1 Best Ecommerce Stock To Buy Right Now
The e-commerce industry continues to grow at an incredible rate, and there is certainly no shortage of leading companies from which investors can choose and capitalize on these market trends. In this segment of Backstage Pass, registered on December 14th, Fool.com contributors Rachel Warren, Demitri Kalogeropoulos and Asit Sharma discuss one of the top ecommerce stocks investors should consider clawing back now.
Rachel Warren: The stock I wanted to talk about is Etsy (NASDAQ: ETSY). It’s a business that I cover quite frequently. I’m a shareholder of Etsy and for me one of the industries that I think of in mind when we talk about digital transformation or transformation, as we’re going to talk about here in a minute, can mean so many different things to so many. different people and businesses.
But one area I think about is e-commerce, because not only is it revolutionizing the way people shop and the way people buy the everyday products that they have always relied on. But it also changes people’s ability to change their financial future.
One of the things I love about Etsy is that it is built on this business model of vintage and unique and specialty and handmade items where you have sellers from all over the world on the platform to sell those specialized things that you really can’t find anywhere else.
Not only does this create plenty of opportunities for small business owners, or maybe someone who is finally chasing their side business or their lifelong dream of monetizing a business idea they’ve had, but it does. also provides a very convenient way as a consumer to find goods and items that you really can’t find elsewhere.
I like this aspect of Etsy’s business model. The company recently acquired Depop, a well-known platform where you can basically resell second-hand clothes. She also acquired a company called Elo7, which is basically called Etsy from Brazil, so she put a lot of effort into growing her business.
The company’s shares have risen about 30% year-to-date, which actually surprised me. I thought it might be going down because the stock has been all over the place. We’ll see where it lands before January. It’s another one of those companies that has been hailed as pandemic action.
But I think the company has proven to be much more than that. Take a quick look at some metrics. In the first nine months of this year, the company’s revenue increased 45% compared to the first nine months of 2020. Market revenue on the platform also increased by a similar amount, net profit from one year to the next. In the first nine months of 2021 increased by 65%, compared to the same period in 2020.
Active sellers grew 102% year-on-year in that nine-month period, while active buyers grew 40% year-over-year in the nine-month period. I love these numbers, I love that not only are more and more people coming in to list any specialty item they want to sell, even as we hopefully enter a new phase of the pandemic, which people also continue to buy on the platform en masse.
I myself am a frequent user of Etsy for specialty jewelry. Love that I can continue there and there is a jeweler in Bulgaria whose items I love and I’m going to be buying things from them as an example, really random things that you just can’t find elsewhere.
One last point here that I found really interesting. The company recently launched what is called a Star Seller Program, which the company says “defines what success looks like in celebrating and rewarding our top sellers.” It improved several customer service metrics that are essential to the Etsy platform, such as on-time delivery and responsiveness, essentially increasing those incentives for sellers on the platform, which we have also seen a lot with from other e-commerce sellers.
“The company is also focused on transitioning buyers to our shopping app on Etsy.” Management said, “We believe this is the best way to transact on Etsy, personalizing the onboarding experience and helping shoppers discover items and stores that match their tastes and preferences. . “
Make acquisitions, increase its turnover and results at an astonishing rate, encourage salespeople and also increase purchases on its mobile application. These are all the things you want to see on an ecommerce platform like Etsy that operates in such a competitive space, so one to watch out for if you aren’t already invested.
Demitri Kalogeropoulos: It’s awesome. I’m just going to jump real fast. I want to add two things, two reasons why I love this business too. Firstly, they have a niche that they really dominate and it’s not just like they’re an ecommerce salesperson their top six categories cover almost 90% of their top sales, I’ll just name them. first two here, housewares and furnishings and number two, as you mentioned, Rachel, jewelry and personal accessories.
When you think you can compare it to something like eBay, I follow eBay a lot and they are larger ecommerce retailers, but I don’t know the relevant rankings for them, but I’m sure it’s not those two.
I’m sure it’s probably consumer electronics, for example, that you can buy anywhere else. You can’t really duplicate their available products. The second thing that really struck me when I looked through their business is their take rate, which is the fee they can charge sellers, most of the time is 18% which blows my mind because “eBay has worked very hard to get that number up to 10% over the past three years.
Rachel Warren: Wow.
Demitri Kalogeropoulos: Because I believe, obviously, a lot of things are smaller brands and things like that to help a lot more practical, but interesting service. This gives you a good indication that it can be quite profitable.
Rachel Warren: It’s awesome.
Asit Sharma: Yeah. I really like this discussion. Etsy shareholder here too. I think they play a good role in this growing concert economy. Very liberating for people who want to turn a side hobby into something more, or a passion into a business. I think it’s a great stock of virtual opportunities in that sense. Their use of technology is also very convincing.
I’ll just add here that they’ve done a really good job of figuring out how to push users towards what users want to achieve. It sounds easy, but it’s one of the hardest things to do in the ecommerce visual interface. If I have a certain aesthetic in mind, especially on a site like Etsy, how do I translate this idea that I have into something that the platform itself can then interpret and show me different versions of that? ? Etsy does such a good job with this and it isn’t by accident.
They’ve spent a lot of money on their own AI and machine learning, and over the years I think they’ve generally become very proficient. If you have a certain aesthetic, something you want, a piece of furniture in the house, or a certain type of table, just take a look and you are instantly intrigued, in love. I enjoyed it as a shareholder, and have probably fallen too low on this platform over the years. [laughs] just because I think they’re so efficient at what they do.
Rachel Warren: I understand you.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.