Top-Notch Digital and Direct Marketing Retail Shares to Watch in 2024
Top-Notch Digital and Direct Marketing Retail Shares to Watch in 2024
More and more shopping is shifting from traditional brick-and-mortar stores to online commerce. This shift is lowering the barriers for retail businesses, leading to a surge in entrepreneurs selling goods online. Online sales are projected to grow faster than physical store sales for several years.
Investing in internet and direct marketing retail stocks can be a wise move to capitalize on this trend. This market segment supports various business models, such as traditional retail, which combines physical stores with online sales, direct-to-consumer retail without any physical presence, and online marketplaces that facilitate sales between buyers and sellers online.
Top Stocks
Top Internet and Direct Marketing Retail Stocks in 2024
1. Chewy
1. Chewy
Chewy (CHWY 1.95%) is a prominent name in the rapidly growing online market for pet products. E-commerce has doubled its market share in the pet industry since 2018 and is expected to continue growing. Consumers are investing more in their pets than they did a decade ago, and shopping online for pet products is easier than for most other merchandise categories.
Chewy is capturing a significant share of this market due to its faster growth than its competitors. The company has over 20 million active customers, and more than three-quarters of its sales come from Autoship subscriptions. Chewy has expanded beyond its successful e-commerce business by launching a retail ad network and entering the healthcare services sector. Both these new ventures present high-margin opportunities to supplement the relatively low-margin online retail business.
2. Etsy
2. Etsy
Etsy (ETSY 0.88%) is an online marketplace for handcrafted goods and vintage items. Etsy's unique focus separates it from other online marketplaces, making it more efficient at attracting both makers and buyers.
As a marketplace business, Etsy has the advantage of generating profits. Retail is known for its low margins, but Etsy generates relatively attractive margins by charging fees to sellers for listing, promoting, and selling items. Etsy is investing in expanding its services, boosting customer loyalty, and entering new markets, which positions the company for growth. However, investors should be aware that the discretionary nature of the items sold on Etsy and its other marketplaces makes the company highly cyclical.
3. The RealReal
3. The RealReal
The RealReal (REAL 3.04%) is an online marketplace for used luxury goods. The company takes items on consignment, authenticates them, and sells them. The RealReal aims to bring the high-touch experience of local boutique shopping to e-commerce.
This focus comes with additional costs compared to more general marketplaces that are starting to explore the luxury goods space. The company has faced financial pressure in recent years, forcing management to focus on higher-value inventory while cutting investments. Despite these challenges, The RealReal boasts a strong customer base, with more than half of its consignors also being buyers. This tight network provides the company with a solid foundation to regain strength.
4. Booking Holdings
4. Booking Holdings
Booking Holdings (BKNG 0.75%) owns a portfolio of travel agency websites that list hotels and vacation rentals, airfare, rental cars, experiences, and restaurant reservations. The company's extensive listings of hotel accommodations make its websites among the top online destinations for travelers.
Booking is focused on offering a fully connected trip, taking care of everything from flights and accommodations to dining and activities. Its huge network of hotels around the world puts it in a strong position to attract customers to its wide range of bookable options.
5. Shopify
5. Shopify
Shopify (SHOP -2.4%) provides small online retailers with the tools needed to create an e-commerce storefront on their own domain. Unlike marketplaces, Shopify gives business owners an independent piece of the web to sell their goods and services. Shopify generates revenue through subscriptions to its software and additional services called merchant solutions, which include payment processing.
Shopify is seeing strong adoption by merchants while existing businesses retain its services. This has resulted in high growth in its monthly recurring revenue. Add-on merchant services also benefit from growing merchandise sales on its platform. Shopify can be highly cyclical, given that most of its customers are small and medium-sized businesses.
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6. DoorDash
6. DoorDash
DoorDash (DASH 1.37%) is the leading food delivery company in the U.S., with a 67% share of the U.S. food delivery market. DoorDash also operates in Canada and Australia. The company has expanded beyond restaurant delivery to include grocery and convenience items, as well as building an advertising business based on its strong network of stores and customers.
In variousAmerican markets, DoorDash, as a prominent figure, establishes a robust web of eateries, delivery personnel, and clients. This intricate setup fosters a beneficial cycle for the company. However, DoorDash faces potential challenges from other competitor apps that offer an extensive assortment of services.
Adam Levy holds stake in Booking Holdings. Our platform advocates for and invests in Booking Holdings, Chewy, DoorDash, Etsy, and Shopify. Our platform adheres to a disclosure policy. [Disclosure policy link]
The shift towards online commerce has led to an increase in investing opportunities in internet and direct marketing retail stocks. Chewy, a leading pet products online retailer, has seen rapid growth in its market share and has expanded into new ventures to supplement its low-margin online retail business.
Etsy, an online marketplace for handcrafted goods and vintage items, generates profits through fees to sellers and is investing in expanding its services and entering new markets. Although Etsy is highly cyclical due to the discretionary nature of its items, its strong customer base provides a solid foundation for growth.