The coronavirus pandemic has completely changed the way that we work, socialise and even shop. Recurrent lockdowns and high transmission rates in recent years has forced people to make more purchases online, since the physical retail sector was almost entirely shut down, except for essentials.
If we look back to last year’s Christmas spent in lockdown, we can assume that majority of gift purchases were made online. As a result, it would seem that COVID-19 has completely altered the consumer’s shopping preferences and the eCommerce industry has reaped the benefits.
This trend is likely to continue, especially since — at the time of writing — the government has imposed new rules to safeguard the UK against the effects of the Omicron variant of the virus.
This year, it is likely that many Christmas shoppers will purchase the majority of their gifts online and in this article, we will look at the effects that this could have upon eCommerce stocks.
Change in consumer spending habits
In December 2021, shops are open, once again bustling with people, following the easing of restrictions in July this year. However, online retail stores still continue to reign supreme. In a survey conducted by Worldpay, 60% of UK consumers claim that they’re planning to do all of their Christmas shopping online this year.
This is much to do with the fact that eCommerce platforms provide shoppers with greater flexibility — with a variety of different payment methods to choose from. When you make a purchase online, you usually have the choice to delay your payment, divide your payment into instalments or pay using your preferred method.
Additionally, social media has completely changed spending habits, since consumers find themselves prompted to make purchases by their favourite influencers, or see smart adverts that will link them to an eCommerce site’s page.
Overall, the convenience and safety of online shopping is likely to see eCommerce sites triumph over physical retail stores. Before the pandemic, 55% of online shopping was done online, however, the PWC pre-Christmas survey has predicted that this could rise to 67% this year.
How have ecommerce stocks benefitted?
Many eCommerce stocks have reaped the benefits of the consumer’s change in shopping habits. Here are some examples of the companies that have profited most from this shift:
- Amazon (AMZN)
Prior to the coronavirus crisis, Amazon was the leading eCommerce site, but it has continued to thrive as a result of the pandemic. In the early months of 2021, revenue had increased from $75 billion (in the previous year) to $108.5 billion.
Additionally, the ecommerce giant’s profits were $8.1 billion, a rise from $2.5 billion in 2020. This growth was a representation of the company’s combined success in eCommerce, cloud-based web services and media streaming services.
In addition, the company’s stock has increased in value by more than 60% this year and has traded at around $3,000 per share in 2021 — an astonishing growth.
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- Shopify Inc. (SHOP)
Shopify is a newcomer in the world of eCommerce, but this doesn’t mean that it should be overlooked. The Canadian company is directed at small businesses, providing them with a platform from which they can list their products and make sales online.
Although the company has only been trading for the last decade, 1.75 million sellers now use their services, and much of this success can be attributed to the demand for online buying and selling during the pandemic.
In 2020 alone, Shopify grew by 116%, and in its third quarter of 2021, managed to record a total revenue of $1,123.7 million. In addition, Shopify stock has grown by over 30% year-to-date and could prove a worthy investment for the future.
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Shops are now open, but the question remains — where will you be doing your Christmas shopping this year? Will you be opting for the personal experience that you’ll receive in a physical store? Or will you be making your purchases online, choosing convenience and safety?
However you choose to shop, your decisions, along with the decisions of other consumers, will likely impact the landscape of the stock market.
