How the Pandemic Boosted the E-commerce Industry

Photo by rupixen.com on Unsplash

There are two types of people in the stock market.

The first type of people are those frantically selling their shares especially during a bear market. Gotta escape before everything crashes down during a market recession.

Then there’s the second type. These investors have just woken up from a slumber, ready to take action after a long time of observing and studying. During a market recession, they don’t flee. Instead, they buy bargained stock prices and then wait for it to bounce back again.

Warren Buffett belongs to the second type of investor.

Because of the COVID-19 pandemic, it’s tough for investors to see profit in their investment portfolios. It’s obvious, isn’t it? Now is not the time for harvesting — it’s the planting season. With a lot of businesses downsizing and closing down, investors have to single out the businesses that are prospering despite the bad circumstances.

As I’ve mentioned before, self-storage companies are one of the market sectors that are thriving because of their durable competitive advantage. To add to that, e-commerce is also a promising area for your investments in the next 2 years.

Here’s why.

The Effect of the Pandemic on the Ecommerce Industry

E-commerce, or electronic commerce, covers all businesses that buy and sell products and services on an online platform. It may be business to business (B2B), business to consumer (B2C), consumer to business (C2B), or consumer to consumer (C2C).

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Before the pandemic, the e-commerce industry is gaining traction because of modern times. The current generation right now loves the internet. With e-commerce, we don’t have to leave our houses to buy the things we want. With just a few swipes, clicks, and few days of waiting, it comes to our doorway. It doesn’t matter where it came from — there are no boundaries when it comes to e-commerce!

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During the pandemic, I think it goes without saying that the e-commerce transactions are heightened. It’s not that we DON’T want to leave our homes — we CAN’T leave our homes because of quarantine protocols. Online shopping became a necessity. If you look at the data from the U.S. Department of Commerce illustrated by Digital Commerce 360, there was a sharp rise of 44% in e-commerce sales growth in 2020!

Future Market Trends of Ecommerce

To start, let me put out a disclaimer first.

I don’t know what’s going to happen in the future — no one does!

Although I have a grasp of understanding about these things, I’m still not an expert. So I listed down the future market trends from industry experts themselves. Nevertheless, take these with a grain of salt.

Artificial intelligence will bring more profit to the ecommerce industry.

“2021 will give rise to hyper-personalization within the e-commerce sector in regard to the customer experience. We’ll start to see AI technology coupled with NLG create a type of ‘algorithmic e-commerce’ experience, where customers gain bespoke shopping experiences through customized product and category descriptions.” — Robert Weissgraeber, CTO of AX Semantics

Thanks to the advancement of technology, all we need to do is enter the right keywords in the search bar, and the choices are streamlined for you. Even better, these online apps will show recommended products that we end up liking. Chatbots that answers your queries Artificial intelligence definitely improves the customer’s buying experience which is what creates customer loyalty.

Online grocery shopping will reach mass adoption.

“The pandemic has already had a monumental impact on how we grocery shop — in the US alone, online grocery sales increased from $1.2 billion in August 2019 to $7.2 billion in June 2020. In 2021, to compete, we’ll see grocery retailers capitalizing on this trend in myriad ways — it will be smart for grocers to bolster their online services, offer membership programs and look for new ways to better align their online shopping strategy with their in-store shopping and curbside experience.” — Faisal Masud, CEO of Fabric

Only busy customers will most likely buy grocery online pre-pandemic. Come 2020, online grocery shopping became a necessity. For our health and safety, we do our best to avoid face-to-face social interactions. Grocery retailers will have to adapt in order to meet the demand. Some examples of online grocers are AmazonFresh, Instacart, and Walmart.

Livestream shopping apps will bring in-store experience online.

“The world of social commerce is booming, and we can only expect to continue to see further investment, particularly in social and livestream shopping apps, such as Pinduoduo, who laid the groundwork for the surge in social commerce in the Western world.” — Lucas Tieleman, EVP of Product at Bazaarvoice

You must have seen those memes like what I ordered vs. what I got, right? If not, here’s one from MemeZilla.com.

Apparently, what you see is not what you always get. That’s why some customers prefers in-store shopping where they can see the product themselves. However, today in the “new normal”, there are livestreaming shopping apps which seems like a hybrid of in-store and online shopping. It builds trust to the consumers that there are no fake goods in the platform.

Digital payings app

“Consumers are looking for easier and faster ways to pay. Credit and debit cards have huge wallet share, but buyers are looking for more flexible payment options, better identity solutions, more robust reporting on their purchases, and ease of use.”

When you’re rich, you don’t bring cash with you anymore. That was before.

In the 21st century, majority of the people now make digital payments. That’s why even store establishments have QR codes and POS terminals for cashless transactions. Naturally, digital payment apps will rise with the demand for ecommerce. Some examples of international digital payment companies are Google Pay, Paypal, Venmo, Cash App.

The COVID-19 Pandemic could last until 2022, with a reappearing surge in 2024.

No one really knows for sure how long the pandemic will last. Since COVID-19 is a new strain of disease affecting the whole world, new data comes up every now and then. Findings are always dynamic. — data is still continuously gather

In an article published by the University of California San Francisco, Peter Chin Hong, a Professor of Medicine said — “to reach pre-COVID “normal” with herd immunity on a national level may take until the fall. Global herd immunity may take until summer 2022.”

However, in an article from Nature.com, scientists made several predictions. One of those said“If immunity is moderate, lasting about two years, then it might seem as if the virus has disappeared, but it could surge back as late as 2024, the Harvard team found.”

The life span of the pandemic is uncertain. No matter what, the world will have to adjust with the “new normal”. Investors will have to shift their attention to industries that are thriving despite the pandemic — e-commerce as a strong example.

Top E-commerce Players of USA in 2020

According to Digital Commerce 360, these are the top e-commerce companies in the U.S. stock market in 2020.

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Bottomline: Is Ecommerce a Good Investment for the Next 2 Years?

Here are the reasons why you should invest in the e-commerce industry in the next 2 years:

  1. The scope of e-commerce is not limited by geography. People can now buy goods across continents. The possibilities are endless.
  2. The younger generation right now — Millennials, Gen Z, and Gen Alpha — are mostly obsessed with online shopping.
  3. Both the advancement of this generation’s technology and the social distancing due to COVID-19 complements the business model of e-commerce businesses.
  4. E-commerce companies are still constantly getting upgraded as customers continuously look for better alternatives. It’s best to jump on this investment a bit early on before e-commerce gets more mainstream.
  5. Even if COVID-19 goes away, some habits will stay. As they say, necessity is the mother of invention. Once everything goes back to normal, people will still be used to the convenience of digital payments and e-commerce.

The list could go on.

Jeff Bezos, CEO of Amazon, became the richest man in the world in 2018 — before the pandemic. Since then, Amazon’s stock price today has grown by over 197%.

It’s exciting to think which e-commerce stock will skyrocket and have the same growth as Amazon!

What are your bets? Let me know in the comments section.

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Roman Reitman

Roman Reitman

Proficient Investor concentrated on ethical investments and green technologies.