Amazon may benefit as digital goods sales jump

SEATTLE, Wash. ― Digital goods are the fastest-growing category online this holiday, led by e-books, suggesting Amazon.com Inc’s strategy of blanketing the world with cheap e-readers and tablet computers may be producing some early gains.

Sales of digital goods, which also include music and videos, are up about 30 percent this holiday season, compared to the same period last year, according to comScore data.

That is ahead of sales of consumer electronics and jewelry and watches, which are up about 25 percent versus last year’s holiday season, and apparel and accessories, which are growing in line with overall e-commerce at roughly 15 percent, comScore data show.

The only other holiday season that digital goods grew the fastest was in 2006, when sales jumped 83 percent from a smaller base, according to comScore. At that time, Apple Inc’s iTunes music store drove a lot of the growth of the category.

“Music is a much more stable market at this point. The real new growth is coming from e-books,” said Andrew Lipsman of comScore.

“The increased proliferation of devices, such as tablets and e-readers, has led to more forms of digital content being downloaded,” he added. “People are downloading e-books in a way they had not previously.”

Amazon launched its $199 Kindle Fire tablet ahead of the holidays and slashed prices on its range of Kindle e-readers.

Earlier this month, Amazon said customers were buying more than one million Kindles a week and analysts at Goldman Sachs estimate the company will sell 14 million units during the fourth quarter.

Amazon priced these products aggressively and many analysts estimate the company is making little or no profit on the devices. Instead, Amazon is hoping to make money from higher sales of digital goods, according to Aaron Kessler, an analyst at Raymond James.

“Tablets and Kindles are selling a lot this season and that should ultimately benefit Amazon’s digital sales,” he said.

Still, a lot of these devices were bought as gifts this holiday, so the full impact on digital content sales will probably not come until Christmas Day and the weeks that follow, Kessler added.