Will Amazon, eBay And Apple Have A Happy Holiday Season?

After Halloween comes the lucrative holiday shopping season — sorry, Thanksgiving, but you’re only a speed bump — but there are serious questions about how happy the fourth quarter will be for some big eCommerce operators.

Online spending will increase nearly 15 percent compared with last year, reaching $124.1 billion, according to a fresh forecast from Adobe Analytics. That projection took into account transactions at 80 of the top 100 retailers in the United States, along with visits by consumers to U.S. retail websites.

Overall holiday retail sales, by contrast, will increase 4.8 percent, according to an estimate from the National Retail Federation. If so, that’s a slower pace than the 5.3 percent growth the retail market saw one year ago. “Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” said NRF Chief Economist Jack Kleinhenz.

Amazon’s Problem

That might explain some of the anticipated Q4 slowdown for major online retailers — but not all of it.

Take Amazon.

The eCommerce giant recently said that its Q4 revenue will range between $66.5 billion and $72.5 billion —  well below consensus estimates of $73.79 billion. Recent wage increases for Amazon warehouse workers were factored into that guidance, but it remains unclear how much those increases depressed the Q4 outlook. Analysts also wonder if recent shipping increases are playing a part in the deflated outlook for the fourth quarter — for its part, Amazon, mainly via CFO Brian Olsavsky, said it does not see those increases as a significant factor in that Q4 guidance.

“Amazon is slowing down, but it is also becoming more profitable and it has a large amount of profitable growth ahead,” read one recent analysis on Seeking Alpha. That said, Amazon should not falter with holiday shipments, where mistakes can smear company reputations. “Using robots in the warehouse allows Amazon to ship twice as much per square foot. Management says that the warehouse infrastructure is in excellent shape for the holidays.”

eBay Balancing Act

Whatever the reasons for the anticipated Q4 slowdown, you can’t blame consumer confidence, which recently hit an 18-year high. “With many consumers looking to do the bulk of holiday shopping in November, the high consumer confidence is likely to increase spending this season,” read one report about the consumer confidence index.

That might not serve as major comfort for eBay as the holiday shopping season starts. For the fourth quarter of 2018, eBay said it expects net revenue of between $2.85 billion and $2.89 billion, which represents year-over-year growth of 4 percent to 5 percent — hardly something to write home about in an economy commonly seen as strong.

The eCommerce operator is trying to attract new consumers without alienating existing ones — a delicate balancing act for any business, but especially challenging for a company such as eBay, which faces fierce online competition and is still trying to position itself after the PayPal separation. “We are targeting our ambitions to focus more on acquiring new buyers,” CEO Devin Wenig said recently. “That will result in slower growth for a period of time as we grow the user base and acquire a new mix of customers.” In fact, he told analysts that strong growth will not return until 2020.

Apple Woes

Apple, too, is facing a slowdown as the year nears its end. Apple forecast sales for final quarter of the calendar year — typically its main event unit sales-wise — of between $89 billion to $93 billion. That means the company is in danger of missing Wall Street’s estimated $93 billion forecast by as much as $4 billion.

Sales of iPhones have flattened out, and that caused Citigroup Analyst Jim Suva to say that “this now means that the iPhone units are going to start going negative year-over-year growth, because it’s easy to talk about great things and not show the details of things that aren’t so great.” Apple leadership, meanwhile, is busy touting growth for its wearables product line, along with its digital payments offerings.

Still, eyes will remain focused on those three big eCommerce operators to see how much of the holiday shopping dollar they manage to command in the coming months — and what that means for the larger world of retail spending.