The e-commerce industry, which saw accelerated growth amid the pandemic, should keep growing even in a post-pandemic world given the convenience it offers and the permanent shift to online platforms. However, not all players in this industry are well positioned to capitalize on the industry tailwinds. Growing international footprint and diversified offerings make the prospects bright for Vipshop Holdings (NYSE:VIPS) and Amazon (AMZN). But on the other hand, Sea Limited (SE) and Jumia Technologies (JMIA) are struggling to stay afloat.The e-commerce industry was growing even before the pandemic, but it received a significant boost last year thanks to increased dependence of people relying on e-commerce to meet their daily living needs. In order to stay afloat, many traditional retailers moved to online platforms as well. Consequently, the industry has experienced favorable investor sentiment, as evident from Global X E-commerce ETF’s (EBIZ) 68.3% return over the past year, compared to SPDR S&P 500 ETF Trust’s (SPY) 47.4% gain over this period.
While the fast-paced reopening of the economy is leading to a shift in investors focus away from the pandemic winners, with the assumption that they may not be able to maintain their growth in the post-pandemic scenario, the demand for e-commerce is not expected to reduce anytime soon, given the convenience it offers. Moreover, many retailers have invested significantly on setting up their online platforms, and they should continue building these platforms even after the pandemic. The global e-commerce market size is expected to grow at a CAGR of 14.7% over the next six years.
As virtual shopping and contactless transactions are here to stay, Vipshop Holdings Limited (VIPS) and Amazon.com, Inc. (NASDAQ:AMZN) should deliver solid returns based on their expanding global footprint and strategic investments. But what about Sea Limited (SE) and Jumia Technologies AG (NYSE:JMIA)? Should they be avoided in the near-term owing to weak financials and cloudy growth prospects? I will answer that below