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E-Commerce Breathing Life Into Retail Sector: 4 Winners

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E-commerce has been saving the retail sector all through the pandemic and this was once again proven in the holiday season. According to a new report by Adobe Analytics, e-commerce played a major role in driving holiday sales in 2020.

The pandemic has changed the shopping habits of millions, with most people shifting online. Given that the crisis is far from over despite two vaccines having been rolled out, it’s likely that people will continue shopping online.

E-commerce Drives Holiday Sales

According to Adobe Analytics, U.S. online sales during the 2020 holiday season grew 32% from 2019, hitting a record $188.2 billion, as most people shopped from home. The holiday period, which includes Black Friday and Cyber Monday in November, saw online sales surpass $100 billion for the first time.

Moreover, online sales crossed $1 billion everyday during the holiday period and crossed $2 billion on 50 days. Online sales on Cyber Monday crossed $10 billion. Christmas Day, the typical mobile shopping day, saw smartphone sales accounting for 52% of the total sales.

Also, online sales of toys jumped more than 50% from the 2019 level, while online purchase of jewelry increased 66% from last year.

E-Commerce Proving Its Dominance

Although visiting physical stores during the holiday season has been like a tradition, e-commerce has slowly been gaining prominence. This year proved to be yet another landmark for online shopping. Moreover, the pandemic has made people stay at home and shop online, which was helping e-commerce grow further.

The majority of customers used smartphones to shop this year as an increasing number of retailers are investing on mobile apps and giving bigger and better deals. Particularly on Christmas Day, retailers witnessed 52% of the online spend coming from smartphones, crossing the 50% mark for the first time.

Another big shift from visiting physical stores was curbside pickup. BOPIS (Buy Online Pick-Up in Store) gained popularity this year because of the pandemic. BOPIS started picking up with the onset of pandemic and increased substantially during the holiday season. During the holiday season, BOPIS continued to average 1 in 4 orders (25%), jumping almost 40% compared to the 2019 holiday levels of 18%.

Our Choices

Given that virus fears have once again started escalating in the minds of people, online shopping will continue to be a safe bet for millions over the coming months. This is thus the right opportunity to invest in retail stocks that have a strong online presence.

Target Corporation TGThas evolved from just being a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.

The company’s expected earnings growth rate for the current year is 37.4%. The Zacks Consensus Estimate for current-year earnings has improved 20.6% over the past 60 days. Target carries a Zacks Rank #2 (Buy).

DICKS Sporting Goods, Inc. (DKS - Free Report) operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment such as for team sports, fitness, camping, fishing, tennis, golf and water sports.

The company’s expected earnings growth rate for the current year is 57.5%. The Zacks Consensus Estimate for current-year earnings improved 46.3% over the past 60 days. Dicks Sporting sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

eBay Inc. (EBAY - Free Report) operates as an online shopping site that allows visitors to browse through available products listed for sale or auction through each company's online storefront.

The company’s expected earnings growth rate for the current year is 20.5%. Its shares have gained 12.4% over the past 30 days. eBay carries a Zacks Rank #2.

Williams-Sonoma, Inc. WSM is a multi-channel specialty retailer of premium quality home products. Incorporated in 1973, the company has five brands and each of the brands is an operating segment.

The company’s expected earnings growth rate for the current year is 74.4%. The Zacks Consensus Estimate for current-year earnings has improved 32.3% over the past 60 days. Williams-Sonoma sports a Zacks Rank #1.

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