RealTime IT News

E-Surfing Santa: Holiday Season Could Be Turning Point for E-tail

'Twas the month before Christmas and all through the Web e-tail stocks start stirring, though some thought long dead...and up on the rooftop click, click click, down through the modem comes the new St. Nick.

We predict this year's holiday buying will blow away expectations and forever change the gift-giving season and estimate that as many as 10 million Web users in the U.S. may buy at least one gift online, about double last year's numbers.

Driving that belief is the reason that people don't want to drive. Don't want to battle other potential customers for the last Beanie widget/gadget/whatchamacallit. Why, when you can buy it on the Web, they wrap it, ship it, slap it, zap it, right to its destination and you probably got it at a better price than if you had stood in line.

We're seeing this pre-holiday fervor already push shares up of some more well-known e-tail stocks. So which e-tail stocks are we keeping an eye on? The list:

Popular Products Web Consumers Buy

Item, rank

Stocks in this sector

Software

Egghead (NASDAQ:EGGS), Beyond.com (NASDAQ:BYND), Digital River (NASDAQ:DRIV)

Books

Amazon.com (NASDAQ:AMZN), Barnes & Noble (NYSE:BKS), Borders (NYSE:BGP_

PCs

Dell (NASDAQ:DELL), ONSALE (NASDAQ:ONSL), Egghead

Music

CDnow (NASDAQ:CDNW), Music Blvd-N2K (NASDAQ:NTKI), Amazon

Gifts

AOL (NYSE:AOL), Yahoo, Lycos (NASDAQ:LCOS), Excite (NASDAQ:XCIT)

Travel

Preview Travel (NASDAQ:PTVL)

Clothing

AOL

Electronics

ONSALE

Food

AOL, Peapod (NASDAQ:PPOD)

category source: Cyber Dialogue; stock list from Internet Stock Report (c) 1998 Mecklermedia

There's Amazon.com (NASDAQ:AMZN), ONSALE (NASDAQ:ONSL), Egghead.com (NASDAQ:EGGS), Beyond.com (NASDAQ:BYND), Digital River (NASDAQ:DRIV), and more (see the table). Here's why we're watching this group closely:

  • Amazon - made books a top selling item. Books! Now books are great, but before Amazon books were just books. Now they're cool. Added music sales this past quarter and in one quarter surpassed leader CDnow (NASDAQ:CDNW) in sales. Wants to be the personal Web store for everyone. A long way to go, but it's done some remarkable stuff so far.

  • Software is a no-brainer for Web sales. Egghead (NASDAQ:EGGS) has done well in this realm, despite a lack of recognition by the general media. Almost unnoticed in Egghead's offings, surplus auctions, similar to ONSALE (NASDAQ:ONSL), which we believe has a lead in PC auctions. ONSALE also auctions off hardware, consumer electronics, cars, and more.

  • DELL (NASDAQ:DELL) holds the distinction as a business PC seller but we think those same people go home and may think of buying DELL for gifts and themselves this holiday season. DELL now reports selling $6 million per day of PCs via the Web. It was just $1 million a day, a year ago and that was thought to be phenomenal at the time.

    Where DELL wins in brand name, we think ONSALE wins in a better model--let the bidder decide what to pay, not the box maker. Similarly, we think eBay (NASDAQ:EBAY), already overheated in our opinion, could get more heat from its abundance of Beanie Babies that may prove a gift favorite. The Cabbage Patch doll of the 1990s.

  • In music we're slating CDnow (NASDAQ:CDNW) and Music Blvd-N2K (NASDAQ:NTKI) ahead of Amazon for one reason: we want to see if the exclusive e-tail deals the two cut with top traffic sites and services will pay off. N2K is the exclusive or preferred online music retailer for AOL, Netscape, Excite, WebTV, @Home, iVillage, AT&T WorldNet, StarMedia, PointCast, CBS Cable's CMT, TNN, country.com, and MTV International in Europe, Asia, Japan, and Brazil.

    CDnow has pacts with Yahoo!, Lycos, Lycos-Bertelsmann, Webcrawler, Tripod, Geocities, MTV/VH1, Rolling Stone Network, and CBS.com.

    For holiday travelers there's Microsoft's (NASDAQ:MSFT) Expedia which gets good reviews and Preview Travel (NASDAQ:PTVL). Preview has signed up 5 million subscribers and has deals with AOL, Excite, Lycos, Snap and USA Today. It made its fare search engine available to other Web sites, free of charge.

  • Clothing lacks an e-tail leader (in a public Internet stock anyway) and for that we think AOL could get a lot of interest because of its general purpose appeal. Last year clothing was the #1 selling product on AOL. While we're at it, check the top sellers on AOL in 1997-- 2. Food, 3. Books, 4. Flowers, 5. Electronics, 6. Music, 7. Toys.

    For that reason we also think AOL could show strong food sales with the usual holiday non-perishable food exchanges. Let the fruitcake beware.

    At the end of the sleigh bell ride, however, when sales get counted in January/February, we don't think that every e-tail stock wins in the way they could if a fully-stocked easy-to-use, well-known supermart of products was available.

    This is one reason we're keeping a close eye on what Amazon plans to do with shopping comparison engine Junglee and what Inktomi (NASDAQ:INKT) will do with a similar service it acquired. We believe 1998 will be a turning point but 1999 will be the main event as Web-based shopping grows up.

  • Your turn: Plan on playing "WebSurfing Santa" this year? Tell uswhat categories and which e-tail sites you favor buying gifts from, results next week...

    Join Steve tonight for a real-time Internet stock chat, 5 p.m. Pacific time - click here for details.