While the coronavirus crisis has battered almost every corner of the retail industry, the surge in consumers doing their shopping online — and in businesses shifting to meet their needs — has given investors a reason to be bullish on e-commerce.
Major online retail players such as Shopify and Etsy have seen meaningful stock-market gains since North American lockdowns began in March, and have continued to trend upward even as most brick-and-mortar stores have reopened.
The Amplify Online Retail ETF, which sat at around $50 per share at the beginning of March, has gained more than 78%, hitting $89 per share on Tuesday. Much of that growth can be attributed to just one of its holdings, Overstock.com, which has soared more than 3,000% since March and which last week reported record revenue in the second quarter.
While Overstock has benefited from its vast selection of home furnishings — a category that’s gotten a boost with consumers spending an unprecedented amount of time in their houses — even online fashion retailers have seen Wall Street rallies. Farfetch’s stock has more than doubled from around $11 in the beginning of March to $26.14 on Tuesday. Revolve and Stitch Fix, too, have recovered from their late-March and early-April lows, respectively, though with an uncertain outlook ahead for office reopenings, travel and events, it’s unclear when many of their customers will again have a reason to shop for items like high heels and handbags.
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Investors, however, appear to be confident that e-commerce still has room to grow. According to Adobe Analytics, online sales between March 1 and June 30 were $77 billion higher than expected for the period, tracking above even holiday shopping levels. While in 2019, U.S. online retail sales accounted for a record 11.8% of total sales, the market research company eMarketer forecasts that they will surge to 14.5% in 2020, or 20.1% with the exclusion of gasoline and auto sales.
Among the biggest beneficiaries of this shift to e-commerce has been Shopify, which in May became Canada’s most-valuable public company. The online retail platform provider says it now powers more than one million businesses, with revenue nearly doubling year-over-year last quarter.