Amazon (AMZN) has two huge advantages as a retailer. The first is that it has no stores. The other is that it has an astonishingly large list of things it sells from TVs to books to consumer electronics and jewelry.

If Amazon’s forecast for the fourth quarter had been relatively strong, or even benign, Wall St. might have been able to believe that the consumer was not dead and buried. If people were going to buy things for the holidays, cheap prices and free shipping would bring them into the market.

None of that worked out.

In its press release and earnings call Amazon said it now anticipates full-year revenue of $18.46 billion to $19.46 billion, below the $19.52 billion that analysts polled by Thomson Reuters were expecting. In July, Amazon had predicted 2008 sales of $19.35 billion to $20.10 billion.

The shortfall is all in the last quarter of the year. There is an extent to which investors had given up on most bricks-and-mortar retailers with the exception of Wal-Mart (WMT). Driving to outlets involves gas. The lines may not be long this year, but some places like Circuit City (CC) don’t even have a full inventory. They might not get the credit to buy what they usually stock.

E-commerce has been growing at nearly 30% a year since 2002. Even if that had fallen off a bit, there would be some sign, however modest, that someone, somewhere had money to spend.

Amazon got on its call and fundamentally said the consumer is broke. Even free shipping will not bring him back. He may not even have a home where his Christmas presents can be sent.

Douglas A. McIntyre

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