The -1x investment would have yielded gains of almost 36%, as opposed to losses of nearly 10% and 30% from holding NDX and TSLA respectively.
Amazon: The Bellwether
Amazon – whose performance has long mirrored the trends seen in NDX – was considered by many analysts in the beginning of 2020 to have no more room to grow, owing to its lacklustre fundamentals. The fall of stock markets following the pandemic’s effects worldwide certainly didn’t help matters. The stock collapsed in line with NDX until the bottom on March 23rd of this year. Following this, the leading companies constituting NDX began to improve their performance as the global economy adjusted to current conditions. The market rose nearly 9% in the week following the 23rd while AMZN rose only 2%.
However, it was then reported that millions of people in the U.S. and abroad had to turn to online marketplaces to fulfil their essential requirements like groceries, food, toiletries, and medicines in the face of lockdown measures, shortages at local stores due to panic buying, etc. At a time when companies were cutting pays and jobs, AMZN went on to hire more and more staff, eventually leading to the hiring of 100,000 warehouse and delivery workers.
Amazon’s Competition
Amazon controls 45% of the U.S. electronic marketplace share alone which is expected to grow to 50% by 2021. Its closest competitor isn’t a website but the “big-box” department store Walmart (NYSE: WMT) which has witnessed a 40% year-on-year growth and is the second-most visited website for online sales. Walmart also owns 77% of Flipkart, India’s largest online retailer with over 100 million registered users.
eBay (NASDAQ: EBAY), which was the pioneer in consumer-to-consumer (C2C) online selling, has been evolving into a business-to-consumer (B2C) selling space as well. In terms of marketplace website visits, it stands second to Amazon with nearly 20% of market share.
Alibaba (NYSE: BABA) specializes in wholesale selling online and went on to diversify into B2C, C2C and multinational brand sales under distinctive businesses. Today, Alibaba’s various businesses account for nearly 58% of all online retail sales in China.
Rakuten (OTC: RKUNY) holds nearly 10% of the electronic marketplace share in Japan and has been making acquisitions in France, U.K. and the U.S.
In addition, with retail e-commerce sales expected to reach nearly $5 trillion in 2021, there are nearly 24 million stores selling products online today. Competition is increasingly specializing along product categories, which suggests that further consolidation of online marketplaces would be a tough preposition.
A 3-year comparison of these USD-denominated instruments reveals that competition is clearly among two companies in the near future.
