E-commerce has increased as a result of conditions created by the coronavirus pandemic, and the main players in the sector have presented attractive returns. However, investors should know that the online retail revolution is just beginning.
With that in mind, we assembled a panel of Motley Fool contributors and asked each member to profile one of the top ecommerce actions to buy in 2021. Read more to see why they think Amazon (NASDAQ: AMZN), Etsy (NASDAQ: ETSY), and MarketLibre (NASDAQ: MELI) are ready to crush the market.
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An online retail giant that is ready for more wins
Keith Noonan (Amazon): Nominating Amazon as one of the top ecommerce actions will not earn points for originality. Investors who bought the shares at almost any time in their publicly traded history have had overwhelming returns. It’s still a great time to buy shares in Amazon.
Amazon currently controls about half of the United States’ business-to-consumer e-commerce market. The online retail giant has also shown that it is better to innovate than any other company.
In addition to its e-commerce service that shapes the industry, Amazon leads the cloud computing market. The company is also building a fast-growing position in a sector parallel to online retail: digital advertising. A recent survey by Cowen estimates that the company’s platform will account for about 13% of global ad sales, excluding the Chinese market.
There is considerable overlap in the technology and data needed to drive e-commerce, cloud computing and digital advertising businesses, and that makes Amazon stronger as a whole. The company can also be considered one of the first leaders in potentially revolutionary trends, including artificial intelligence, robotics and autonomous vehicles.
Amazon is one of the best companies in the world and has shown a trend towards innovation in shaping the market. The company’s already massive size means it will have a harder time delivering relative growth compared to smaller competitors in space, but Amazon stands out as a trusted industry leader that offers attractive risk-reward dynamics to growing investors.
The online craft fair
Joe Tenebruso (Etsy): If you need a personalized handmade gift, it is likely to end up on Etsy.com. Buyers migrated to the e-commerce market during the pandemic to find products they couldn’t find elsewhere – a trend that is likely to accelerate in the years to come.
Etsy is excellent at connecting manufacturers and consumers. The number of active sellers on its platform increased 42% year on year, to almost 3.7 million in the third quarter, while the number of buyers increased 55%, to 69.6 million. Etsy receives a small fee for each transaction. Collectively, these fees totaled $ 341.6 million in the third quarter, an increase of 141% over the previous year. Etsy also offers sellers a variety of services, of which it generated $ 109.9 million, an increase of 95% over the same period last year.
Face masks were another major driver of Etsy’s growth during the COVID-19 crisis. This is a segment in which sales tend to decline. But while many people joined the Etsy mask market last year, they are likely to stay because of their growing selection of handcrafted products. Gross sales of goods (GMS) excluding masks in the Etsy market increased 93% to $ 2.2 billion in the third quarter.
However, despite this torrid growth, Etsy has only scratched the surface of its long-term expansion potential. The company expects its online market opportunity to grow to $ 437 billion by 2023. With so much growth yet to come, investors who buy Etsy shares today should be well rewarded.
This leader is shaping powerful trends
Jamal Carnette (MercadoLibre): MercadoLibre is often called the “Amazon of Latin America”, but even this high name may be underestimating its true potential. Stocks were up last year, shooting 160% higher because the pandemic has displaced many online purchases, but the long-term growth story is just beginning.
Although it may seem ubiquitous, with 15% of retail sales in the United States, which has 90% internet penetration, it is still in the early stages of e-commerce. Compare that to two of the largest MercadoLibre countries – Brazil and Mexico – that have Internet penetration rates of 70% and 65%, respectively. MercadoLibre stands to gain from increased Internet penetration, leading to greater e-commerce adoption and continues to increase unique active users at a rapid pace, reporting an increase of 92% in the third quarter.
However, real informed investors are more enthusiastic about the company’s digital payment platform Mercado Pago. Initially designed to support payments on the MercadoLibre website, it has expanded to include off-platform transactions, such as supermarkets, and as a person-to-person money transfer mechanism. The Mercado Pago continues to grow rapidly, with total payment volume growing 161% on a neutral foreign exchange basis and off-platform volume growth reaching 197% during the third quarter.
It is not always that you find companies with two highly scalable businesses, but this is what MercadoLibre has with its e-commerce market and digital payment solutions. In addition, with MercadoLibre, you have growth drivers for several decades, as Internet penetration will increase e-commerce and the number of citizens without and without a bank will increase the demand for your digital payment solutions. Maybe it’s time to call MercadoLibre “Amazon and PayPal From Latin America. “