It's a tale of two online sellers-and two fourth-quarter earnings reports. When Amazon reported earnings at the end of last month, it showed why it's about the only recession bright spot in retail, as its investments in the buying experience, customer service and smart fourth-quarter promotions have paid off. The week prior, eBay told a different story, even though a recession should arguably be its time to shine. It's lost affiliates and failed to build out a unified experience and direct e-commerce platform. Now, fear some analysts, it may be too late.
EBAY
Q4 REVENUE ↓ -7% to $2 billion
INCOME ↓ -31% to $367 million
THE OUTLOOK First-quarter revenue will be down between 6% and 18%
AUDIENCE, DEC. 2008 EBay's Dec. Audience: 77.9 million, down 3% year over year
WHAT THE STREET IS SAYING stock: $28.81 on Feb. 1, 2008; $12.02 on Jan. 30, 2009
BRAND ADVOCACY INDEX CHANGE[1] 6 (from 45 to 39) *From December 2007-December 2008
MODUS OPERANDI EBay has been slow to change itself into a traditional, fixed-price e-commerce giant and struggled to not alienate its third-party sellers, instead focusing on operating margin. "Perhaps the only longer-term fix to the business is for the company to actually take on balancesheet risk via building out distribution centers and purchasing inventories for direct e-commerce activity," says Deutsche Bank's Jeetil Patel.
MARKETING PHILOSOPHY It's used traditional advertising and media to push the message that it offers everything, including hard-to-find products, for cheap. But when it comes to creating a unified shopping experience, it flounders.
TOP BRAND TAGS (The words consumers associate with each company on BrandTags.net): bid, buy, cheap, crap, fun, junk, money scam, shopping
AD OUTLAY $32 million in measured media for the first nine months of 2008, according to TNS Media Intelligence; it had 281 million paid-search exposures in December, according to ComScore. 1. source: Motivequest
AMAZON
Q4 REVENUE ↑ +18% to $6.7 billion
INCOME ↑ +9% to $225 million
THE OUTLOOK First-quarter revenue will be up between 9% and 19%
AUDIENCE, DEC. 2008 Amazon's December audience: 71.4 million, up 10% year over year
WHAT THE STREET IS SAYING AMZN stock: $74.63 on Feb. 1, 2008; $58.32 on Jan 30, 2009
BRAND ADVOCACY INDEX CHANGE[1] +7 (from 38 to 45) *From December 2007- December 2008
MODUS OPERANDI Amazon has withstood criticism that some initiatives are too expensive-and it's paid off. Its Kindle e-reader was the retailer's best-selling electronics item for 2008, and it's still sold out. Amid speculation the company will launch version 2.0 today, CitiGroup analyst Mark Mahaney predicts Kindle will generate $750 million for Amazon in 2010, or nearly 3% of the retailer's revenue.
MARKETING PHILOSOPHY It largely eschews traditional advertising, instead spending on services such as free shipping. The site is consistent and it has developed loyalty programs such as Amazon Prime.
TOP BRAND TAGS Awesome, book, buy, cheap, convenient, everything, shopping, smile
AD OUTLAY $9 million on measured media for the first nine months of 2008, according to TNS; it had 801 million paid-search exposures in December, according to ComScore.
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By Abbey Klaassen, aklaassen@adage.com and Natalie Zmuda, nzmuda@adage.com
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