The online shopping craze shows no sign of slowing down, with millions of consumers every year making the industry a great buy for investors.
Feb. 26, 2020
There is no doubt that the e-commerce realm is continuing to grow, with customers around the globe spending around $3.4 trillion online in 2019, up almost 18% year-on-year according to Digital Commerce 360.
In addition, online sales are expected to make up 16% of total retail in 2020 and be the reason for more than three-quarters of the retail industry’s total gains. Here are three companies that are in a good spot to continue reaping the benefits of the digital sales platform.
E-commerce gem Shopify (NYSE: SHOP) was initially started as an online snowboard shop before moving into software. The founders started the core idea of Shopify because they couldn’t find what they were looking for – a place they could both sell and grow a brand.
The Canadian-born business is now an extremely influential platform that around one million companies turn to. The platform helps manage the small businesses merchandise online, along with marketing and selling. 2019 was a milestone year for Shopify with a huge increase in merchants using the platform, their revenue reaching $505.2 million in the fourth quarter, a 47% increase year-on-year. A huge win for the company was the sales made on Black Friday, making more than $2.9 billion, up from $1.8 billion in 2018.
The e-commerce business is showing no signs of slowing and expects to make up to $2.16 billion in 2020. While Shopify is likely to remain in the red for this year, with an estimated GAAP operating loss of up to $105 million, it will be an improvement on the $141 million for 2019.
Similar to eBay (NASDAQ: EBAY), MercadoLibre (NASDAQ: MELI) began as an online auction site with local classified ads, real estate, car sales, fixed-price sales, and payment processing by Mercado Pago, which was modeled after PayPal (NASDAQ: PYPL). As the business model grew, MercadoLibre stood out by supplying tools, payments, shipping, and fulfillment to merchants of all sizes. While e-commerce remains its core platform, its payment service is growing, even receiving a $750 million investment from PayPal.
The company mainly has users in the countries counties of Argentina, Mexico, and Brazil and adds a lot of value for Latin Americans as more than half of the people don’t have access to a bank account. MercadoLibre did post a net loss of $54 million at its fourth-quarter earnings report which could make some investors a little worried. However, revenue did increase by 57.6% year-on-year to $674.3 million and investors received a +90% gain. With the increasing demand for this e-commerce business and the company’s heavy investment in sales and marketing – it is a stock worth investing in!
E-commerce giant Amazon (NASDAQ: AMZN) exceeded analysts’ expectations in its fourth-quarter earnings report, increasing 15% year-on-year. On February 11, the stock jumped to an all-time high at $2185.95 and its valuation passed $1 trillion. For a period of 2019, Amazon was the most valuable company in the world, ahead of tech rivals like Apple (NASDAQ: APPL), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL). Amazon continues to pave the way with its one-day prime delivery service.
In cloud computing, the business just won a court victory over Microsoft in the battle for the Pentagon’s $10 billion JEDI contract and Microsoft was ordered by the judge to stop all work on the project until the problem was resolved. Amazon also has leading positions in other areas like voice-activated technology with Alexa and Connected TV with its Fire TV devices.
There are currently trials ongoing with Amazon Care, a tech-supported healthcare pilot that has huge potential. It seems Amazon is always striving to be better and to deliver more for its customers, and all of these elements are huge competitive advantages for long-term growth potential.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Amazon, MercadoLibre and Shopify. Read our full disclosure policy here.