I’m sure that most of you didn’t need reminding of this, but e-commerce is kind of a big deal?
How much of a big deal, you ask? Well, at least $900 billion more than a big deal it was in 2019, for sure.
E-commerce hasn’t scratched the surface…
Well, according to the Mastercard Economics Institute, e-commerce is going to continue scratching after global online spending increased by $900 billion in 2020. Even with that growth, e-commerce sales in 2020 only accounted for 14% of global retail sales, an increase of 3% from 2019’s 11%.
Shares in Etsy, Mercado Libre, Sea Limited, and Shopify all rose on Tuesday following this report. Ironically though, the king of e-commerce, Amazon, was one of the few businesses in this sector to find its stock declining on the day — albeit marginally. This is likely due to outside factors such as its current union troubles, and I think that its 60% valuation increase in the past year can put most of those concerns to rest.
But what does this mean?
While e-commerce will continue to rise, there is the very real possibility that once restrictions ease and people get back to shopping, online activity will shrink. Analysts are already seeing evidence of this as shoppers are heading back to restaurants and returning to stores to buy clothes and shoes in person.
However, an area that we are likely to see a permanent shift to e-commerce in post-pandemic is bargain hunting and grocery shopping. This sticky habit has developed during the pandemic, with consumers showing no signs of slowing down in areas where restrictions are being lifted. According to the report, grocers will likely retain about 70% to 80% of the digital sales gains they saw during the peak of the pandemic, and discount stores will hold onto about 40% to 50% of them.
So the real growth opportunity in e-commerce doesn’t necessarily lie with the usual companies you would associate with that sector, but instead, it is grocers and bargain stores that will benefit the most.
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Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.