E-Commerce Steals Market Share from Physical Stores

October 26, 2011

E-commerce is gaining market share at the expense of physical store transactions, as e-commerce offers more efficient ways to purchase items and allows for companies to reach customers in previously untapped geographies, says Herman Leung, an Analyst with Susquehanna Financial Group LLLP.

“One of the more important themes out there is just the most basic one, which is the secular growth of time spent on the Internet, whether it’s on more time being spent away from traditional media platforms, or more time being spent shopping on e-commerce platforms versus going out to shop in malls, or more time booking online transactions,” Leung said.

Leung has a “positive” rating on Priceline.com (PCLN) because the company enjoys faster transaction-based growth compared with its competitors. PCLN benefits from its expansion into areas of high fragmentation and a need for improved distribution to consumers around the world, says Leung.

“Priceline continues to enjoy the fragmented nature of the European hotel market, where they have the largest supply, and with the large supply they’re able to buy a larger and more relevant inventory of keywords to drive a very successful marketing campaign for the business for a very long time,” Leung said.