Online Ho, Fashionistas!

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Fashionistas in-the-know don't know everything as they just gave the Amazon.com (NASDAQ: AMZN) the nod thrice for Zappos, Shopbop, and Amazon Fashion as three of the nine best online shopping sites for fashion saying Amazon Fashion was best for buying everything. They honored zappos.com, part of Amazon, as best for customer service and shopbop.com as best for high fashion. But all three are Amazon!

Gap (NYSE: GPS) also made the cut with its Piperlime site as the "Best shopping like at a department store". ASOS, a publicly traded British online retailer was listed as best for hot new trends. RueLaLa was cited as "best for the budget-minded fashionista". eBay (NASDAQ: EBAY) holds a 30% stake in RueLaLa.

The sites were curated for the Daily Worth website by Beso editor-in-chief Elise Loehnen and SHEfinds senior editor Justine Schwatrz. Most of those listed like Gilt Groupe and RueLaLa are what's called private-sale sites where the site wangles some designer merchandise and emails subscribers about a deeply-discounted flash sale. Seconds matter as these sell out fast. Gilt is expected to debut in an IPO this year and was listed as the best site for buying luxury goods.

Buy Amazon, get Shopbop and Zappos for free

With three of the top fashion sites Amazon stood head and shoulders above the other publicly traded names. It is clearly the best online retailer for just about everything. However, an interesting kindle deal site ran a long and well-written piece, "Is This an Amazon Tipping Point?", in which the writer cites several possible cash cows for the company including the luxury fashion sites as well as Amazon Web Services.

While numerous sites abound to buy any manner of goods, no one site can challenge the setup at Amazon. Not even eBay Marketplaces. Despite the moaning and groaning of Amazon's third party sellers over a raise in fees Amazon Fulfillment Services is still a sweet and convenient deal for them. Amazon is building more fulfillment centers and shipping keeps getting faster.

However, web services is a different matter altogether and Google Compute Engine as well as Apple have been positioning themselves to usurp the pioneer and leader of cloud services, Amazon. This could force Google to take a hit to cloud margins to compete. Since Google's platform only exited beta recently it should not be an immediate concern, but does bear watching.

What Amazon has to do going forward and in some cases, is already doing so, is attracting more Prime members, dialing back freemium books and apps, sell more of the higher price Kindle Fires, and work on that kindle phone "thing".

Gene Munster, Piper Jaffray senior analyst, said Amazon was a good long term hold, even going as far to say, "It's a no-brainer," in an interview with Jeff Macke for Yahoo! Finance Breakout. He has a price target of $329.00 on Amazon and an Overweight rating.

Amazon reported Q1 earnings on April 25 of $0.18, above analysts' expected $0.07 and revenues of $16.07 billion, shy of the expected $16.14 billion The company guided slightly below the consensus of $15.9 billion in revenues for Q2. The forward P/E is at 77.38.

Buy PayPal, get marketplaces for free

The entire thesis on eBay has been the extraordinary success of PayPal, its payment division, and its mobile momentum. Win-win cross channel promotions at partners like Macy's and a price matching promotion this past holiday season gained more adherents to its mobile wallet.

Wells Fargo upgraded eBay to Outperform based on international opportunities for eBay and accelerating sales growth in eBay Marketplaces (the auction sites and e-tail). Its price target between $61-64 is in line with the median analyst price target of $63.27 for 20% upside.

eBay is clearly more of a value stock than Amazon with a 25.71 P/E and a 1.35 PEG. RueLaLa is a very small part of EBay with only an investing stake rather than a wholly owned subsidiary but it shows they do recognize the power of these flash and private sale sites.

The company reported its Q1 results on April 17 with a 14% increase in revenue year over year and GAAP earnings of $0.51 per share. Marketplaces grew revenues by 13% and PayPal grew revenues by 18%. Margins increased and the company bought back $476 million worth of stock.

There's not much not to like about eBay with PayPal growing its user base of merchants and customers with another 5 million in the quarter to 128 million total.

Buy Gap, get Piperlime for free

On virtually every retail earnings call over the last few quarters, CEOs have mentioned their e-commerce sites and their progress. Gap, apparently has it down if these fashionista editors like Piperlime so much.

Gap is a retailer of men’s, women’s, and children’s apparel under the Piperlime, Athleta, Gap, Old Navy, Intermix, and Banana Republic brands. The company has 3,400 stores worldwide. Gap is the best value of these three with a 15.85 P/E and a 1.60% yield at a sustainable 27.00% ratio. The PEG is the same as eBay's at 1.35. The return on equity is 40.18%

The stock is up 35.23% over the last year and the return on equity is 40.18%. It's come back from several years where the stock did nothing but in 2012 the stock doubled from $18.00 to $36.00 right where it is now. The median price target is $40.00 for a little less than 10% upside. Barclays initiated coverage on Gap on April 1 with an Overweight.

Although it's got Piperlime and Athleta to compete with Nike and Lululemon Athletica, I can't get more excited about Gap. It's basically a solid retail stock. Unless you like shopping there I have to say in general I like Target or Macy's better.

Shop until you drop

As the best online retailer Amazon is still my favorite play on e-commerce. I agree it is at a tipping point and going forward momentum on profitable initiatives should continue.

PayPal is the main reason to own eBay and it is doing very well and should continue gaining active users. Gap will probably move sideways after the big run it has had since the beginning of 2012.


AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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