The e-commerce market saw a huge growth spurt during the pandemic. As a result, the industry faced major headwinds as growth normalized in 2022 and 2023. However, the overall market is still growing at a significant clip, benefiting these top e-commerce stocks 2024 picks.
In terms of the addressable market, there is still plenty of growth left. To put things into perspective, e-commerce share of worldwide total retail sales is just 20%. Thus, there is a secular growth opportunity as more shoppers shift online.
Gradually, this shift will continue due to the value proposition offered by e-commerce over physical retail. Indeed, e-commerce retailers have enhanced convenience by providing faster delivery times. For instance, Amazon (NASDAQ:AMZN) offers same-day delivery for Prime customers. The other advantage is their breadth of selection that brick-and-mortar stores cannot match.
Today, it is evident that the future of retail will be online. Physical stores can hardly match the convenience, value and breadth of selection of e-commerce players. According to Boston Consulting Group (BCG), global e-commerce will grow 9% annually through 2027. These e-commerce stocks 2024 will ride that secular shift.
MercadoLibre (MELI)
This e-commerce retailer is a dominant force in its Latin America market, where it has been crushing competition. Having the first mover advantage, the company has consolidated market share and is a leader in key South American markets. Now, it is combining its dominance with innovation to drive growth.
Looking at market share, MercadoLibre (NASDAQ:MELI) dominates the e-commerce market across Latin America. It is the leading player in Brazil and Argentina, with 27% and 68% market share, respectively. Even in Mexico, one of its most competitive markets, it is number one with a 15.4% market share.
The Amazon of Latin America is one of the top e-commerce stocks 2024, given the revenue acceleration it’s seeing. For instance, net revenue growth rates in its largest market, Brazil, accelerated in Q3 2023 to 40% year-over-year from 23% in Q2 2023. Besides, overall e-commerce growth has also accelerated in the last five quarters, from 20% in Q3 2022 to 45% in Q3 2023.
Unique active users on its platform have also surged. For the nine months ending September 2023, it had 167 million users compared to 127 million in the prior year. MercadoLibre continues to invest to drive growth. Last year, it launched MELI+, its loyalty program, in Brazil and Mexico, offering free shipping on millions of products. Furthermore, it continues to invest in its logistics network, building new fulfillment centers to increase capacity and support same-day shipping.
Management believes the best is yet to come and is looking to capitalize on growth opportunities. With commerce revenues growing 45% in Q3 2023, MELI stock isn’t easing up. Buy the stock to capitalize on the underpenetrated Latin American markets.
PDD Holdings (PDD)
For good reason, PDD Holdings (NASDAQ:PDD) has shot into the limelight over the past year. Its shopping app, Temu, has taken the e-commerce market by storm. In markets like the U.S., it is gaining significant traction and upsetting the status quo.
The Chinese e-commerce giant is using the same playbook it used to gain a foothold in Chinese online retail. By offering extreme discounts and using viral marketing, it is increasing Temu’s active users in the U.S. and other developed markets. As it gains scale, it is leveraging economies of scale to lower prices further and offer more convenience.
Already, this strategy is paying off in the U.S. According to a Reuters report, Temu is grabbing market share from dollar stores. The report noted that the shopping app now has a 17% market share in the discount store category. As has been evident for a few months already, social media influencers have popularized the app by highlighting its steep discounts.
PDD Holdings is attracting customers through its significant promotional activity aimed at bargain hunters. These efforts have yielded results, with the e-commerce giant achieving tremendous financial growth. In Q3 2023, earnings crushed estimates, with revenue soaring 94% YOY.
And the company isn’t resting on its laurels. To garner more customers, it has launched a multibillion-dollar internet advertising campaign in the U.S. Already, the firm has over 70 million users, a huge feat considering it entered the U.S. in September 2022.
Temu will be the main revenue growth catalyst for PDD Holdings in its international expansion drive. The shopping app is now available in over 40 countries. As the company repeats its successful strategy, PDD stock will soar.
Shopify (SHOP)
After divesting its logistic business last year, Shopify (NYSE:SHOP) is one of the top e-commerce stocks 2024 to buy. The firm has returned its focus to what it does best: supporting online commerce and merchants.
The foray into logistics, while meant to improve the overall value proposition of the platform, was misguided. It led to increased operating expenses due to the build-out of the logistic network. Also, it put Shopify in direct competition with Amazon, a strategic risk, given Amazon’s dominance and resources.
After divesting the logistic business, profits have improved materially. Third quarter 2023 results highlighted progress on the profitability front. Gross profit was $901 million, representing 36% YOY growth. At the same time, gross margins improved from 48.5% in the prior year’s quarter to 52.6%.
Shopify is back to its core business of helping merchants succeed and, hence, one of the best e-commerce stocks 2024 to buy. It is innovating and improving solutions to facilitate cross-border trade for merchants. Furthermore, it’s venturing into partnerships like the integration with Buy with Prime to improve the merchant experience. And it’s reaping the rewards with revenues growing 25% in the last quarter.
According to Gartner, Shopify is a digital commerce leader. It powers e-commerce for top brands such as Supreme, Heinz, Kylie Cosmetics and SKIMS. It is positioned for secular growth as more brands turn to e-commerce to reach more customers worldwide.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
