The best stocks for online shopping.
The downfall of American stalwarts like Sears Holding Corp. (ticker: SHLD), J.C. Penney Co. (JCP), Toys R Us and others has made it obvious that a major shift is taking place in the retail world. Most successful modern retail companies must have an online sales presence to survive. Some companies have been quick to embrace the shift to digital sales, while others have fallen behind the times. For investors betting that the e-commerce boom is just getting started, here’s a look at the eight retail stocks with the biggest share of U.S. online sales, according to eMarketer.
Amazon and its stock are the quintessential examples of the power of the internet. It should come as no surprise that Amazon holds the largest share of the U.S. e-commerce market, accounting for an estimated 49.1 percent of all U.S. online sales in 2018. Yet despite AMZN stock climbing more than 2,600 percent over the past decade, Jefferies recently estimated Amazon’s core retail business could push its stock higher by another 50 percent in the next two years and will be generating $200.7 billion in annual revenue by 2021.
Long before Amazon became the clear leader in U.S. online sales, the eBay online auction platform was the best place for Americans to shop online. Way back in 1996, there was $7.2 million in goods sold on eBay. In 2017, that number grew to $88 billion in gross merchandise volume. While eBay is a distant second to Amazon with only 6.6 percent market share of U.S. online sales, the company has more than 170 million active users across its namesake site and its other online businesses, including Stubhub and Half.com.
Apple generated $18.3 billion in online sales last year. In fact, Apple’s 24 percent growth in online sales outpaced even Amazon’s 20 percent growth. Apple will account for an estimated 3.9 percent of all U.S. online sales in 2018. If early demand for the new family of iPhones is any indication, those sales numbers could be even higher than anticipated. Surveys by Loup Ventures and RBC Capital suggest iPhone buyers are buying more high-end iPhones than ever before, and the iPhone upgrade cycle appears to be shortening.
Walmart is the best example of a traditional, non-tech, brick-and-mortar retailer that has completely committed to embracing e-commerce. Walmart acquired e-commerce company Jet.com for $3.3 billion in 2016 and rolled out a redesigned Walmart.com back in May. In the most recent quarter, Walmart reported 40 percent growth in online sales after generating $11.7 billion in online sales in 2017. Walmart is expected to make up 3.7 percent of all U.S. online sales this year, but those growth numbers suggest its market share is on the rise.
Home Depot (HD)
Over a seven-year stretch, Home Depot has grown its online sales from $500 million to $5 billion. As of earlier this year, online sales represented more than 6 percent of Home Depot’s total sales, and digital sales are still growing at more than 20 percent annually. Home Depot recently added in-store lockers so customers can order items online and then pick them up at local stores, and nearly half of items ordered online are now picked up on-site. Home Depot’s share of U.S. online sales is expected to reach 1.5 percent this year.
Best Buy Co. (BBY)
Of all the companies included in this list, Best Buy may have undergone the most aggressive transformation to stay relevant in the digital age. In addition to investing heavily in its website, Best Buy added in-store fulfillment options and Geek Squad tech services to differentiate its shopping experience from other electronics stores. In the most recent quarter, online sales were up 10 percent to $1.21 billion, and online revenue now represents an impressive 14 percent of total revenue. Best Buy will make up an estimated 1.3 percent of all U.S. online sales this year.
Investors may not recognize the name Quarate Retail, but they will certainly recognize the names of its retail brands, such as HSN, QVC and Zulily. Earlier this year, Liberty Interactive rebranded itself as Quarate as part of its efforts to focus on a “third way to shop” that involves a combination of traditional TV-based sales, mobile sales and e-commerce. Quarate expects to generate $7.5 billion in online sales and $4.7 billion in mobile sales in 2018, giving it 1.2 percent of the total U.S. e-commerce market.
Macy’s hasn’t exactly been thriving, but it’s aggressive push into e-commerce has helped it survive a steep decline in U.S. shopping mall traffic. A 50 percent increase in app sales in the first half of 2018 helped offset the difficult mall environment. Macy’s expects to have its “Buy Online, Pick Up in Store” feature available at nearly all of its locations by the end of the third quarter and said online sales growth was in the double digits in the second quarter. Macy’s will account for about 1.2 percent of all U.S. online sales this year.
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