The Prime Reason Why Amazon’s Sales May Be Falling Behind This Holiday

Amazon’s ability to get orders to your door in time for the holidays may be having an unexpected consequence: Consumers are procrastinating longer than usual to buy presents online.

amazon_boxesIn a memo to investors, Wells Fargo Analyst Matt Nemer wrote that, for the first time in years, Amazon is giving some customers coupons for 10 percent off this holiday. Nemer hypothesizes that there are two logical explanations for the promotion: Either the e-commerce giant is trying to get customers active again or holiday sales are tracking below expectations.

Yesterday, comScore, which tracks online spending from computers using landline broadband connections, reported that so far this holiday, spending is up 13 percent year over year, which is below its 2012 prediction of 17 percent.

Nemer also offers a plausible explanation for why sales are slow: Procrastination. “As Amazon’s base of Prime users continues to grow, customers will be more likely to delay purchases,” he wrote.

An Amazon spokesman declined to comment.

On Tuesday, Amazon gave customers even more reasons to wait. It announced that orders can be placed through Dec. 18 and still get free delivery in time for Christmas. In particular, Amazon Prime members, who pay $79 a year for free two-day delivery, can wait even longer. They can place orders until 7 pm ET on Dec. 21 to receive deliveries by Dec. 24. In some cases, Amazon will offer one-, two-, or even same-day delivery for a small fee.

ComScore chairman Gian Fulgoni said there is perhaps less urgency than there once was to make those final purchases. “What we’ve seen over the past few years is a tendency for heavy spending to continue late into the week of Green Monday (Dec. 10) and right up until Free Shipping Day, which this year falls on December 17,” he said in a release.

Quirky names have been given to several days around the holidays.

“Free Shipping Day” tends to be a widely celebrated event, with dozens of e-tailers offering to cover postage during a 24-hour period. However, the prominence of the day is wearing off as more online retailers offer free shipping year-round. On “Green Monday,” which is the second Monday of December, sales reached $1.275 billion, up 13 percent over last year, according to comScore. At that level, the day ranks as the third heaviest online spending day in 2012. So far this year, spending has totaled $29.3 billion during the first 40 days of the holiday shopping season, representing a 13 percent jump over last year.

PayPal at San Francisco's Westfield mall, where it is now accepted at a handful of retailers as a form of payment.

At San Francisco’s Westfield mall, PayPal tells customers that is now accepted at a handful of retailers.

While that’s lower than what comScore was originally predicting, Hill Ferguson, PayPal’s VP of Global Product, said he’s seeing no indication that sales are falling below expectations.

In general, he said, the trend is for shopping to start earlier and end later, with the peak shopping days being closer to Christmas, rather than the more prominent heavy days, like Black Friday (the day after Thanksgiving) or Cyber Monday (the Monday after Thanksgiving).

He attributes that shift, in part, to consumers shopping on their mobile devices. ”So much of shopping is generated by promotions, but with mobile you can make a purchase whenever or wherever you are, so people are willing to wait and not change their lives around what retailers are offering,” he said.

For instance, on Dec. 2, PayPal reported its global mobile payment volume hit a new high, exceeding its record set only six days earlier on Cyber Monday. PayPal’s parent company, eBay, saw its biggest mobile shopping day on Dec. 9.

Here’s a snapshot of the weekly trends for the past four years, showing how spending ramps up as we get closer to Christmas:

Comscore_Weekly_Online_Holiday_Retail_Sales_2012_Weeks_1-6


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