Amazon.com shares tumbled as much as 4 percent Monday on concerns that offers of free shipping by Wal-Mart Stores Inc and other retailers could challenge the online company’s results.
Amazon shares have fallen $12.37, or 7.1 percent, since hitting a 52-week high of $173.37 last Wednesday.
“It’s going to be a fight for revenue that could impact profitability,” said BGC Partners analyst Colin Gillis.
Also on Monday, a shopping website circulated a Black Friday flyer for Wal-Mart stores with heavily discounted electronics that strike at the heart of Amazon’s gadget sales.
Last week, Wal-Mart said it would offer shoppers free shipping with no minimum purchase requirement at its website through Dec. 20, signaling the retailer was ready to take on Amazon’s e-commerce leadership.
“How can Wal-Mart management be happy for Amazon to have the label of ‘the Wal-Mart of the Web’?” asked Gillis, noting the impression some consumers have of Amazon.
While both retailers strive for low prices, Amazon’s discounted shipping has helped it increase customer loyalty. The perk has become increasingly popular among retailers vying for online sales.
Amazon offers free shipping for orders over $25. It also offers a discount shipping program called Amazon Prime that costs $79 per year for unlimited shipping.
U.S. bookstore chain Borders Group Inc said last week it was working with ShopRunner, a members-only online service, to offers free two-day shipping with no minimum order size and free shipping on returns. ShopRunner is a unit of GSI Commerce.
Some of the decline in Amazon shares since last Wednesday was the result of investors taking advantage of the stock’s rise in recent months, analysts said.
“In the last few years, this is the highest we’ve seen Amazon shares, and it’s probably just a little bit of profit-taking,” said Hudson Square Research analyst Scott Tilghman.
HOLIDAY DEALS
Amazon’s prices on some items, including toys, remain lower than Wal-Mart’s, despite the latter’s recent price reductions to undercut rival Target, according to a note published Sunday by Goldman Sachs.
The same held true for electronics, Goldman Sachs found, with Amazon’s prices 10 percent below the average retail price, compared to 4 percent below at Wal-Mart.
On Monday, the website www.blackfriday.info released Wal-Mart’s Black Friday flyer for its stores, but the company would not confirm its authenticity.
As in prior years, Wal-Mart is focused on electronics for the kickoff to the holiday shopping season, such as a $69 Magnavox Wi-Fi Blue-ray disc player or a $398 Emerson 42-inch LCD HDTV.
“This is Wal-Mart trying to make sure that consumer electronics shoppers start there, and then they can adjust their plan based on what happens that holiday weekend,” said McQuivey, noting that hot products include Apple Inc’s iPad and Microsoft Corp’s Kinect, an XBox accessory.
Analysts said it was too early to ascertain whether Wal-Mart’s promotions were steeper than its rivals’, as each retailer highlights slightly different merchandise and other flyers have not yet been made public.
Doorbuster deals, or early bird specials, are offered by retailers as way to attract traffic to their stores and spur sales.
Wal-Mart, which sells an extensive array of merchandise, is also offering a host of apparel items for girls and boys under $10, such as $7 jeans and $4 fleece hoodies.
The retailer is opening its doors at midnight on Thanksgiving with deals on items from toys to kitchen appliances. Stores will also be open earlier on Thanksgiving, Wal-Mart said last week.
Amazon shares closed down $4.09 to $158.90 on Nasdaq.
Shares of Wal-Mart closed down 18 cents to $53.95 on the New York Stock Exchange.
