No discussion of e-commerce can take place without mentioning the mighty Amazon.com (NASDAQ: AMZN). The company dominates online retail -- and, increasingly -- retail as a whole.
Yet there are other businesses with exciting e-commerce growth prospects that you may be less familiar with. Read on to learn about three of the best available in the market today.
Continue Reading Below
It's not often that Wal-Mart Stores (NYSE: WMT) finds itself in the position of underdog, but that's exactly what it is when it comes to competing against Amazon in e-commerce. Recently, however, the retail behemoth has made some aggressive moves to close the gap.
Wal-Mart purchased e-commerce start-up Jet.com for $3.3 billion in August 2016. It then quickly moved to install Jet.com CEO Marc Lore as head of its U.S. e-commerce operations. Since that time, Wal-Mart has scooped up several smaller online retailers, including ShoeBuy.com, outdoor gear retailer Moosejaw, women's apparel seller ModCloth, and most notably, upscale men's clothing brand Bonobos.
Yet, importantly, the majority of Wal-Mart's growth is coming organically through Walmart.com. Earlier this year, it began offering free shipping on orders over $35, which forced Amazon to lower its free-shipping threshold. Wal-Mart is also aggressively courting online merchants in an attempt to weaken Amazon's network of third-party sellers while fortifying its own.
These efforts are already paying hefty dividends: Wal-Mart's e-commerce sales surged 63% in the first quarter and 60% in the second. If Wal-Mart can maintain anything close to this rate of growth in the coming years, it could become a legitimate competitor to Amazon in the e-commerce arena -- and generate handsome profits for investors along the way.
The people's champion
Shopify (NYSE: SHOP) is another company that's making its mark on e-commerce. But it's not an online retailer; instead, the Canadian software maker excels at helping smaller merchants compete more effectively with their larger rivals.
Shopify provides cloud-based solutions to more than 500,000 small and medium-sized businesses. It helps users sell their goods across multiple channels, including:
- online marketplaces such as Amazon.com and eBay,
- social media platforms like Facebook and Pinterest,
- merchants' own websites,
- and even brick-and-mortar stores.
Additionally, Shopify performs vital back-office services such as inventory management, sales tracking, and payment processing. It's a comprehensive commerce platform that, along with a growing list of integrated third-party apps, provides users pretty much everything they need to run their business.
Growth investors will also like that Shopify is just scratching the surface of the massive market it serves. In its IPO filing, the company noted that approximately 10 million merchants with fewer than 500 employees operate in its key geographies, with 46 million such merchants worldwide. Thus, Shopify currently has only 5% penetration in its core markets and about 1% of its total addressable market. With so much growth still to come, Shopify offers investors the prospect of exponential growth in the years ahead.
The international titan
One company that has a leg up on Amazon in many foreign markets is MercadoLibre (NASDAQ: MELI). It's the leading e-commerce platform in Latin America, and its MercadoPago subsidiary is the No. 1 online payment service in the region.
MercadoLibre's growth has recently outpaced Amazon's, despite serious economic turmoil in several of its major markets. Its second-quarter revenue soared 59% to $317 million (65% on a currency-neutral basis). Helping to drive this impressive growth was a 23% jump in unique buyers and a 41% surge in items sold. Moreover, payment volume rocketed higher by 74%.
More people conducting more transactions on its network -- that's a powerful trend that should continue to drive MercadoLibre's results for many years to come. Only about 62% of the more than 605 million people in Latin America are currently connected to the internet. That's up from approximately 50% in 2013, but still far below the nearly 90% internet penetration rates seen in North America. Moreover, less than 3% of total retail sales in Latin America were conducted online in 2016, compared to more than 8% in the U.S. So, like Shopify, MercadoLibre has a long runway for growth still ahead. As such, investors who buy shares in 2017 could see strong gains in the decade to come.
10 stocks we like better than AmazonWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017