THE DAY AHEAD: Will Amazon hit its sales targets?

COMMENTARY -- Amid warnings from eToys, United Parcel Service and FedEx, can Amazon hit its fourth quarter sales targets?

That's what a lot of investors will be quietly asking until Amazon reports its earnings in January. Who can blame them?

Let's connect the dots here. The economy is slowing as a slew of data indicates a hard landing is possible. There's even talk that the Federal Reserve could even cut interest rates when it meets on Tuesday.

Brick-and-mortar retailers such as Home Depot are indicating that sales are slower than expected. Consumer-oriented tech giants such as Gateway (NYSE: GTW) and Apple (Nasdaq: AAPL) have issued profit warnings, citing a slow holiday shopping season.

And then there's the whole e-commerce thing. E-tailers just didn't get the pop during the busy Thanksgiving season. The Nielsen/NetRatings Holiday E-Commerce Index shows that the shopping season got off to a slow start, but has picked up lately.

Amazon (Nasdaq: AMZN) promised Wall Street fourth quarter sales between $950 million and $1.05 billion, but the real benchmark is $1.1 billion. The company could have to stretch to meet those goals. The e-tailer, which was banking on a seasonally strong holiday season, can't afford any slowdown.

On Friday, eToys (Nasdaq: ETYS) said its sales would be between $120 million and $130 million, compared to its forecast of $210 million to $240 million. Some observers would say eToys was Amazon-ed, but there's more to it than that. I don't see all those sales flocking to the Toysrus.com/Amazon joint venture. In fact, Prudential Securities recently noted that Toysrus.com/Amazon.com was out of stock more than other online toy retailers.

EToys blamed a "harsh retail climate driven by concerns over the economy, the current disfavor of Internet retailing, and a consumer population meaningfully distracted by the presidential election and its aftermath." All of that's true.

The alarming thing for Amazon investors is that eToys isn't some second-rate e-tailer -- it is consistently among the best rated and a leader in its category.

Couple eToys' warning with the UPS and FedEx red flags and you have more than enough to conclude that Amazon may have problems. UPS, which ships most of the goods sold on the Web, said that its domestic volume shipments were flat from a year ago. Barring a late quarter rally, UPS is going to miss its estimates. FedEx also forecasted a slowdown.

Analysts said the UPS warning doesn't reflect directly on Amazon since the e-tailer has primarily used the U.S. Postal Service through Dec. 15. To guarantee shipping by Dec. 23, Amazon will be using UPS' 2nd Day or Next Day Air. Clearly, UPS had already factored in an Amazon bump into its quarter.

The other potential knock against Amazon is something that's a little harder to gauge -- psychology and shopping patterns. Amazon is seen as the top e-tailer, but these days anything dot-com is out of favor. Meanwhile, the consistent losses and bearish sentiment regarding Amazon could hurt consumer confidence in the company.

And then there's the shopping patterns this holiday season. After watching friends and relatives shop online, it's pretty clear that Eddiebaurer.com and catalog sites and some click-and-brick sites like Bestbuy.com are in fashion this year.

The Nielsen/NetRatings research drives the point home. Traffic to apparel sites through Dec. 14 is up 130 percent from the week ending Oct. 29. Books, music and video traffic is up 49 percent, and computer hardware is up 8 percent. Toys and games traffic was up 130 percent from October, but has fallen off in recent days.

Simply put, two of Amazon's biggest categories are showing growth, but not enough to juice sales dramatically. And Amazon doesn't do apparel. Judging from the Nielsen/NetRatings stats, Amazon will need a big boost from consumer electronics to make its sales targets, but that may be a stretch too. Consumer electronics traffic is up 111 percent from Oct. 29.

The evidence is beginning to pile up. How can Amazon not be affected?TDAIN

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