The shift to shopping online is here to stay, and these 3 stocks are one analyst’s top picks in the e-commerce space.
The coronavirus pandemic has dominated 2020, and for one group in the retail sector, it has been welcome news.
E-commerce stocks have had one heck of a year as consumers shifted to shopping online, with big names like Amazon (NASDAQ: AMZN) seeing surging sales.
But as the e-commerce revolution speeds up, there are names in the space beyond Amazon that look like good bets now for investors looking to cash in on the megatrend.
ROBO Global senior research analyst Lisa Chai argued in a note this week that the shift to shopping online seen this year is just the start of the true revolution in shopping.
Chai said that e-commerce is easily the best performing subsection of the ROBO Global Artificial Intelligence ETF that she manages, and noted that the investments that companies are making now in their digital presence will transform how we shop in the future.
Looking specifically at Amazon, Chai noted that the company’s ability to keep items in stock and promise tight delivery windows for products across the board has helped it be a major winner this year.
“Amazon learned months ago the impact of their supply chain from the pandemic,” Chai said. “They ramped up their inventory for the holiday season, and if anyone has the technology capability to do it, it’s them.”
Amazon isn’t the only winner in the e-commerce space, however. Chai specifically likes Shopify (NYSE: SHOP), Etsy (NASDAQ: ETSY), and Wix.com (NASDAQ: WIX), which is a website-building platform that caters to small businesses.
All three of these stocks have seen massive gains this year, with Shopify up 167% year-to-date, Etsy up 249%, and Wix up 107% since the beginning of the year.
But of the three, Etsy may be the best bet this holiday season as shoppers seek more personalized gifts as the pandemic fuels interest in more meaningful gifts.
“Large [online retailers] like Amazon are great to buy things that are very cheap and arrive very fast, and you use them and you’ve forgotten about them two seconds later and then they’re in a landfill,” said Etsy CEO Josh Silverman. “I think there’s always a need for things that are going to be cheap and arrive fast, but more and more I think people want an alternative to that, when they want that product to mean something to them, when they want it to feel special, and those occasions happen all the time.”
Etsy has seen its gross merchandise sales grow 101% through the first nine months of this year amid the broader surge in e-commerce spending. And the holiday season is likely to be strong as well, with Silverman pointing to the strength in sales for items like jewelry and how furnishings, and, “of course, things like personalized gifts for the holidays.”
“These are things you’re going to need every year, in a pandemic, not in a pandemic, and I think what people are discovering is there’s just a better way to shop,” Silverman added. “Connecting with the actual person who made the product and having it sent just to you is just a better way to shop.”