Best E-commerce Companies of 2024

Less than a generation ago, e-commerce was in its infancy, born on the World Wide Web as the vision of entrepreneurs like Jeff Bezos.

E-commerce currently accounts for approximately $1 trillion in annual U.S. retail sales, or 13% of the total retail industry. Globally, it has reached $5 trillion and is led by companies such as: Amazon (AMZN -0.83%) and China alibaba group (NASDAQ:BABA), plus the following brick-and-mortar retailers: home depot (HD -0.85%).

The tremendous growth of e-commerce has led to many companies winning big in the stock market, but there are still many opportunities left in online retail. Annual e-commerce sales increased by about 15% in the 2010s, and the adoption of online shopping accelerated during the COVID-19 pandemic.

However, in 2022, spending patterns returned to physical stores, travel, restaurants, and other services, and growth slowed. Still, there is plenty of room for long-term growth in e-commerce. If you are looking for a list of the top e-commerce companies in the world, keep reading below.

Top e-commerce stocks to buy now

Top e-commerce stocks to buy now

1.Amazon

1.Amazon

For most American investors and consumers, Amazon is the first and last name in e-commerce. The company essentially defined the space, launching in 1995 as an online bookstore and then expanding into countless other categories over the years. Its marketplace currently sells a whopping 350 million stock keeping units (SKUs), or unique items.

Amazon, which has no direct e-commerce competitors in the United States, has grown rapidly throughout its history, with innovations such as third-party marketplaces (Fulfillment by Amazon) and Amazon Prime being key to its growth. The company has also built a competitive advantage through real estate, opening a network of more than 100 fulfillment centers in the United States.

Today, Amazon is by far the world's largest e-commerce company by revenue.it's even challenging walmart (WMT -0.4%) is on track to become the world's largest company by revenue, and will soon overtake the retail giant in its category. Amazon ended 2021 with $470 billion in sales, second only to Walmart's $573 billion, but Amazon has historically grown at a much faster pace.

Amazon currently has a higher gross merchandise value (GMV) than Walmart, thanks to third-party marketplaces that account for the majority of sales on its site, but it lags behind Chinese e-commerce giant Alibaba in this space. ing.

Amazon has also built one of the world's largest cloud infrastructure services, which is a major source of revenue for the company. Both e-commerce and cloud computing businesses provide the company with enormous competitive advantages and should lead to continued outperformance in its stock price, which has risen more than 100,000% since its IPO in 1997.

E-commerce sales growth is slowing through the first half of 2022, but that is likely only a temporary slowdown. Amazon's guidance indicates it should accelerate again in the second half of this year.

2. Shopify

2. Shopify

Shopify has emerged as Amazon's biggest competitor over the past few years. Software-as-a-Service (SaaS) companies didn't do it by directly challenging Amazon in online retail or building an e-commerce marketplace. Instead, he has established himself as the technology infrastructure that supports his more than 2 million merchants around the world, whose operations range from privately owned businesses to Kraft Heinz (NYSE:KHC).

Shopify provides all the tools any company needs to run an e-commerce business, from website building and mobile apps to marketing, payment processing, financial tracking, lending, and other services.

The company is the clear leader in e-commerce software. Amazon discontinued its competitor Amazon Webstore after realizing it couldn't keep up with Shopify. Most recently, Amazon launched “Buy with Prime,” allowing independent e-commerce sites, including Shopify sellers, to ship through Amazon Prime. It's not yet clear how much of a threat this poses to Shopify, but investors should keep an eye on it.

Amazon's competitors have helped define Shopify. CEO Tobi Lutke likes to call his company's strategy “arming the rebels,” and it's driven Shopify's revenue from $389 million in 2016 to $389 million in 2021. He contributed to the dramatic growth of the company to $4.6 billion. As the business expanded, so did profitability. That's what SaaS businesses should do.

Shopify stock, along with other high-priced tech stocks, crashed in early 2022 as pandemic headwinds slowed growth, but challenges appear to be primarily cyclical, with revenue growth ultimately accelerating again. You should.

3. Etsy

3. Etsy

Generally, operating an e-commerce marketplace is more profitable than selling directly online. Marketplaces can benefit from scalability and network effects, without having to spend on expensive physical infrastructure like fulfillment centers or worry about shipping costs.

Perhaps no pure e-commerce marketplace has been more successful than Etsy, which has carved out a niche for handmade and vintage products. It is particularly popular for jewelry, gifts, and stationery items such as wedding invitations, and has little direct competition in the artisan e-commerce space. Amazon has been running its own Amazon Handmade marketplace for several years, but it hasn't been able to gain much traction against Etsy.

Like other e-commerce stocks, Etsy's business has boomed during the pandemic, with sales up 2 as shoppers and would-be entrepreneurs turned to online channels to buy products and make money. It has more than doubled. The company's active seller base surged 72% in 2021 to 7.5 million people, demonstrating the rapidly growing global base of artisan entrepreneurs, which is expected to increase through network effects. It helps attract many shoppers.

Etsy is also expanding beyond its namesake website with acquisitions such as musical instrument resale marketplace Reverb. Depop, a marketplace for new and used clothing. Elo7 is a Brazilian artisan-based marketplace comparable to Etsy.

With these moves, the company aims to apply the same strategy that has worked well for Etsy to other niche markets, an approach that will significantly expand the company's addressable market over the long term. It gives investors another reason to support stocks.

4. MercadoLibre

4. MercadoLibre

E-commerce is not just a domestic phenomenon. Online shopping is also gaining ground internationally, with Latin America being the clear leader. mercadolibre (Meri -1.14%) operates in 18 countries in Latin America, but about half of its revenue comes from Brazil.

MercadoLibre's primary businesses include e-commerce marketplaces for both third-party and first-party sales. Delivery service through Mercado Envios. The suite of financial services under the Mercado Pago umbrella includes mobile POS devices, consumer digital wallets, and loans through Mercado Credito.

In some ways, MercadoLibre is like a hybrid of Amazon and Shopify, with some of the features of fintech companies, including: PayPal (PYPL 0.87%). This method has been successful in Latin America as well as in the United States. For example, Mercado Pago was originally conceived as a tool to power MercadoLibre's marketplace, but it has grown so quickly that most payments processed through the service now come from the MercadoLibre platform. Mercado Pago essentially functions as an independent business.

In 2021, Mercado Pago's total payment volume exceeded $75 billion, with market GMV of approximately $30 billion. MercadoLibre is growing rapidly and improving profitability, with 2021 revenue increasing 74% to his $7.1 billion. The company has avoided the slowdown that has hit U.S. e-commerce companies and continues its strong growth in 2022.

Considering that e-commerce in Latin America is still under-penetrated and the middle class is rapidly expanding, MercadoLibre still has a lot of potential to deliver high growth for years to come. There remains a large potential market.

Related investment topics

Should I invest?

Are e-commerce stocks right for you?

E-commerce stocks offer investors great upside potential, but they also come with risks. Many e-commerce companies are not profitable, and even those that are, generally make minimal profits. The sector's negative impact on the recovery from the pandemic also increases risks.

Most e-commerce stocks fell sharply in late 2021 and into 2022 as growth slowed past the start of the pandemic and market sentiment shifted away from growth stocks in hopes of higher interest rates. However, many of these stocks are trading at discounts to their historical valuations, meaning the drop could mean it's a great time to gain exposure to the sector.

Investors need to be aware that e-commerce is riskier than most sectors of the stock market, but the track record of these stocks shows that one successful e-commerce stock can change your life. You'll see that it can deliver transformative returns.