These Companies Are Tapping Into The Multi-Trillion-Dollar E-Commerce Industry

Let's face it – everyone is connected to their phones, or glued to their laptops or tablets. Consumers are always connected and are able to shop online for nearly everything they need. It’s efficient and convenient enough for consumers to shop online nowadays, and as the number of global internet users grows, the e-commerce industry should thrive.

E-commerce companies like Amazon.com Inc AMZN, Shopify Inc SHOP and BigCommerce are set to grow their revenues and earnings significantly over the medium- and long-term, due to the projected growth of the industry.

Let’s take a look at the projected growth of e-commerce customer bases and transactions, as well as how some of the key players in the market are positioned to benefit from the e-commerce business boom.

E-Commerce Sales Set to Grow to Over $4 Trillion

The ongoing global expansion of the Internet has fueled the transformation of world trade, as well as transactions in stores. E-commerce is simply buying and/or selling products through the internet, and it serves as a more efficient and convenient way of shopping. Now, there are several e-commerce solutions out there, but the popular types are business-to-business (B2B), enterprise, small business, business-to-consumer (B2C) and consumer-to-consumer (C2C).

According to Statista, over 40% of global internet users purchased products online, and this number is projected to grow to 57.6% by 2019.

Source: Statista

The potential growth in the number of digital buyers across the globe should fuel the continued growth of retail e-commerce sales. Between 2014 and 2020, worldwide e-commerce sales are set to grow from $1.336 trillion to $4.058 trillion, according to Statista.

Check out the forecast of worldwide e-commerce sales between 2014 and 2020, below.

With the immense projected growth rates in the e-commerce space, the brick-and-mortar landscape is becoming obsolete. Pure e-commerce companies have a one up on traditional retailers looking to get into the space, due to the difficulty in figuring out the best user and brand experiences. Retailers may start adapting to the changes in technology, in an attempt to compete for customers. In turn, this could drive companies to leverage solutions from well-established e-commerce companies.
 

E-Commerce Companies Set to Grow at a Fast Pace

Amazon is one of the world’s largest e-commerce companies in the world, and according to Slice Intelligence, Amazon’s sales accounted for over 50% of online sales growth in the U.S., in 2016. Amazon has set itself apart from other companies, and its stock price shows the meteoric growth potential e-commerce companies could potentially have, if they go public.

Here’s a look at AMZN on the monthly chart.

Source: TradingView

Although Amazon.com is a leader in the space, some retailers are in direct competition with the company, and they might not want to employ the e-commerce giant’s solutions. With that in mind, retailers often look to companies, such as Shopify , which is a software as a service (SaaS) e-commerce platform made to enable merchants to build their own e-commerce properties.

Shopify’s platform was in direct competition with Amazon’s Webstore platform as recently as 2015. However, Amazon Webstore owners were soon able to seamlessly migrate their online stores to Shopify, indicating that Amazon had become open to partnering with other e-commerce companies. Soon thereafter, Amazon began to tell online merchants using its Webstore platform that the service would be shut down. Although Amazon discontinued its platform service, it did recommend online merchants use Shopify’s platform.

Nowadays, there are signs that Shopify is shifting away from the SaaS subscription revenue model. Today, the company also offers its own merchant payment processing solution and subscription solution. For Shopify, there has been a paradigm shift in the way the company has been generating sales, with the payments processing solution growing at a much more rapid pace than the subscriptions model.

With the subscriptions model, consumers pay a periodic payment in order to gain access products or services. On the other hand, a transactional model is one in which the consumer would pay as they used the products and services.

Shopify went public in 2015, and the stock has been soaring significantly, since its initial public offering. SHOP was up over 60% in 2016, and as of June 12, 2017, SHOP more than doubled since the beginning of the year. Here’s a look at Shopify on the daily chart.

Source: TradingView

There’s one private e-commerce company that could go public and have the same performance as SHOP, if it follows a similar trajectory.

BigCommerce is an e-commerce platform that was founded in 2009, and it features a similar range of products and construction to Shopify. However, the company may provide many value-added benefits over Shopify, which include comprehensive support, SEO, native discounting and customer segmentation, as well as lower monthly costs for merchants.

According to Ipsos, BigCommerce’s e-commerce software enables retailers to grow by nearly 30% year over year, which is nearly twice as fast as the industry average. Some companies that are using BigCommerce’s innovative technology are Gazelle, Toyota, Payless, Dorco, U.S. Patriot Tactical, Taser and Gibson Guitars. With all these corporations leveraging its solutions, the company has generated over $8B in merchant sales and secured $125M in funding.

This suggests that the company’s platform may be a cost-efficient alternative to other market leaders. According to the company, it provides the best return on investment (ROI) in the industry, due to its quick setup time and cost efficiency. BigCommerce allows merchants to launch new sites in half the time of on-premise platforms, and its costs are 75% lower than the total cost of on-premise enterprise e-commerce solutions such as Magento.

The company’s enterprise solution provides tools for businesses to create stores and grow sales, as well as create an engaging user experience. Moreover, this solution has some of the latest features and best practices in the industry, which includes better and faster search rankings, page loads and higher conversion. With its enterprise solution, online merchants are able to scale their businesses and sell more of their products and services. Additionally, businesses could leverage this technology to convert more visitors, and in turn, this should increase the platform’s revenues and earnings.

The company’s solutions could take some of the market share from other e-commerce platforms. For example, unlike Shopify, BigCommerce does not charge a fee for use of its preferred payment solutions. Users would gain access to some of the best gateways at the best rates, with digital wallets like Amazon Pay, Apple Pay and PayPal, which can help to boost mobile conversions and point-of-sale solutions in non-virtual environments.
 

Final Word

We’ve seen the meteoric rise of Amazon and Shopify, and it seems like e-commerce is here to stay and could be worth over $4T by 2020. Since many of e-commerce companies operate on the same timeline, analysts and investors are projecting e-commerce platforms as potential cash cows within the foreseeable future due to the projected sales of the industry. Consequently, If current trends are anything to go by, the company will likely conduct its initial public offering (IPO) sometime during 2018, and if it follows in the same path as Shopify and becomes publicly traded, BigCommerce could potentially generate attractive returns similar to those of Amazon and SHOP.