As the economy continues to suffer from lower consumer confidence and weaker consumer spending, many believe that the retail sector has taken a beating from these weaknesses. One segment related to retail is eCommerce, an online version of retail that can be seen with companies such as Amazon.com Inc. (AMZN), eBay Inc. (EBAY) and Barnes and Noble, Inc. (BKS). What many economists and consumers have overlooked is the continued out performance of this segment, especially by the segment leader, Amazon. As of April 13, 2009, Amazon has been up 45.22% year-to-date. Some may say that Amazon is overpriced, but with the company being best of the breed, eCommerce flourishing, and Amazon’s growth opportunities through its product innovations, I will prove why Amazon will continue to strive through 2009.

Amazon.com Inc. (NASDAQ GS:AMZN) operates as an online retailer and generates revenue through its domestic and international websites.

Its geographic revenue is broken down into 53% domestic and 47% international, while its business segments and units are broken down into three categories: Media (61%), Electronics (36%), and Other (3%). Amazon’s corporate strategy is, “not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range.”

Now to the reasons why Amazon.com will continue to outperform in this sluggish market. The first reason is its best of breed qualities. There are three reasons why Amazon is best of breed: it is the leader of its competitors, it has a strong balance sheet, and it has phenomenal international sales.

Amazon is a $30 billion company, twice the size of its closest competitor eBay, while it has excellent compound annual growth rates (CAGRs) in revenue, EBIT, and EBITDA. Amazon also has a very strong balance sheet with $3.3 billion of cash available and $1.36 billion of free cash flow available, and as we all know, cash is absolute king in these markets. Amazon also has relatively low debt with only $687 million on its balance sheet and a debt to equity ratio of 0.2x.

Amazon also has phenomenal international sales, up 33% in 2008 during the peak of the economic downfall. International sales grew at 19% during the fourth quarter of 2008 and are expected to grow through 2009.

This leads me to my second driver as to why eCommerce has flourished recently.

There has been a recent shift from traditional retail to eCommerce.