09/17/2020

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Major Retail Reports Confirm a Cultural Shift



Ecommerce Is Here to Stay

A number of recent earnings reports have shown that ecommerce is likely not just a temporary trend sparked by lockdowns and store closures. Consumers are shifting their habits permanently.

Some analysts predict that by 2024, ecommerce will account for 19% of US retail—up from 11% in 2019. This is creating a multitrillion-dollar market opportunity for businesses around the world.

Evidence in Earnings Reports

Target (TGT) reported that its online sales increased by 197% compared to one year ago. Walmart (WMT) saw a 97% surge in online sales during the second quarter.

Due to a combination of DIY enthusiasm during the pandemic and a growing demand for ecommerce, Lowe’s (LOW) and The Home Depot (HD) also had skyrocketing online sales. During the fiscal second quarter, Lowe’s saw a 135% increase in its website sales.

Companies outside of the US are also seeing growth in demand for online shopping. JD.com (JD), the Chinese online retail powerhouse, saw its revenue rise by 33.8% during the quarter ending in June compared to the year prior.

Ecommerce Picks and Shovels

When looking at the ecommerce boom, some investors are thinking about the saying, “during a gold rush, sell picks and shovels.”

It’s not just retail powerhouses like Walmart and Target seeing their online operations grow. Small businesses are also pivoting to selling goods online, and they need support from platforms that help them reach customers virtually.

Companies that support online sales for third parties may be the proverbial shovel merchants in the ecommerce gold rush. These companies include Wix (WIX) and GoDaddy (GDDY), which help users build their own websites. Platforms like Shopify (SHOP), Etsy (ETSY), and Pinterest (PINS) provide opportunities for businesses to showcase their products to the world online, and may also see growth due to the continued surge in ecommerce.


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