MIZUHO SECURITIES USA INC. | US EQUITY RESEARCH
Summary
We believe that AMZN, EBAY, GOOGL should benefit from the strong start in eCommerce sales from Thanksgiving. Third party sources indicate that eCommerce revenue was flat YoY or even accelerated, which we view as a positive. Furthermore, we believe that mobile conversion could be nearing a tipping point which would benefit the online players as well.
Key Points
Thanksgiving and Black Friday eCommerce sales appear flat-to-up YoY, better than our expectation. Per Adobe, eCommerce sales from the two days grew ~18%, flat with last year. We were expecting some deceleration so this was a positive surprise to us. And comScore data showed a material acceleration, with Black Friday sales up 19% YoY vs. up 12% in 2015. For comScore, we were expecting flat to a modest deceleration in eCommerce sales, so this acceleration was a positive surprise, especially with sales starting well before Thanksgiving.
Mobile conversions could be at a tipping point, which could accelerate growth in eCommerce. Both comScore and ChannelAdvisor noted that approximately 78% of total online traffic came from mobile devices, up a couple points from last year. ChannelAdvisor noted that mobile purchases hit 53% - a first time ever where mobile has exceeded desktop conversions.
Although early, we could see modest upside to Amazon's North America revenue. With expect Amazon's North America 4Q16 revenue (excluding AWS) to grow to $26.8B, up 24% YoY, a modest decel to 3Q's revenue growth of 26%. If this Thanksgiving holiday momentum carries into Cyber Monday and beyond, we believe there could be modest upside to our revenue growth estimate. We note that eBay also revamped its mobile site, and launched an ad campaign ahead of the holiday season, so we could see strength in eBay as well.
mCommerce tide should benefit Alphabet and Facebook. We are starting to see more conversions take place from mobile visits to mobile buying. In fact, we believe Alphabet should be the biggest benefactor of this trend as people continue to do more mobile commerce searches on Google as they get close to the bottom of that purchase funnel. And Facebook should benefit through new ad formats and product ads in the mobile newsfeed.
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