Gift givers searching online for a kid's must-have toy this holiday season are more likely to find it at Amazon.com Inc. than a brick-and-mortar retailer.
In recent Bloomberg Industries study measuring the online availability of a basket of 100 toys, Target Corp., Wal-Mart Stores Inc., Toys "R" Us Inc. and Kmart all lost out to their e-commerce rival. Target fared the worst with just 40 percent of the items in stock online compared with 95 percent at Amazon. What's more, traditional chains were missing many of the items they predicted will be the hottest sellers this holiday.
Retailers sell about $10 billion worth of toys in the fourth quarter or about half the annual total, according to researcher NPD. They compete fiercely on price and use discounted toys as bait to entice shoppers to buy other merchandise. Not having the hottest ones in stock will cost stores market share as they head into the last stretch of the annual holiday shopathon, said Poonam Goyal, a Bloomberg Industries analyst who helped conduct the study.
"A lot of holiday shopping is left," said Goyal, who is based in Skillman, New Jersey. "By some estimates, half of it remained after Black Friday."
With U.S. consumers weighed down by a patchy economic recovery and stagnant wages, researcher ShopperTrak predicts that holiday sales will rise 2.4 percent, the weakest since 2009. Sales at brick-and-mortar stores on Thanksgiving and Black Friday posted an estimated 2.3 percent gain to $12.3 billion, the Chicago-based firm said.
Since October, Bloomberg Industries has been tracking the online availability of 100 toys, including Activision Blizzard Inc.'s Call of Duty: Ghosts and Hasbro Inc.'s Marvel Iron Man 3 Sonic Blasting Action Figure and Words With Friends Classic. They were chosen based on what chains promoted as the top toys for the holiday season.
Though brick-and-mortar chains have been shoring up their e-commerce operations, this is the second year in a row that Amazon has outmatched them on in-stock availability, the analysis shows.
Amazon's outperformance is in part a testament to the company's spending spree on warehouses for a growing array of items that can be shipped more quickly to buyers whatever their location. While the proliferation of these facilities helps Amazon keep more stuff in stock, it also crimps margins and can lead to losses at the world's largest e-tailer.
Though traditional chains such as Wal-Mart and Target have the advantage of thousands of physical stores close to customers, Amazon can leverage its Marketplace offering, which features thousands of third-party merchants.
On Dec. 12, Wal-Mart had 55 percent of the 100 toys available on its website; Sears Holdings Corp.'s Kmart and Toys "R" Us had 61 percent and 63 percent, respectively.
Toys "R" Us had only 50 percent of its hot-toy list in stock; Kmart had 57 percent. Of the 20 toys Wal-Mart put on its list in September, 12 were unavailable two weeks before Christmas, including Mattel Inc.'s Barbie Dreamhouse. Amazon and Target didn't publish a shortlist of in-demand toys.
Based on internal sales data, Wal-Mart's website stocked 75 percent of the 100 toys surveyed by Bloomberg Industries on Dec. 12, Ravi Jariwala, a company spokesman, said in a telephone interview.
Jariwala and representatives for Target, Toys "R" Us and Kmart all said they were working to replenish out-of-stock toys. Amazon didn't respond to an emailed request for comment.
Many of the toys unavailable online could be found at retailers' physical stores, and in some cases the chains indicated that on their websites. Yet not having an item online even if it's in a store can cost the chain sales because more people are shopping and researching on the Web, Goyal said.
Because general-merchandisers such as Wal-Mart and Target use toys to lure shoppers to their stores and websites, pricing is paramount. Here Wal-Mart has the advantage, according to a Bloomberg Industries pricing survey also conducted on Dec. 12.
That day, Wal-Mart's prices were 5.3 percent lower than Target, 8.5 percent below Kmart and 9.9 percent lower than Toys "R" Us, the survey showed. If the legion of third-party merchants on Amazon were included, Wal-Mart was 13 percent cheaper. Exclude them, and Amazon pulled ahead by 2.8 percent.
In some cases, Amazon's third-party sellers charge much more on average, especially if a toy is only available online there. The Teenage Mutant Ninja Turtles action figure based on the Shredder character was selling for about $23, compared with an average of about $13 at other sites.