WOODSIDE, Calif. -- Amazon.com reported Wednesday that it shipped 20 million items during the holiday season, increased sales 250 percent, welcomed 2.5 million new customers and -- here's the lump of coal -- would lose even more money than forecast.
While some Amazon.com Inc. watchers expressed disappointment that the company didn't do even better, the report added to early indications that overall e-commerce during the fourth quarter was at least as strong as predictions.
Here's what worked, according to the still somewhat sketchy results of various analysts and researchers:
-- World Wide Web sites with brand names that are well-known off-line (Jcpenney.com and Kbkids.com made strong showings).
-- Sites that have reliable records for customer service (eToys.com, Amazon, Barnesandnoble.com).
-- Sites that discounted their products heavily (Buy.com, CDNow.com, Overstock.com).
Here's what didn't work: making a profit.
Amazon, as always, is leading by example here. To make sure it didn't disappoint holiday customers, the online department store stocked up on anything and everything in its four massive new warehouses, and said it delivered 99 percent of its orders on time. Inevitably, a lot of stuff remains -- anyone want a Franklin Talking Plush or a Delightful Days Treehouse? -- that is subject to write-downs and special inventory charges.
''As a result, our higher seasonal sales will not translate into lower net losses,'' Amazon's chief financial officer, Warren Jenson, said in a statement. Company executives refused all further comment.
Wall Street, which has shown less patience recently with Amazon's oft-professed desire to please customers at any cost, expressed its disapproval by kicking the company's stock.
On a day when the market largely recovered from Tuesday's plunge, Amazon fell nearly 15 percent to close at $69.75, right about where it was a year ago and significantly below its peak of 113. The brokerage Robertson, Stephens & Co. lowered its rating on the stock, but in the mildest possible way: it went from ''strong buy'' to merely ''buy.''
Amazon won't officially announce results until Feb. 2, but Wednesday's preview gives a glimpse at just how eagerly consumers clicked the ''buy now'' button on their computer screen over the last three months -- not only with Amazon, but with everyone else.
America Online Inc. said Monday that holiday online spending by its 20 million members more than doubled, compared with 1998, to $2.5 billion. For the month leading up to Christmas, Yahoo Inc. reported that orders on its shopping site were up 385 percent over last year.
''Our expectations were high, and maybe they were exceeded a little bit,'' said Alan Alper of Gomez Advisors. ''The vendors are still tallying up the take and people are still returning items, but so far so good. Those sites who did their homework in advance and had the inventory did pretty well.''
Gomez was estimating $9.5 billion in e-commerce sales for the quarter -- more than twice the $4.5 billion reported in the fourth quarter of 1998 -- and Alper said he is ''comfortable'' with that figure. At another leading research firm, Forrester, the forecast started out last fall at $10 billion, slipped to $8 billion, and was bumped up again Wednesday to $10 billion.
''Overall, it was better than we predicted,'' analyst David Cooperstein said.
But not better for everyone: ''When new shoppers went online, they didn't go to the intermediaries, they went to the online version of the stores they usually shop at -- J.C. Penney, L.L. Bean, the Gap,'' Cooperstein said. ''There's a lot of benefit to having a physical presence in the real world. People said, ''I don't want to stand on line, I'll just go on-line.' ''
For all the advertising the newer dot-coms did, they didn't seem to have much of a surge. None of them turned up on Media Metrix's list of the 25 top e-commerce sites for the five-week holiday season.
Referring to sites like Gift.com and Redenvelope.com, Cooperstein said: ''I don't think you can build a brand in November for December. I'll give them another year to make themselves more firmly established on the fingertips of shoppers.''
Amazon, of course, already has achieved such recognition. But it also skillfully avoided the trap that some equally well-known brands -- most famously, Toys R Us Inc. -- fell into of not being prepared for all the orders it received.
There's a price for this, and that's Amazon's abrupt transformation from a virtual company -- which means it could charge consumers for an item before it had to pay its suppliers, a marvelous reversal of the traditional retailing experience -- to one where it has a lot of merchandise sitting on shelves getting dusty. On its toys Web page Wednesday, the company was offering some bargain basement deals, just the way real-world retailers do after Christmas.
The company said its fourth-quarter sales of $650 million will be two-and-a-half times fourth-quarter sales of $253 million in 1998. Indeed, its fourth-quarter 1999 revenue exceeded the $610 million in sales it did in all of 1998.
Great work, but after the endless hype, culminating in founder Jeff Bezos being named Time Magazine's Person of the Year two weeks ago, many were expecting more.
''Typically, retailers do 40 percent of their business in fourth quarter,'' said Cooperstein. ''I was hoping to see, with Amazon's great growth trajectory and all these new shoppers and its new product lines, that they did 50 percent. But it was 40 percent, which means they're just another retailer.''
Influential Merrill Lynch & Co. analyst Henry Blodget, in a report released Wednesday, said the fourth-quarter sales figures were ''very good'' but ''not spectacular.'' He added that Wall Street ''is likely to be disappointed based on some very aggressive expectations'' and that ''this announcement could create negative sentiment for the rest of the (e-commerce) group.''
The fortunes of Amazon not only affect other companies' stock prices, but even their formation and funding. That's what Michael Lannon, the chief executive of the luxury gift site Send.com, discovered last fall when he was out looking to raise $20 million.
''The first two weeks, there was a tremendous amount of interest,'' he recalled recently. ''Then Amazon announced they were going to continue to be unprofitable. That immediately changed the whole perception in the marketplace. In one week, I went from 'Hey, I'm a hot dot-com in the consumer space' to having to explain why there was a consumer market on the Web at all.''
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