Coronavirus pandemic-triggered spike in online shopping has led to unanticipated uptick in e-commerce volumes in 2020.
Rapid surge in coronavirus cases due to the new mutant strain, increasing health risks and deaths pertaining to the same are expected to drive growth in this industry. Moreover, aggravating apprehensions regarding contracting the COVID-19 virus globally is likely to continue fueling online shopping in 2021.
The pandemic-induced stay-at-home wave and social-distancing restriction have led to a drastic change in consumer preference and behavior. Retail companies have witnessed a major shift from offline to online shopping.
Per a McKinsey research report, in the United States alone, e-commerce penetration experienced 10 years’ worth of growth in three months.
Apart from this, the e-commerce industry continues to grow, driven by rapid adoption of smartphones and the Internet worldwide.
Further, the growing proliferation of m-commerce and online payment solutions and online retailers’ deepening focus on expanding omni-channel presence are key catalysts.
The above-mentioned factors necessitate the need for robust e-commerce platform providers, including Shopify SHOP, MercadoLibre MELI, Etsy ETSY and Square SQ. Investors looking to tap this flourishing market can grab these strong fundamental stocks right away to ride your way to affluence in 2021.
Growth Prospects Aplenty
The e-commerce platform providers offer merchants with the required digital infrastructure designed keeping in mind evolving consumer preferences, making transactions convenient with customer-centric focus and more payment options.
The platforms are also updated regularly to make it flexible and aid merchants in offering more goods, supporting dynamic pricing, and facilitating shipping and faster delivery with up-to-date fulfillment options to boost experience.
Per a report from Statista, the global e-commerce market is expected to hit $3.5 trillion by 2025, witnessing a CAGR of 6.3% between 2021 and 2025. User penetration in this market is projected to reach 63.1% by 2025 from 50.8% predicted in 2021.
Markedly, the Global X E-Commerce ETF EBIZ has gained 67% compared with the SPDR S&P 500 ETF‘s SPY rally of 14% in the past year. This is a testament to investors’ confidence in impressive growth in the global e-commerce traffic.
The e-commerce platform providers are leaving no stone unturned to bolster sales on their platform by enhancing it with technical capabilities and even investments in advanced fulfillment centers.
The growing proliferation of voice search, AR/VR, chatbots and video bots backed by integration of AI and ML expertise, and robust application programming interface (or API) and algorithms to boost on-site personalization and optimize digital strategy, hold key to gain competitive edge in the post-COVID digitalization era.
On the heels of these factors, demand for e-commerce platforms is poised to sustain through 2021 and beyond among sellers adopting online sales channels and boosting business.
Upbeat Past Year Price Performance
Top 4 Bets
Shopify is riding on an exponential surge in buying of essential items due to COVID-19-induced lockdowns and shelter-in-place guidelines. Moreover, the robust performance of Shopify Shipping, Shopify Payments and Shopify Capital is a key catalyst for this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.
Furthermore, strong uptake of new merchant-friendly applications amid an evolving retail environment and an e-commerce boom bodes well. Also, partnerships with TikTok, Walmart and Facebook FB are expected to expand the merchant base. Initiatives aimed at international expansion remain noteworthy.
Additionally, the company rolled out Shopify Fulfillment Network in the United States and Canada to facilitate commerce. Moreover, the acquisition of 6 River Systems is anticipated to boost growth of the company’s fulfillment network.
Shopify also announced that brands on its platform hit $5.1 billion in sales on Black Friday/Cyber Monday 2020 weekend, up 76% year over year. Shopify platform had generated sales of $2.4 billion alone on Black Friday.
The Zacks Consensus Estimate for 2021 earnings has moved upward by 1.1% to $3.52 per share in the past 30 days.
MercadoLibre is benefiting from strengthening online-to-offline offerings. Further, robust mobile-point-of-sale business and growing adoption of MercadoPago are contributing well to the company’s total payment volume growth.
Moreover, increasing traffic and engagement rate by buyers on the company’s online retail platform is a positive. The growing penetration of managed networks is another tailwind. Additionally, rapid adoption of Mobile Wallet remains a major catalyst.
Also, strength in integrated and synergized e-commerce services, growing user base, and increasing monetization are other key growth drivers for this Zacks Rank #1 stock.
The Zacks Consensus Estimate for 2021 earnings has moved up 1.1% to $4.46 per share over the past 30 days.
Etsy is gaining from accelerating Marketplace and Services revenues. Solid momentum across active sellers and buyers remains a major positive. Moreover, the coronavirus-induced e-commerce boom and increasing mask sales are other tailwinds. Further, the company is witnessing solid traction among reactivated buyers, which is contributing to its performance.
Also, enhancements in search and discovery are driving momentum among buyers. Besides, robust Etsy ad program is also aiding seller base growth. Additionally, positive contributions from the Reverb acquisition are other positives for this Zacks Rank #2 (Buy) company.
The Zacks Consensus Estimate for 2020 earnings has moved up by 1 cent (0.5%) to $2.20 per share over the past 30 days.
Square is well-poised to grow on strength in Cash App engagement and expanding customer base. Further, rising bitcoin revenues owing to robust Cash App are contributing well to the top line. The introduction of CashApp and Instant Deposit in U.K. bodes well for the company’s market position and is expected to boost revenues.
Moreover, the company is deeply focused on integration and automation. On the integration front, Square aims to make its services more cohesive. It has been focusing on integration with the customer directory to give sellers an advanced client base. It also helps in building customer profiles and provides purchasing history directly from the point of sale. On the automation front, Square is emphasizing on machine learning to automate internal and customer-facing experiences.
Additionally, the company’s strengthening momentum in online channels and growing card-not-present GPV (or Gross Payment Volume) are expected to remain tailwinds. Moreover, robust online products, such as Square Online Store, Invoices, Virtual Terminal and eCommerce API are anticipated to accelerate the GPV growth. Also, strong adoption of Cash Card is a major positive this Zacks Rank #3 (Hold) company.
The Zacks Consensus Estimate for 2021 earnings has moved up 1.9% to $1.07 per share over the past 30 days.
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SPDR S&P 500 ETF (SPY): ETF Research Reports
Facebook, Inc. (FB) : Free Stock Analysis Report
Etsy, Inc. (ETSY) : Free Stock Analysis Report
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
Square, Inc. (SQ) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
Global X Ecommerce ETF (EBIZ): ETF Research Reports
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