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Online Shoppers Targeting Their Sites

After a slow start to the holiday shopping season, things are picking up for e-tailers.

Two statistical indicators -- internet.com's weekly Internet StockTracker newsletter and the Nielsen/NetRatings Holiday E-Commerce Index -- show increased activity on a number of e-tail sites, which means the spending season finally is beginning in earnest.

Which is good news for many investors who expected more earlier holiday cheer from e-tail powerhouses such as Amazon.com (AMZN) and eToys (ETYS), both of which have slumped in the wake of October earnings reports that included warnings of heavier marketing costs this quarter.

The E-tailer sector entered November as the poorest-performing among 12 Internet sectors tracked by our newsletter. It moved to the middle of the pack last week, gaining 7.5 percent in the week ended Nov. 10. In the week ended Wednesday, e-tailers gained 9.8 percent, third-best of all sectors.

Leading the way was Ticketmaster Online-CitySearch (TMCS), which rose 61 percent in the week ended Wednesday. TMCS shares got a ride from an upgrade to "strong buy" from "buy" by BancBoston Robertson Stephens, as well as news that the company would begin selling event merchandise such as concert t-shirts and baseball hats online.

Several other e-tailers posted strong gains in the past week, including: Fatbrain.com (FATB), an online seller of books and publications for professionals, which rose 56 percent; "name your price" e-tailer priceline.com (PCLN), up 34 percent; auction site uBid (UBID), up 20 percent; and ftd.com (EFTD), up 19 percent.

Among the most-traded stocks, eToys was up 8 percent in the week, while Amazon.com and eBay each gained 6 percent. For the past month these stocks are down 22 percent, 5 percent and 3 percent, respectively.

Meanwhile, Nielsen/NetRatings' Holiday E-Commerce Index shows that traffic from unique visitors to e-tail sites across 10 categories was up 25 percent over the past six weeks.

The leading gainer among e-commerce categories have been toy sites, which have averaged 102 percent increases in traffic in six weeks. The broader category of online malls saw a 71 percent jump in traffic.

While extra shopping traffic presumably is good for e-tailers as a whole, most of the economic benefit will go to the players that sell what consumers want to buy online. According to the NetRatings survey, the top product shoppers look for on the Web is books (45 percent), followed by toys (41 percent) and music (39 percent).

To me that spells a big season for Amazon.com, eToys, barnesandnoble.com (BNBN) and a handful of others such as CDnow (CDNW). I expect this to be reflected in their stock prices as the holiday season intensifies and the huge advertising campaigns are unleashed.


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