E-commerce is one of the fastest-growing industries in the world, with online retail being its much-vaunted segment. Amazon.com Inc. AMZN has a huge role to play in this booming space and has bright prospects too, given the optimism surrounding it.
eMarketer expects retail e-commerce sales to reach $2.290 trillion in 2017, accounting for 10.1% of total retail sales. This share is expected to surpass 16% by 2021, when e-commerce sales are expected to hit $4.479 trillion.
China and the United States together are expected to garner $1.584 trillion in ecommerce sales this year, representing 69.1% of global ecommerce.
Another research firm, Forrester Research Inc. projects online sales to account for 17.0% of all retail sales in the next five years. It expects e-commerce to account for 17.0% of retail sales by 2022, up from a projected 12.9% in 2017.
Why Amazon Is Still the E-Commerce Hero
Amazon seems to be the undisputed leader and a trendsetter in this space. While new players are emerging, it won’t be easy to unsettle Amazon simply because of the size, experience, prices and loyalty it commands.
Aptly, shares of Amazon have exhibited a bullish run in the last two years. During this time, the stock gained a significant 69.3%, outperforming the industry’s growth of 66.4%.
Given that the company is a pioneer in online retailing, it enjoyed first-mover advantage and has grown at a tremendous pace. The e-commerce giant’s popularity can be attributed to its solid technological expertise, which enables it to offer consumers an unmatched level of convenience. Moreover, the company’s takeover of Whole Foods Market has further helped in strengthening its foothold in the e-commerce business.
Driven by these efforts, Amazon once again emerged a winner on Cyber Monday. The company announced that Cyber Monday was the biggest shopping day worldwide in its history, surpassing Prime Day 2017 held in July. Also, per a research by SimilarWeb insights emailed to Retail Dive, on the Black Friday weekend, Amazon’s desktop conversion rate rose nearly 23% and site visits increased 50% compared with other Black Friday weekend holidays.
Although Amazon is well ahead of others in terms of turnover and competitiveness, it has time and again made hefty investments in expansion. However, it has always provided limited details on when this investment phase would end. Further, the saturation of Prime in the United States and currency headwinds due to international operations are likely to be deterrents. So at best, we can say it’s a long-term hold.
Our Picks
Here are three other stocks that are a good buy right now.
EVINE Live Inc. EVLV operates as a multiplatform video commerce company in the United States. Currently, it has a Zacks Rank #2 (Buy) and a VGM Score of A. The Zacks Consensus Estimate for current-year earnings has increased in the last 30 days. EVINE Live’s projected growth rate for the current year is 109.5%, a lot higher than the industry’s 7.7%. The stock’s earnings are likely to grow more than 100% next year.
PetMed Express, Inc. PETS, headquartered in Delray Beach, FL, is involved in marketing health products directly to consumers through online and direct mail/print advertising. Currently, the company has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. The company managed to beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive earnings surprise of 23.5%. PetMed’s projected growth rate for the current year is 42.5%.
The company has outperformed the industry it belongs to on a year-to-date basis. The stock has returned approximately 77.4% compared with the industry’s growth of roughly 58.1%.
Wal-Mart Stores Inc. WMT, the country’s largest brick-and-mortar retailer. We note that the company is making huge investments in e-Commerce initiatives. Its online gains can be attributed to its push toward bolstering its e-commerce business by making more items available and improving its online sales portal. The company also improved its online grocery business.
Also, Wal-Mart partnered with Alphabet’s Google in an effort to add voice-controlled shopping to its e-commerce arsenal. Notably, the company grew its online sales by 50% in the third-quarter. Currently, the company has a Zacks Rank #2 and a VGM Score of B. The projected growth rate for the current year is 2.48% and for 2019 is 5.82%.
Also, Wal-Mart has outperformed the industry it belongs to on a year-to-date basis. The stock has returned approximately 40.4% compared with the industry’s growth of roughly 31%.
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