Cyber Monday, just so happens to be the biggest online shopping day of the year (although preliminary reports of Black Friday sales suggests that honor is no longer entirely secure). And what would any discussion of Cyber Monday be without placing Amazon.com (AMZN) as the centerpiece?
After all, Amazon is largely the reason Cyber Monday became an event in itself by becoming synonymous with “online shopping” within just a few years of opening its digital doors in 1994.
On the one hand, whether Cyber Monday boosts the actual underlying value of AMZN stock, of course, isn’t clear; maybe it’s all just a lot of expensive noise.
On the other hand, in the modern era of digital-driven consumerism, noise can be a marketing tool in itself.
Amazon Promises Biggest Cyber Monday Yet
Those investors who have owned AMZN stock for the long haul will know that each year, its Cyber Monday mania gets bigger than the last. Not only do the deals get better, there are more of them. This year, it offered a new deal every five minutes for a week, and that was before Cyber Monday even started. Amazon really turned up the heat after Black Friday.
The company unsurprisingly said this year’s was expected to be its biggest Cyber Monday yet, with orders pacing faster than 500 per second. And, with shoppers spending a billion fewer dollars at stores on Black Friday this year, it’s not tough to believe consumers are redirecting their holiday shopping budgets to online venues like Amazon.com.
Is it worth it? Does Amazon actually make any money selling merchandise just marginally above (and maybe even at) its cost and then charging practically next to nothing for shipping, or shipping things free for Prime customers? Probably not.
Then again, turning a profit on Cyber Monday was never the point.
It’s All About Establishing the Relationship
There’s a reason proprietors of small businesses frame their first dollar received from a customer; that first one is the toughest to pocket. All the ones earned after the first one are sequentially easier.
In that vein, Amazon knows once a consumer buys their first product from Amazon, the odds of them buying another ramp-up tremendously. Once a consumer places a handful of orders at Amazon.com, they become a full-fledged customer.
That’s why Amazon is willing to bend over backwards on Cyber Monday — when the odds of winning or re-winning a customer are the highest — to make sure it’s the first and last online shopping destination a shopper visits. It’s about monetizing that customer in perpetuity.
And make no mistake, Amazon knows exactly how to turn what seems like a mere digital entry in an order log into something much more. With just one order Amazon knows a customer’s name, e-mail address, physical address and can log their future purchases. With all of that data, it’s not difficult to begin building a customer “profile” that will allow the company to laser-target that customer in the future.
Of course, there’s an upside to Cyber Monday beyond the reaping of a new swath of customers.
That is, Amazon has an opportunity to establish itself as the best place to get merchandise at the best prices. That’s a message that echoes the rest of the year, and that’s perhaps the even bigger upside to Cyber Monday for AMZN stock — consumers everywhere are simply saying the word “Amazon” to their friends and family.
Bottom Line for AMZN Stock
Don’t look for Amazon to publish any meaningful specifics about Cyber Monday. It hasn’t in the past, and isn’t likely to start now. It doesn’t matter. Just know that this year’s Cyber Monday is apt to be the biggest and best yet for Amazon (again), which the company can hold up like a trophy to attract even more attention.
In other words, nothing draws a crowd like a crowd.
And every year Amazon wins the crowd, the easier it becomes to win the war the following year, which is why Amazon and owners of AMZN stock have already won the battle.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.