E-commerce stocks are up in 2020 as the COVID-19 pandemic has sped up the online shopping shift. Many e-commerce companies now need to turn these initial purchasers into long-term customers to keep their revenue and share gains going forward.
Wayfair Inc: Shares of Wayfair Inc (NYSE: W) are up over 200% in 2020.
Third-quarter revenue grew 67% year-over-year to $3.8 billion for Wayfair. Active customers grew 51% year-over-year to 28.8 million in the third quarter.
The revenue growth in the third quarter and overall revenue slowed from the prior quarter. Second-quarter revenue growth was 84% year-over-year and second-quarter revenue was $4.3 billion.
In the third quarter, 11.3 million repeat customers placed orders, which was up 84.4% year-over-year. Repeat customers represented 71.9% of third-quarter revenue, which was up from 67.3% in the prior year’s third quarter.
The third-quarter business from repeat customers was also an improvement from the second quarter, which saw 67.4% of revenue from repeat customers, which could be a strong sign of Wayfair maintaining growth and its new customers.
Analysts remain bullish on Wayfair, with several price targets over $300.
Related Link: Which E-commerce Stock Will Grow The Most By 2025
Etsy: Handmade and craft e-commerce company Etsy Inc (NASDAQ: ETSY) saw an influx of new buyers to its platform, especially those seeking homemade masks during the COVID-19 pandemic.
The company reported third-quarter earnings and revenue that beat the Street consensus. Several analysts raised price targets after the quarterly report.
Third quarter revenue increased 128% year-over-year. Active sellers increased 42% year-over-year and active buyers increased 55% year-over-year for the third quarter.
Etsy reported that 50% of its 138 million lifetime buyers have made a purchase on Etsy in the last year.
The third quarter for Etsy saw 9.6 million new buyers and 5.2 million reactivated account buyers.
Customers who made purchases six times and spent over $200 in the last 12 months increased 104% in the third quarter. Customers who made purchases two or more times in the last 12 months grew 70% in the third quarter.
These figures show Etsy could be seeing strong long-term growth from repeat buyers.
A Needham analyst said the company has grown its total addressable market from $100 billion to in the trillions, as its market share gains are coming from more traditional product categories.
Etsy shares are up more than 190% in 2020.
Overstock.com: Shares of Overstock.com Inc (NASDAQ: OSTK) are up over 700% in 2020. The company has seen an influx of new customers using its platform during the COVID-19 pandemic.
In the third quarter, Overstock reported a 111% year-over-year revenue increase to $732 million.
New customers grew 141% year-over-year in the third quarter.
“These new customers are making repeat purchases at an increasing rate. Heading into the fourth quarter, I am as confident as ever in our retail business maintaining sustainable, profitable market share growth,” said Overstock CEO Johnathan Johnson.
The company reported it is seeing a “substantial year-over-year increase in our website traffic and number of new customers.”
Benzinga’s Take: All three of the mentioned stocks are up over 190% year-to-date. These companies have seen strong new customer inflows due to a rapid switch to e-commerce.
These stocks could produce further returns if they can keep up momentum and maintain the new customers they gained as long-term buyers.
The growth of repeat buyers for Wayfair could be a bullish sign and could be the key figure to watch in the next quarterly earnings report.
Photo courtesy of Etsy.
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