1) eCommerce Wins The Pandemic
When it comes to the pandemic and which sectors and industries have become winners the story invariably leads to eCommerce. eCommerce is the easiest, fastest, best way to get what you need while social distancing and seen a sustained double-digit increase in use over the past two quarters. And that’s a big deal. eCommerce grew in the mid-teens last year and will grow in the mid-20% range this year. And those gains are sticky. The switch to digital and the demise of brick&mortar has accelerated.
Industry-tracking firm Deloitte issued its holiday outlook for 2020 a few weeks ago and the outlook is good. Total retail spending will only grow about 1.5% but eCommerce will shine. Ecommerce is expected to grow 25% to 35% and that estimate may be low. Some companies have already reported triple-digit or near-triple-digit gains in their omnichannel offering and I see no reason why that won’t continue through the holidays.
2) Dick’s Sporting Goods Goes On Hiring Spree
Dick’s Sporting Goods (NYSE:DKS), on its own, is not a reason to bet big on eCommerce. It is, however, a great example of a developing trend that points to solid gains in eCommerce as a whole. The company’s results this year are underpinned by a focus on eCommerce that began even before the pandemic struck. Since then, eCommerce sales have soared nearly 200% because of social distancing and are fast becoming a pillar of company results.
In terms of gross sales, eCommerce was worth 30% of receipts versus only 12% in the previous year. While Dick’s will remain a brick&mortar staple it will be leaning more and more on eCommerce in the future. To that end, the holiday hiring plans include 9,000 new workers or 12.5% more than last year. The new hires will help in stores and specifically with curbside and in-store pickup.
3) Walmart Takes On Amazon
Walmart (NYSE:WMT) has long had its sights on Amazon and that battle is only getting hotter. The good news is that there is still plenty of market share in the eCommerce space for both to grow. The two most recent moves by Walmart include the launch of Walmart+, a premium service that is yet to compare with Prime, and a rash of new hires. The company is hiring 2,000 permanent full-time employees for its warehouses and distribution centers. The hires are earmarked for order-fulfillment and curbside delivery purposes. Regarding eCommerce, Walmart reported a 97% increase in digital sales across all businesses for the most recently reported quarter.
4) Amazon Price Target Hiked On Unprecedented Demand
Benchmark analyst David Kurnos just raised his price target on Amazon (NASDAQ:AMZN) to $3,800 citing things like “unabated, unprecedented demand”. That demand is seen in the company’s results, up 40% YOY in the last quarter, its plans to hire, and its growing network of warehouses.
In terms of hiring, the company is planning to hire more than 100,000 full and part-time employees for its warehouses and fulfillment centers which are 100% focused on eCommerce. In terms of warehouses, the company is planning to open 1,000 new fulfillment centers in small and mid-sized towns across America. With net shopping expected to grow, and eCommerce by roughly 30%, Amazon stands to nab a sizeable portion of the gains.
5) FedEx And UPS Are Distributing eCommerce
FedEx (NYSE:FDX) and UPS (NYSE:UPS) have announced 170,000 seasonal hires between them. There isn’t comparable data for FedEx but UPS says that 35% of its seasonal hires go on to become full-time employees. Regardless, the uptick in hiring is due to typical holiday demand increases that are underpinned by strong demand across eCommerce channels. Both companies reported 13.5% increases in gross revenues for the last quarter as well as doubling their consensus for earnings, a clear sign of the strength of the industry. As for the analysts, they’re predicting a multi-year run of revenue and earnings increase for both companies.
“Our results were better than we expected, driven in part by the changes in demand that emerged from the pandemic, including a surge in residential volume, COVID-19 related healthcare shipments and strong outbound demand from Asia,” said Carol Tomé, UPS chief executive officer.
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