Amazon's Tipping Point

Tickers in this article: AAPL AMZN WMT YHOO

NEW YORK (TheStreet) -- There's a major theme in the first 23 days of 2014: retail disruption.

The lead article on CNBC.com today is a story we've seen in different iterations since the calendar turned. Today it's titled "It's Black Friday Again! Retail Woes as Deep as the Discounts." Retail continues to offer unprecedented discounts, even as steep as Black Friday discounts, but nobody is shopping.

Six days ago the Wall Street Journal published a piece, "Stores Confront New World of Reduced Shopper Traffic," indicating a permanent shift is underway. Macy's recently announced plans to lay off 2,500 employees and close 5 stores this spring. Lululemon cut its quarterly outlook because of weak January sales. Best Buy lost 28% of its market cap in a single day after reporting lackluster holiday sales.

What's going on? With GDP growing and the economic recovery underway, it should have been a strong holiday quarter for retail. But it wasn't. And the stock market isn't happy. The market has been running in circles without going anywhere, and the Dow Jones Industrial Average is down 379 points (2.29%) year to date.

As Apple investors, we've been frustrated by the lack of a pre-earnings run, but the truth is that no stock has gotten a pre-earnings run.

What gives?

There's a chance that the answer to this question will be revealed on Jan. 30. There's a chance that a tipping point of massive proportions is underway, a tipping point being led by a single company. That company is Amazon .

Amazon reports earnings on Jan. 30, and it's possible the report will shock and awe. Without knowing the exact results, we do know that Amazon had to limit new Prime memberships to 1 million during the third week of December to be able to fulfill its orders. (The $79 Prime membership provides unlimited free two-day shipping). Even this self imposed limit on Prime memberships wasn't enough to get all the packages shipped in time for Christmas, which resulted in some unhappy customers.

We also know that Amazon set a record with 36.8 million items ordered on Cyber Monday, a healthy 39% higher than last year's peak day due to a consumer shift toward smartphone shopping. That is boosting Amazon sales. More than half of Amazon customers "showroomed" in bricks-and-mortar stores and then clicked on their smartphones to purchase via Amazon.

Amazon's low overhead costs compared to its retail peers are proving to be too much for the competition to bear. Amazon has 88,600 employees, compared to Wal-Mart's 2.2 million employees. This structural advantage has enabled Amazon to disrupt the retail industry on an Apple-esque scale. Remember the collateral damage that Apple inflicted on its competitors? Over the first 23 days of 2014, it's looking like a similar trend might be underway because of Amazon.