Online Spending Gains Slow To Crawl (AMZN)

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The latest data from comSCORE is showing some very troubling trends.  In the past, online retails sales have grown while on-site retail sales have seen their ups and downs.  It was the growth of the internet which outweighed any developments in the economy.  The good news is that growth was seen in October online sales at a time when overall sales shrank.  The bad news is that the growth slowed to 1%.  This data coincides with a significant drop in shares of Amazon.com Inc. (NASDAQ: AMZN).

This is actually the slowest growth witnessed since comSCORE begantracking this metric of e-commerce spending in 2001.  The year-over-year growth that had been seen last year in October 2007 was 19%, and even thatthat was a slower growth than we had seen in the 2007 summer months.

comSCORE also noted that online retail spending across mid- to lower-income segments from households earning less than $50,000 showednegative spending growth compared to a year ago.

It seems that the metrics of the web ARE income dependent.  A three-month trailing average showed that households bringing in less than$50K saw a drop of 3%. Houses with $50K to $100K in income saw a three-month average gain of 1%, while those bringing in over $100K showed a three-month average growth of 14%.

We cannot tie this directly to the drop off in Amazon.com (NASDAQ:AMZN), but it does coincide rather well with this drop of 4.5% to$37.86 after being up for most of the day.  Sadly, this move under$38.00 takes Amazon.com stock down about 2% under its prior yearly lowas its 52-week trading range was $38.48 to $97.43.

Jon C. Ogg
November 18, 2008