The coronavirus pandemic is wreaking havoc on global trade, investments, tourism and supply chains. However, it is favoring the e-commerce industry as lockdowns, quarantines and social distancing are likely to boost demand for online shopping and quick delivery services.
In the United States, major cities are under lockdown and with the steep rise in COVID-19 cases, President Donald Trump has extended social-distancing guidelines through April-end, urging people to stay indoors.
Per Ipsos MORI survey conducted from Mar 12-14, 50% of Chinese and 31% of Italian consumers are turning to e-commerce more often to shop for items usually purchased in-store. Other countries such as Vietnam, India and Russia have witnessed increase of 57%, 55% and 27% respectively.
Moreover, Amazon AMZN, Instacart and Walmart WMT have all cautioned about ‘limited delivery availability’. These companies’ services are experiencing delays as shoppers are hoarding products.
According to app tracking firm Apptopia report, average daily downloads beginning of February till Mar 15 for Instacart, Walmart grocery and Shipt apps increased 218%, 160%, and 124%, respectively, thus adding to their profits.
Meanwhile, 44% of retailers expect production delays due to the coronavirus outbreak and 40% expect inventory shortages in the near term, per a Digital Commerce 360 survey.
E-Commerce Prospects in 2020
As consumers turn to digital options as a means to circumvent physical shopping environments, the change in behavior is evident.
There is increased demand for delivery of food and on-demand goods at the consumer’s doorstep. Consequently, spike in new customer additions is expected to drive top-line growth at delivery services including Grubhub, Postmates and DoorDash as well as online grocers like FreshDirect.
In late February, the U.S. National Retail Federation indicated that sales in 2020 will rise 3.5% to 4.1% to a range of $3.93 to $3.95 trillion, despite uncertainty surrounding the trade war, the COVID-19 outbreak and the presidential election. Online sales are expected to increase from 12% to 15% between $870.6 billion and $893.9 billion.
Moreover, big retailers like Walmart, Costco Wholesale COST and Target as well as online payment solutions provider PayPal are focusing on developing their footprint in the e-commerce space. However, this is increasing competition for Amazon, the market leader.
E-Commerce Stocks Poised to Weather the Crisis
Against this backdrop, investors can tap the following e-commerce stocks as they are well poised to benefit from the aforesaid strong fundamentals of the space.
Stamps.com STMP, a leading provider of postage online and shipping software, is expected to benefit from the ramp up of its United Parcel Services Inc. partnership to all platforms in first-quarter 2020 (a net new shipping option for Endicia customers).
Moreover, this Zacks Rank #1 (Strong Buy) stock’s long-term reseller agreement with United States Postal Service, with benefits to higher volume customers is expected to be a major growth driver.
The new agreements are for an initial term of four years until Dec 31, 2023 with an option to extend for two additional years. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meanwhile, eBay EBAY is expected to benefit from the ongoing momentum across managed payments and Promoted Listings offerings.
Further, this Zacks Rank #2 (Buy) company’s initiatives of enhancing seller experience by offering innovative seller tools, and delivering better buyer experience by building product catalogs utilizing structured data hold promise.
Moreover, the company has been accelerating efforts to roll out browsing-inspired shopping, boost customer-to-customer business and strengthen its brand.
Fiverr International FVRR operates a platform that connects businesses of all sizes with freelancers offering digital services.
The Zacks Rank #2 company’s marketing efficiency and strong focus toward product and technology enhancements remain major positives.
Further, launch of four industry stores namely — Gaming, E-commerce, Architecture and Politics — will aid the company in expanding catalog and gaining momentum across larger businesses.
Costco Wholesale is also expanding its e-commerce footprint in the United States as well as in international regions like Mexico, Korea, Canada and the U.K.
The company, which carries a Zacks Rank #2, also offers two-day and same day grocery delivery services to customers in collaboration with Instacart.
Recently, it acquired Innovel Solutions, a leading provider of third-party end-to-end logistics solutions. The buyout will boost Costco’s e-commerce capabilities and facilitate it to sell "big and bulky" items. We note that the company’s e-commerce comparable sales advanced 28.4% in the last reported quarter.
Amazon is riding high on robust sales owing to social distancing. The company’s massive supply chain has been deployed to dispense necessary household items as its users are currently confined to their homes.
Moreover, the company’s Whole Foods is dedicating an entire hour to serve only senior citizens in an attempt to keep them safe from mingling with the rest of the crowd as they are more susceptible to the virus.
We note that this Zacks Rank #3 (Hold) company has recently taken an initiative to bolster its Same-Day Delivery program by making the service available in Philadelphia, PA, Phoenix, AZ, Orlando, FL and Dallas, TX for Prime members.
Apart from this, the company’s one-day shipping and many other fast delivery services remain noteworthy and are likely to instill investor confidence.
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