The coronavirus outbreak brought about an undeniable change in consumer behavior whereby buyers are shifting to online shopping from physical stores. Per the U.S. Census Bureau of the Department of Commerce’s (DOC) latest data, e-commerce sales across the United States soared 44.5% year over year to $211.51 billion in second-quarter 2020.
While the figure reflected a 31.8% surge from the first-quarter reading of $160.41 billion, it failed to compensate for the lost store sales from the traditional bricks-and-mortar store closures. Accordingly, total retail spending dipped 3.9% sequentially.
In the June quarter, the share of e-commerce in total U.S. retail sales was 16.1%, up from 11.8% in the March quarter. Per eMarketer, a market research company, e-commerce is likely to represent 14.5% of the overall retail sales in 2020, mirroring an uptick from 11.0% in the previous year while also marking the biggest year-over-year gain in records dating to 2008.
The pandemic created a new landscape for online retailers and e-commerce. E-Marketer expects this transition toward digital sales to stick around for a long term. Even after the bricks-and-mortar stores reopen and their sales revive, e-commerce will continue to gain more than 1% of the total retail sales each year through 2024 after losing a mere 0.1% share in 2021. Thus, digital shopping will account for 18.1% of the total U.S. retail sales and value in excess of $4 trillion by 2024.
The pandemic-fueled online spending is here to stay. Retailers that are leveraging technology with a strong online presence amid this chaotic environment are likely to brave this crisis and ultimately emerge as winners, courtesy of social distancing and stay-at-home restrictions.
Given the booming trends, we narrowed down our search to five stocks for a winning investment portfolio. Each stock currently has a Zacks Rank #1 (Strong Buy) or 2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Etsy, Inc. (ETSY - Free Report) offers e-commerce services and provides both online and offline marketplaces to buy and sell goods. The company's product line comprises art, home and living, mobile accessories, jewellery, wedding merchandise et al.The Zacks Consensus Estimate for current-year earnings has witnessed eight northbound revisions in the past 60 days. The company sports a Zacks Rank of 1 at present.
JD.com, Inc. (JD - Free Report) through its website, offers computers, mobile handsets and other digital products, home appliances, automobile accessories, clothing and shoes, luxury goods, furniture, and other household and personal care items. The company has a trailing four-quarter earnings surprise of 34.54%, on average. It is presently a #1 Ranked player.
Target Corporation(TGT - Free Report) has evolved from just being a pure bricks-and-mortar retailer to an omni-channel entity over time. This currently Zacks #1 Ranked company has been investing in technologies, improving websites and mobile apps, and also modernizing supply chain to keep pace with the changing retail landscape and better compete with the pure e-commerce players. The company has a trailing four-quarter earnings surprise of 37.62%, on average.
Shopify Inc.(SHOP - Free Report) provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses. The Zacks Consensus Estimate for current-year earnings has witnessed 23 northward revisions in the past 60 days. The company currently carries a Zacks Rank of 2.
Wayfair Inc.(W - Free Report) , headquartered in Boston, MA, is one of the world's leading online sellers of home products, consisting of furniture and home decor. It operates worldwide through Wayfair.com and four other branded websites, namely, Joss & Main, AllModern, Birch Lane and Perigold. In the past 60 days, 14 estimates for the current-year earnings have moved north for Wayfair. The company is presently a Zacks #2 Ranked player.
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