Amazon.com, Inc. (NASDAQ:AMZN) & eBay Inc (NASDAQ:EBAY) are touted as the big successes of online retail, but have they been really successful in the last few years? Or is that the brick and mortar stores that opened their e-commerce arm have overtaken Amazon.com, Inc. (NASDAQ:AMZN) & eBay Inc (NASDAQ:EBAY) in growth? Michael Stiller, Tech analyst at Nasdaq Advisory Services, discussed investing in pure e-commerce companies like Amazon.com, Inc. (NASDAQ:AMZN) & eBay Inc (NASDAQ:EBAY) versus investing in Brick and Mortar retail companies having e-commerce arm on CNBC, recently.
“[…] In the softline space things are being driven by two factors. In the softline space it’s the fact that they are all fighting for the same wallet share. So, the softline consumer spend isn’t really growing substantially relative to general consumer spend. So, company A is fighting for company B’s wallet share and they are disrupting themselves from the point of view that e-commerce is taking away from their brick and mortar sales,” Stiller said.
Stiller mentioned that pure play e-commerce companies like Amazon.com, Inc. (NASDAQ:AMZN) & eBay Inc (NASDAQ:EBAY) have witnessed a 175% ownership increase from hedge funds over the last three years, which he attributed to the fact that growth investors are selling their stakes in the pure play e-commerce space and those positions are being filled by hedge funds. Stiller feels that pure play e-commerce stocks are a ‘breeding ground’ for hedge funds as they are able to play quarter to quarter moves and can play both the long and short sides in these stocks.
Stiller also believes that the recent trend from consumers to try a product at a brick and mortar store and buying them online, as well as buying multiple goods at once and returning many of them within a few days, are both eroding the margins of retailers.
As of June 30, 2013, Ken Fisher’s Fisher Asset Management owns over 2.5 shares of Amazon.com, Inc. (NASDAQ:AMZN) and Carl Icahn’s Icahn Capital LP holds over 30 million shares in eBay Inc (NASDAQ:EBAY).