TThe world was already rushing towards e-commerce accounting for a higher percentage of total retail sales before the pandemic hit, and now it is climbing at an inexorable rate.
eMarketer says global retail sales fell 2.8% in 2020 to $ 23.6 trillion as consumers changed their online shopping habits. E-commerce sales soared more than 25% last year, reaching $ 4.2 trillion, or nearly 18% of all retail sales. As reopened economies let the physical world start growing again in 2021 – eMarketer predicts retail sales to hit $ 25 trillion globally this year – e-commerce continues to grow at double-digit rates.
Global online sales are expected to climb $ 4.9 trillion and soon represent one in five retail sales. There are a few ecommerce names that will carve out the lion’s share of these sales, and they should be factored into every investor’s wallet.
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It should come as no surprise that Amazon (NASDAQ: AMZN) is on the list of top ecommerce stocks to buy. As the dominant website in the United States, Amazon.com is expected to account for 41.4% of all online spending in the United States this year.
Its closest competitor is Walmart, but with just 7.2% share of the e-commerce pie, it lags far behind in second place. eBay, with a share of 4.3%, and Apple at 3.8%, are the closest someone else gets. In fact, Amazon’s share is larger than its next nine competitors combined and will contribute more than half of the growth in e-commerce sales in the United States.
Equally important is Amazon Web Services (AWS), which serves as the backbone of the Internet presence of thousands of US businesses. It is also the clear leader in cloud infrastructure market share, where it holds a 32% share of global cloud infrastructure spending. Designed to be Amazon’s leading generator of operating cash flow, AWS remains its most profitable segment and should be at the top of any investor’s list of ecommerce stocks to buy.
Amazon’s Chinese counterpart is Ali Baba (NYSE: BABA), and just because the Chinese market is an order of magnitude larger than that of the United States, the number of sales it handles is also larger.
Where Amazon Prime Day sales reportedly hit a record $ 11.2 billion worldwide during the two-day shopping extravaganza, Alibaba recorded $ 84.5 billion in gross merchandise volume ( GMV) for its Singles Day event, an 11-day affair that has grown tremendously over the past seven years and now involves more sellers and retailers than Alibaba.
Despite a continued crackdown on tech names by Beijing, which has tended to slash sales this year, Alibaba continues to grow, although its latest earnings report was seen as relatively weak. He recently announced a turnaround plan to jumpstart sales growth that includes adding VIP members (who tend to spend more than non-members), targeting older shoppers, and using intelligence. artificial and automation to increase advertising effectiveness.
With its shares down 55% from highs reached a year ago, Alibaba is a particularly attractive ecommerce stock to buy right now.
Image source: Getty Images
You can’t mention Alibaba without also mentioning JD.com (NASDAQ: JD), although it has a different business model than its rival. Operating more like eBay than Amazon, as it is a platform for third-party sellers rather than selling products itself, JD is actually a more powerful force in e-commerce circles in China, because it is the largest online retailer in China and its largest global retailer.
On Singles Day this year, JD generated $ 54.6 billion in GMV during the sales event, up 28% from a year ago. It has also not been subjected to the same kind of scrutiny from regulators that Alibaba has, and it maintains it has strict protocols in place that are aligned with Beijing’s mandates. It is also said that the restrictions envisaged for the companies, such as price controls, could be of benefit to it, as they would prevent JD.com’s prices from being undercut by the competition.
JD.com also has one of the largest fulfillment infrastructure networks of any e-commerce business in the world, with approximately 1,300 warehouses providing a total of some 23 million square meters of space. It claims that it is the only e-commerce platform in the world to provide small and medium-sized warehouses, oversized warehouses, cross-border deliveries, cold chain, frozen storage facilities and refrigerated, B2B and participatory logistics.
Analysts predict that JD.com will be able to grow profits at a compound rate of 24% per annum, and with stocks at five times next year’s profits and 18 times the free cash flow it does. it produces, it’s an ecommerce stock worth buying today. .
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