The coronavirus outbreak may have disrupted the global supply chain but not all industries are suffering.
The global pandemic is expected to favor the ecommerce industry as any kind of lockdown and self-imposed quarantine are expected to boost demand for online shopping and quick delivery services. Online sales have surged 52% from the year-ago period, and the number of online shoppers has increased 8.8% since the outbreak began, according to SaaS platform provider Quantum Metric report. The firm analyzed 5.5 billion anonymous and aggregated online and mobile visits to retailer websites from Jan 1 to Feb 29. Notably, Chinese online retailer JD.com witnessed 215% year-over-year growth in online grocery sales during a 10-day period between late January and early February. VIDEO
AMZN, Instacart and Walmart WMT, offering same-day and next-day delivery services, have all cautioned about ‘limited delivery availability’. These companies’ services are experiencing delays as shoppers are hoarding products.
Meanwhile, 44% of retailers expect production delays due to the coronavirus and 40% expect inventory shortages in the near term, per a Digital Commerce 360
survey. Year-to-Date Performance
E-commerce Prospects Bode Well for These Stocks in 2020 As consumers turn to digital options as a means to circumvent physical shopping environments, the change in behavior may impact longer-term behavior. Delivery services across the board including Grubhub, Postmates and DoorDash as well as online grocers like FreshDirect might see a number of new customers as the need for delivery of food and on-demand goods rises. 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% to between $870.6 billion and $893.9 billion. Consequently, big retailers like Walmart, Costco Wholesale COST and Target as well as online payment solutions provider PayPal ( PYPL Quick Quote PYPL - Free Report) are focusing on developing their footprint in the e-commerce space. However, this is increasing competition for Amazon, the market leader. 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 e-commerce space. Our Picks San Jose, CA-based, eBay EBAY is expected to benefit from the ongoing momentum across managed payments and Promoted Listings offerings. Further, this Zacks Rank #1 (Strong 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. You can see the complete list of today’s Zacks #1 Rank stocks here. Moreover, the company has been accelerating efforts to roll out browsing-inspired shopping, boost customer-to-customer business and strengthen its brand. Meanwhile, the leading provider of postage online and shipping software, Stamps.com STMP is expected to benefit from the ramp up of its United Parcel Services Inc. (UPS) partnership to all platforms in first-quarter 2020 (a net new shipping option for Endicia customers). Moreover, this Zacks Rank #1 company’s long-term reseller agreement with United States Postal Service (USPS), 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. Tel Aviv, Israel-based Fiverr International ( FVRR Quick Quote FVRR - Free Report) operates a platform that connects businesses of all sizes with freelancers offering digital services. The Zacks Rank #2 (Buy) 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. Meanwhile, Costco Wholesale which is a retail wholesaler, 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. Recently, E-commerce giant Amazon announced openings to hire 100,000 new warehouse and delivery workers to meet increased demand for shipments as a result of the coronavirus pandemic. It will also increase the hourly pay of workers employed in these positions by an additional $2 in the United States through April. We note that this Zacks Rank #3 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. Competition is intensifying further as PayPal has entered into a definitive agreement to invest $750 million in MercadoLibre, one of the largest e-commerce players in Latin America. With the deal, the Zacks Rank #3 company is aiming to expand its reach in e-commerce as well as online payment markets. This presents a significant threat for Amazon. Moreover, this collaboration is likely to help MercadoLibre in strengthening its logistics infrastructure and investing in end-to-end payment solutions. 5 Stocks Set to Double Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>