The ecommerce space is a prime example of a new path toward recession-proof non-cyclicality in a world where household savings are robust into the teeth of a potential recession. (1)
At this point, Goldman Sachs and other major Wall Street firms are starting to project a strengthening likelihood of a near-term recession as the Fed begins to tighten monetary policy while prices for basic goods, including gas and electricity, are rising. (2)
But, unlike other past recessionary periods, households have savings to tap to stay in the game, helping the most efficient retailers stand their ground as demand shifts. (3)
The ecommerce space could be a beneficiary because it offers greater efficiency in acquiring basic goods such as clothing, household durable goods, and basic daily necessities. When you shop online, you don’t have to use gasoline or time or energy to gain access to the goods you need. Ecommerce cuts out the middle-man. (4)
The pandemic was an exercise in market penetration for ecommerce retailers, converting the previously unconverted, providing everyone with a reason to try 21st century shopping, bringing hundreds of millions of people into the fold of a new way to acquire goods. (5)
For retailers already positioned for this boon, it represents a structural transformation and a tailwind. With that in mind, we take a look at some of the most interesting growth stories in the ecommerce space below.
Shopify Inc. (NYSE:SHOP) operates a cloud-based commerce platform designed for small and medium-sized businesses. Its software is used by merchants to run business across all sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.
The firm’s platform provides merchants with a single view of business and customers and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting. It focuses on merchant and subscription solutions.
Shopify Inc. (NYSE:SHOP) recently announced financial results for the quarter ended March 31, 2022, including total revenue in the first quarter grew 22% to $1.2 billion, which represents a two-year compound annual growth rate of 60%. The first quarter of 2021 marked the highest revenue growth in the company’s history as a public company driven by stimulus and COVID-19 lockdowns. Shopify merchants are emerging from the last two years stronger and better prepared for commerce everywhere. (6)
“While we’ve experienced massive macro shifts since the start of the pandemic, the one mainstay has been that Shopify is the commerce platform of choice for merchants in any environment, with the ability to support commerce on any surface,” said Harley Finkelstein, Shopify’s President. “This has earned Shopify significant merchant trust and the ability to help them with more parts of their business, which is why we are eager to bring Deliverr’s team and technology to our merchants.”
Even in light of this news, SHOP has had a rough past week of trading action, with shares sinking something like -8% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way.
Shopify Inc. (NYSE:SHOP) managed to rope in revenues totaling $1.2B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 21.7%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($7.2B against $681.9M).
FBC Holding Inc. (OTC US:FBCD) is a tiny newcomer in the ecommerce retail fashion space that has started to make some waves, up 150% in the past few days as the company lays its foundation as a brand in the street fashion domain after announcing its intention to land a major influencer brand ambassador and connecting up with Amazon and eBay on the distribution side.
The company’s primary brand is “Formrunner” (https://formrunnerapparel.com/) (7).
FBC Holding Inc. (OTC US:FBCD) announced this week that it has begun selling its Premium High-End Apparel by expanding its E-Commerce presence on eBay.com. The company is thrilled to add sales from eBay as an additional revenue opportunity following its successful launch on Amazon last week.
President & CEO Lisa Nelson states “We are beyond excited to offer our Apparel on eBay! Our clothing will be available with eBay’s “Buy it Now” option and will kick off the launch with free shipping to the entire United States. Customers around the world will now have an additional platform to purchase our clothing with more to come moving forward.” Lisa Nelson also stated, “Over the past two years, Formrunner Apparel Inc. has been continuously expanding the company’s vertical sales channels, and eBay along with Amazon, are two great retail giants that will assist with expansion throughout the United States along with the rest of the world!” (8)
As noted in the release, with 185 million active buyers and nineteen million sellers worldwide, eBay is one of the world’s leading marketplace and eCommerce platforms. eBay serves customers globally. Like every popular site, there are tons of loyal customers who prefer to purchase on eBay. Customers may prefer to purchase from merchants like these than a site that they land on the first time. eBay also offers affiliate programs through multiple affiliate marketers will take your product link and promote your products to receive the affiliate commission. This will help to increase your sales. So, in addition to running your affiliate program, you can also benefit from the eBay affiliates.
The release goes on to note that the apparel market encompasses every kind of clothing, from sportswear to business wear, from value clothing to statement luxury pieces. After difficulties in 2020 during the coronavirus pandemic, when sales across the apparel industry took a hit, the global demand for clothing and shoes is set to rise again. The revenue of the global apparel market was calculated to amount to 1.5 trillion U.S. dollars in 2021 and was predicted to increase to approximately two trillion dollars by 2026. The countries that account for most of this apparel demand are the United States and China, both generating higher revenues than any other country.
FBC Holding Inc. (OTC US:FBCD) has been powering higher over recent days as the crowd starts to take notice. The recent upside momentum comes after a deep bear move well into sub-penny status driven by the company’s reorganization and pivot. But now that we have passed through that phase, shares may have found a more stable bottom in front of emerging catalysts that speak to the company’s new identity and momentum.
Alibaba Group Holding Ltd. ADR (NYSE:BABA) engages in providing online and mobile marketplaces in retail and wholesale trade. It operates through its Core Commerce, Cloud Computing, Digital Media & Entertainment, and Innovation Initiatives and Others segments.
The Core Commerce segment consists of platforms operating in retail and wholesale. The Cloud Computing segment consists of Alibaba Cloud, which offers a complete suite of cloud services, including elastic computing, database, storage, network virtualization, large scale computing, security, management and application, big data analytics, a machine learning platform, and Internet of Things (IoT) services. The Digital Media & Entertainment segment relates to the Youko Tudou and UC Browser businesses. The Innovation Initiatives and Others segment includes businesses such as AutoNavi, DingTalk, and Tmall Genie
Alibaba Group Holding Ltd. ADR (NYSE:BABA) recently announced that it has joined Low Carbon Patent Pledge (LCPP), an international platform that encourages sharing patents for low carbon technologies, to accelerate adoption of green technology and foster collaborative innovation by making nine key patents for green data center technology available for free to external parties. In keeping with its support for green initiatives, Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group also aims to have its global data centers running entirely on clean energy by 2030, starting with upgrades to five of its hyper-scale data centers in China.
“We believe technology innovation is a key driver in transitioning to the low-carbon circular economy of the future. As a pioneer and global technology leader, we are committed to taking broader social responsibility to use technology to level the playing field and to empower the wider social groups, creating long-term value. We are excited to join the pledge as a way to encourage a collective approach to build a sustainable and inclusive future for the society and environment through open collaboration, joint innovations and mutual inspiration.” said Dr. Chen Long, Vice President of Alibaba Group and Chair of Alibaba’s Sustainability Steering Committee. (9)
Traders will note -6% plucked from share pricing for the stock in the past week. That said, BABA has evidenced sudden upward volatility on many prior occasions. What’s more, the name has seen a growing influx of trading interest.
Alibaba Group Holding Ltd. ADR (NYSE:BABA) has a significant war chest ($654.4B) of cash on the books, which compares with about $502.2B in total current liabilities. One should also note that debt has been growing over recent quarters. BABA is pulling in trailing 12-month revenues of $1008.6B. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 14.3%.
Other key ecommerce players include Amazon.com Inc. (Nasdaq:AMZN), eBay Inc. (Nasdaq:EBAY), PayPal Holdings Inc. (Nasdaq:PYPL), Carvana Co. (NYSE:CVNA), and ProShares Online Retail ETF (NYSEArca:ONLN).
References:
1. https://www.washingtonpost.com/business/2022/02/23/savings-bank-accounts-covid/
4. https://hbr.org/2009/04/how-to-market-in-a-downturn-2
6. https://finance.yahoo.com/news/shopify-reports-first-quarter-2022-110000301.html
7. https://formrunnerapparel.com/
9. https://finance.yahoo.com/news/alibaba-group-joins-low-carbon-002400632.html
