Amazon.com, Wal-Mart Stores, and Apple: E-Commerce Trends to Bank On
If you're going to invest in a retailer, then you should strongly consider investing in a retailer who has been performing well online. E-commerce is one of the bigger waves of the future, and retailers who ignore the trend are going to find themselves well behind their peers. Below, we'll take a look at the top four online retailers based on their 2012 sales: Amazon.com , Staples , Apple and Wal-Mart Stores . We'll also take a look at a recent survey that asked consumers about their favorite online retailer. If a company makes the top five on this list, then there's a good chance it will show healthy online sales growth for 2013 as well.
Head of its class ... again
Amazon is simply ridiculous. Writers and analysts are even running out of adjectives to describe it. In 2012, Amazon's monthly unique visitors averaged just shy of 90 million. Its conversion rate was 4%. Conversion rate refers to the percentage of website visitors that became customers. While 4% might not sound impressive, the average conversion rate across all websites that sell products and services is 1%-3%. Combine that with a massive amount of online traffic and you have yourself an e-commerce champion. The average ticket on Amazon.com in 2012: $220. I don't know about you, but that's higher than I would have expected. Most importantly, in 2012, Amazon.com's sales increased 27.06% over 2011.
If you're wondering about the future, then you might take comfort in knowing that the National Retail Federation's Stores Magazine recently had a survey done by Prosper Insight Analytics. The survey was based on 5,600 consumers, and the goal was to see what online retailer consumers liked most. The survey's title: "Favorite 50 Online Retailers."
Amazon.com was No. 1 on the list. Its customer service and broad product diversification are top of the line. As far as the remaining top four spots for that survey, they were as follows: Walmart.com, eBay.com, Kohls.com, and BestBuy.com, in that order.
Amazon.com 2012 sales: $61 billion
A surprising runner-up
If you keep track of top online performers, then this won't shock you. If you don't, then you might be surprised to know that Staples came in at No. 2 for online sales for 2012. However, this is the only company on this list that saw online sales decline in 2012 over 2011, as it suffered a 2.83% setback.
Staples.com is an interesting story. Its conversion rate is an amazing 8.9%. This demonstrates excellent customer loyalty. The average ticket is $430, much higher than any other company on this list. The problem is that Amazon is more than capable of stealing market share from Staples. This isn't in regard to established Staples customers, but new customers. People tend to follow each other, and with so many people now using Amazon.com as their go-to shopping destination, word-of-mouth spreads and then more people choose Amazon.com for all of their shopping needs.
Staples.com 2012 sales: $10 billion
No surprise here
Apple saw its online sales jump 33.57% in 2012 year-over-year. Therefore, it grew even faster than Amazon online. This is quite an amazing feat. As most investors now realize, the problem for Apple isn't results, but extremely high expectations. Investors are always looking for a new and exciting innovation to fuel the top line, and that's difficult to deliver on a consistent basis, especially considering how high the bar has been set for Apple.
Apple.com's conversion rate is 2.5%, in the average range. The average online ticket is just $85. However, Apple manages to consistently innovate and offer new products, which keeps consumers coming back. For instance, Apple.com averaged 60 million unique visitors per month in 2012. You also have to take into account brand loyalty. Those who love Apple aren't going anywhere anytime soon.
Apple.com 2012 sales: $8.8 billion
A hated company that deserves more love
Not only does Wal-Mart rank No. 2 on the "Favorite 50 Online Retailers" list, but it's ranked No. 4 for online retail sales in 2012. What more do investors need to become excited about Wal-Mart again? Is it a growth story? No. But it would be difficult, if not impossible, to find a safer option in retail.
Walmart.com averaged 61 million unique visitors per month, a number slightly higher than that of the almighty Apple. However, it's not quite as high as that for Amazon.com. Walmart.com's conversion rate of 3.41% is slightly above average, and the average ticket of $140 is higher than most would expect. Most importantly, online sales grew 20.31% in 2012 over 2011. Given the recent survey about consumers' favorite online retailers, it's likely that Wal-Mart will continue to perform well online.
Walmart.com 2012 sales: $7.7 billion
The Foolish takeaway
The only company on this list that should give investors reason for caution is Staples. While Staples will likely survive, it isn't likely to thrive. Amazon is best-of-breed for online retailers. That fact alone should make it a company to consider from an investing standpoint. Apple continues to grow online, but investors expect too much from the company, which keeps the stock from taking off. Wal-Mart is underappreciated.
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The article Amazon.com, Wal-Mart Stores, and Apple: E-Commerce Trends to Bank On originally appeared on Fool.com.Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and eBay. The Motley Fool owns shares of Amazon.com, Apple, eBay, and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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