With 2020 being the year that ecommerce dominated shopping experiences, it hasn’t meant equal levels of enjoyment nor shares of the profit for every brand.
As physical storefronts came down, so did the bulk of retailers and brands’ revenue, even though 2020 has been a record-breaking year for the ecommerce side of business – many registering 3-digit spikes.
During the second quarter of the year, ecommerce overall jumped 44% when compared to the same time last year, nudging just over 20% of all retail sales.
Then we recently got the news that the Covid-19 vaccine that is currently being developed shows extremely promising signs, and that a return to social stability may be within sight. With this in mind (ignoring the huge health, social, and economic benefits of the news to focus on ecommerce) what does this mean for online shopping?
One Wall Street firm, Stifel, has already weighed in on how they see the future to unfold. According the the investment bank, the next three quarters are set to be tough for ecommerce stocks “as investors begin to assess the sustainability of underlying trends amplified by Covid-19 and the approaching difficult comps starting in 2Q 2021,” said the firm in a statement.
But there are companies that are well geared towards accelerating ecommerce growth, with readjusted and robust supply chains. So why not take a look at a handful of them?
Just before we do, I would imagine that almost all companies have taken a long hard look at themselves during 2020, turned inwards, and asked themselves what needs to change in order to adapt to such monumental changes. Those who haven’t are in deep trouble. Even many of those who have are in deep trouble.
And the solutions are multiple and shift with each company, what they sell, how they stock their products, their staff size and supply chain setup. Yet what binds all of them is a preoccupation with doubling down on digital, strengthening their ecommerce capabilities. Among the strategies to do this is by optimising the ecommerce platform that the website is hosted on, and each platform has its own depth of capabilities.
Take Salesforce Commerce Cloud as an example. The best-in-class ecommerce platform was built to handle high-volume sales, manage complex multivariate and A/B testing, the ability to display different versions of the site to different visitors depending on their geographic location – plus, very importantly, can manage complicated integrations. SFCC packs a powerful arsenal to do anything from tweaking aspects of the site to fully transforming it.
So let’s look at some of the ecommerce companies that are setup for strong performances in the near future.
It’s unavoidable to exclude the Jeff Bezos empire when talking about anything ecommerce related.
“Amazon has been a primary beneficiary of the pandemic given the increased penetration of e-commerce,” according to Stifel, which “helped by higher online grocery and consumables spend, and the continued dislocation in offline retail.
“Under a recovery scenario, we see Amazon continuing to benefit from these developments.”
And when looking at Prime users, they seem to be continuing to shop at higher frequencies, and with Amazon’s dominance of the ecom space, it’s likely to stream along at the same speed.
For the ecommerce all-rounder, Stifel expects Etsy to go through “near-term volatility in shares as the company enters 2021, and expect a sizable deceleration in GMS growth under a vaccine scenario in the coming quarters.
“2021 presents challenging comps in 2Q and 2H, compounded by a decline in facemask sales as the health crisis hopefully subsides.”
The online marketplace of Etsy has 1.7 million users who sell to 33 million buyers.
We reported a few months ago the trajectory Etsy was on back in the second quarter, whose ecommerce sales spiked 146%. And although we’re not expecting them to reach further heights, but certainly to keep on rocking high numbers.
One of the stronger performing categories during the pandemic has been fitness and exercise products. With gyms and fitness centers closed – and likely to be the places closed the longest because of its high potential for spreading the virus – we’ve had no choice but to workout at home, or go for runs and walks outside. And so in order to workout at home, some equipment is necessary (unless you’re into bodyweight only exercises).
Stifel pointed out that “Peloton has been one of the marquee beneficiaries of pandemic-related shifts in consumer behavior and discretionary spending. The immediate reaction in Peloton shares on the Pfizer vaccine news makes sense, with shares down 20%.”
“However,” Stifel went on, “here is why we continue to recommend shares: we view the fitness industry as forever changed. Yes, consumers may gradually return to gyms, yoga centers, and other fitness-related clubs. But many former members may never opt to renew their expensive gym passes.
“The fitness industry has been disrupted and consumers are finding more economical, time-efficient ways to meet their fitness needs – enter Peloton.
“Moving into 2021 we think measured product launches and increasing international traction will carry estimates higher over time.”
Even before the onset of the pandemic, Wayfair already had a strong ecommerce presence. And they’ve been strengthening the whole year.
“Wayfair has benefited from increased spending on home categories as the pandemic has sparked housing turnover,” said Stifel, “increased nesting and forced a high degree of work/learn from home.”
“Facing difficult compares in 2021, and having to produce heightened results against a backdrop of waning benefits from the short term factors of work/learn from home, the surge in housing turnover, and return primarily of offline (and online) competition could prove challenging.
“Our below consensus 2021 estimates still produce six 2019 holiday quarters. We do believe Wayfair will permanently benefit to some degree from the pandemic given the acceleration in the home category online.”
Of course, the future does not exist yet… it never will exist. So time can only tell whether these projections translate into reality. So let’s wait.