base. Such transitions from brick-and-mortar shopping to online retail have forced historically-engrained companies in the industry to test out new tactics.
As technology continues to advance, the world of online retail has become increasingly more popular. Black Friday previously brought to mind long lines — crowds of people waiting for the cheapest time to buy an X-Box. However, the holiday has quickly become overshadowed by its online, weekday successor, Cyber Monday.
Shares of Amazon, Shopify, and Alibaba all increased heavily during the holiday week. But their biggest day comes today. Today, consumers are predicted to spend about $6.6 billion online. That marks outspending their Black Friday counterparts by a cool $1.6 billion.
It seems the ease and scale of online shopping has transformed holiday season spending habits. What used to be a field day for retail stores transformed into a battle between e-commerce titans.
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Originally published at https://blog.rapunzlinvestments.com on November 27, 2017.
