EBay and Amazon Achieve Record Sales on Cyber Monday

on Nov 27, 2012

On Monday shares in EBay (NASDAQ:EBAY), the world’s biggest online marketplace, rose by 4.88 percent and closed at $51.40, reaching almost an eight-year high, on optimism the e-commerce retailer will benefit from the surge in online shopping ahead of the holiday season.

**EBay Shares Climb**
The company’s stock reached a daily high of $51.76, its highest level since 2005, on back of robust sales on Black Friday, the weekend after and Cyber Monday. According to ChannelAdvisor, the company’s client sales (the sales generated by third-parties using the company’s software) surged by 57 percent compared with the same period in the previous year.

“The early eBay numbers are impressive,” opined R.J. Hottovy, an equity analyst at Morningstar. “They put together an effective marketing plan across several channels this holiday season – online, television and print.”
The online marketplace company has been working on a new business model, which includes less auctioneering and more emphasis on selling new items at fixed prices. The latest sales numbers provide evidence the new strategy, engineered as to allow the company to better compete with major rival Amazon, might turn out to be effective.

According to Reuters, PayPal, EBay’s payment division, estimated the volume of mobile transactions processed by 2:00 PM EST on Monday to have almost tripled compared to last year.
**Cyber Monday**
The term Cyber Monday is used for the Monday after Black Friday and is meant to persuade consumers, tempted by discounts and promotions, to shop online. This year the online shopping day was bigger than ever with sales 25.6 percent higher than last year, according to IBM, which tracks transaction data from US retail websites. Estimations show shoppers have spent nearly $1.5 billion (£935 million) on Monday with smartphones and tablets dominating the baskets.

“Online’s piece of the holiday pie is growing every day, and all the key dates are growing with it,” said Forrester Research, an analyst at Sucharita Mulpuru, as quoted by FoxNews. “The Web is becoming a more significant part of the traditional brick-and-mortar holiday shopping season.”
The growth in sales was spurred by some of the best promotions and biggest discounts online retailers have ever offered. Amazon slashed $30 off its 7 inch Kindle Fire Tablet, selling it for just $129.

!m[E-Commerce Retailers Seduce Consumers with Heavy Discounts, Promotions and Lazy Shopping](/uploads/story/904/thumbs/pic1_inline.png)The heavy discounting however might have hurt profit margins for both online and offline retailers. EBay is expected to be affected less because its revenue model is based on commission it charges on third-party vendors using its platform. Amazon does the same thing but it also has its own products, such as the Kindle e-readers, which means the company might suffer thinner margins in the last quarter of this year.
Along with other e-commerce sellers, Amazon’s share price also surged on Monday reaching $243.62 or 1.6 percent higher. The online shopping website was the top-visited site on Thanksgiving and Black Friday with traffic on those days at 25 million and 29 million visitors.
On Monday the Financial Times reported that Amazon, in an attempt to increase its available cash for acquisitions, sold $3 billion (£1.87 billion) in bonds. The world’s largest retailer by sales sold three-, five- and ten-year securities with a Baa1 investment grade rating given by Moody’s. “What it really does is increase their ability to do an acquisition if they so choose,” explained Colin Gillis, analyst at BGC Partners. According to the FT, potential targets for acquisitions include Texas Instruments’ chip business and BlackBerry’s makers Research In Motion.


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