Every year it seems like Black Friday deals can’t get any more generous, yet every year, retailers manage to top their prior year’s blowout specials, all in the name of winning business.
Black Friday 2015 doesn’t look like it’s going to be an exception to this trend either, even for a retailer that is usually largely left out of the Black Friday circus … Amazon.com (AMZN). The e-commerce giant is finally taking dead aim at the brick-and-mortar retailers that tend to garner a huge chunk of holiday-shopping dollars before Cyber Monday rolls around.
While it’s unlikely the online retailer’s Black Friday event will directly boost the value of AMZN stock (it’s practically giving goods away), there’s actually a stroke of genius to the tactic that could prove very bullish for AMZN shares.
Amazon’s Plan for Black Friday 2015
Unwilling to be one-upped by, well, anyone else, Amazon will start its Black Friday deals not on Thanksgiving Day, but on Nov. 20. Still, the e-tailer will turn up the heat on Thanksgiving Thursday with “10 Deals of the Day,” and will replace them with another ten super-special deals on the Friday after Thanksgiving.
Simultaneously, Amazon will offer 150 “Lightening Deals” to users of its mobile shopping app and better yet, it’s going to offer some sort of great deal every five minutes between this Friday and next Friday.
It’s an overwhelming barrage of deals for most consumers, and considering that some of the deals are exclusive to Prime Members while others are only intended for users of the website’s mobile shopping app, it could get confusing, too. But Amazon has already accomplished what it ultimately hoped to accomplish with the effort … it has gotten people talking about, and excited about, Amazon.com next week.
Be that as it may, there’s an even bigger reason why owners of AMZN stock should be thrilled the company is hitting the throttle early this year rather than waiting until Cyber Monday to stoke consumerism fires.
Right Time, Right Reason
As valuable as any buzz is for Amazon.com, critics might question the timing of the push; consumers seem to love the idea of fighting the crowds on Black Friday, and even on Thanksgiving evening, in an effort to score the best deals.
As it turns out, however, looks can be deceiving.
It’s a little-known fact about last year’s Black Friday madness, but retail sales the day after Thanksgiving in 2014 actually fell 6.8% on a year-over-year basis.
The reasons for the lull were never made clear, but most plausibly, shoppers didn’t find enough value in the deals to face the hassle.
Don’t assume November’s retail sales were disappointing, though. For all of November 2014, retail spending actually grew 5.4%. It’s a sign that most of the deal-making and deal-taking for the month is starting to shift away from Black Friday itself and move to before and after the zaniest shopping day of the year.
In that light, Amazon may have the right idea, and be doing it brilliantly.
Owners of AMZN stock can also take solace in the fact that Amazon is simply riding a better-known trend — consumers are increasingly turning to the web as a place to shop.
This year is apt to be notably different than in past years, however. A recent survey performed by Prosper Insights and Analytics predicts a record 46.1% of this year’s holiday spending will be done online, with one-third of those buyers expected to do so from a mobile device … where Amazon has made a point of making some major noise.
Bottom Line for AMZN Stock
Back on July 9, yours truly here remarked that the “Amazon Prime Day” event was a brilliant, even if expensive, piece of marketing. Although the company likely lost a good chunk of change making it happen, it also drew a huge crowd of new shoppers and new Prime members. See, once in the fold, it could find other ways to monetize them and offset its costs and bolster the value of AMZN stock.
And, while I’ve never made any bones about Amazon being one of my least-favorite stocks, I’d never deny AMZN does a great job of extracting revenue from its existing customers, one way or another.
This coming week’s steady stream of deals is no different than Prime Day, and shouldn’t be any less effective at pulling shoppers into the fold for the first time (as a Prime member, or as a user of the mobile app, or maybe even just as a shopper using a plain, old computer) so Amazon can then market other goods and services to them.
In that light, the decision to get aggressive before and after Black Friday 2015 at a point in time when e-commerce is clearly taking over brick-and-mortar retailing is a savvy move, even if it feels a little over-the-top.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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