Amazon, EBay offer gloomy outlook for the all-important holiday season

The holiday season may not prove to be that productive not only for Amazon and EBay, but also the entire retail sector this year.

Amazon Go opens in Seattle
Shoppers enter the Amazon Go store located in Amazon's "Day 1" office building in Seattle, Washington, US, January 18, 2018 REUTERS/Jeffrey Dastin

It's only a few days for the holiday season to kick off. However, the picture doesn't look that rosy this time around. A day after EBay gave weak revenue forecast for the fourth quarter, Amazon echoed similar sentiments, giving a gloomy outlook for the all-important holiday season. Amazon, the world's largest online retailer, and EBay both gave a weak outlook for the fourth quarter.

This certainly is an indication that the holiday season may not prove to be that productive not only for Amazon and EBay, but also the entire retail sector this year. Retailers in the United States having been banking heavily on the holiday season over the past few years, given the record sales generated during this time.

However, Amazon, which registered record holiday sales figures last year, forecast revenues and profit for the holiday season below expectations for this year. Much like Amazon, EBay also said that its fourth-quarter sales would be $2.77 billion to $2.82 billion, compared with estimates of $2.85 billion.

Amazon said that it expects holiday-quarter operating income to be between $1.2 billion and $2.9 billion, which fell short of analysts' expectations of $4.19 billion, according to research firm FactSet.

Amazon has been facing stiff competition from Walmart lately. Walmart has been aggressively giving thrust to its e-commerce section. Although the National Retail Federation earlier this month said that it expects holiday retail sales for November and December to increase between 3.8% and 4.2%, trade tensions between the U.S. and China have been playing a spoilsport for quite some time now.

walmart to sell chinese e commerce business to
A clown sits inside a bus seen in front of a Wal-Mart store in Mexico City January 11, 2013 Reuters

In fact, the National Retail Foundation also said that the U.S.-China trade war will play an important role in determining how much shoppers will spend this time during the holiday season. Amazon's CEO Jeff Bezos has been saying that this holiday season, which will also be Amazon's 25th, will be the best for Prime Customers, whose delivery will now be made in one day instead of two. However, the push for faster delivery has been one of the major reasons behind the e-commerce giant's worst quarterly results in two years.

However, trade war has been hurting retailers for more than a year now and a lot will depend on if the Trump administration makes an effort to resolve the disputes.