Another Black Friday is in the books, and this one, in the midst of a global pandemic, was probably the oddest in history. As expected, shoppers generally avoided brick-and-mortar stores because of the coronavirus pandemic on what's traditionally the busiest day of the year for retail businesses. Instead, many shopped online.
According to data from Sensormatics Solutions, in-store retail traffic in the U.S. fell 52% on the shopping holiday. Adobe Analytics, meanwhile, reported that online sales on Black Friday were up 22% to $9 billion.
Not surprisingly, e-commerce stocks were among the biggest winners from the shopping event, in particular Amazon (AMZN 0.53%), Etsy (ETSY 1.99%), and Shopify (SHOP +3.28%). Let's take a look at how each one performed, and what it means for the longer term.
Image source: Getty Images.
1. Amazon tightens its grip on e-commerce
Amazon has seen an unprecedented boom in sales ever since the pandemic really accelerated in late February. The company has hired more than 400,000 new employees this year, a record for any modern company, expanding its workforce to 1.2 million as it grows at a breakneck pace.
It wasn't surprising that Amazon's sales spiked on Black Friday, but it also managed to gain market share, strengthening its already-dominant grip on online retail. According to data from Edison Trends, Amazon saw its e-commerce market share over Thanksgiving and Black Friday increase from 51.5% a year ago to 55.7%, measured among a pool of retailers, grabbing market share from peers like Best Buy and Target. Amazon also saw a 30% increase in two-day spending during the period.
That Amazon is consolidating market share over its peers even when it's the biggest target is a testament to its strength. The company is also in an especially strong position because of its logistics operations, which should help it avoid some of the challenges associated with "shipageddon," or the constraints on logistics infrastructure expected this holiday season. CFO Brian Olsavsky noted on the most recent earnings call that Amazon had expanded its fulfillment and logistics infrastructure by 50% this year, which should help it handle the increase in holiday demand.
2. Etsy remains a market darling
Etsy, the online crafts fair, has been one of the biggest success stories in e-commerce this year, up about 260% year-to-date. The company said that it was planning its biggest Cyber Week sales event this year, which included discounts of up to 60% through Dec. 2. CEO Josh Silverman has also made the holiday season a priority for the company since taking over at the stock's nadir in 2017, prioritizing things like faster shipping times and more visible marketing. Both those efforts, along with the strong tailwinds from the pandemic, have paid off so far this holiday season. Etsy saw a 108% jump in sales during Thanksgiving and Black Friday, according to data from Edison. That performance continued an ongoing trend, as Edison also reported Etsy's sales being up 108% from Nov. 1 to Nov. 24.
Investors shouldn't be surprised by those numbers: The company's gross merchandise sales jumped 119% in the third quarter, meaning the early holiday results are a continuation of existing growth patterns. This holiday season is especially valuable for Etsy as an opportunity to capture new customers, so expect the company to spend on marketing in the fourth quarter, as this is a unique opportunity for it to grow its customer base for the long term.
3. Shopify continues to surge
Shopify, the leading provider of e-commerce software allowing online sellers to manage everything from websites to order taking to payments and marketing, has also seen a surge in business, with revenue jumping near triple-digit percentages in the second and third quarters. New online sellers and brick-and-mortar retailers have swarmed to Shopify to take advantage of the spike in online demand.
Shopify said it had $2.4 billion in sales on its platform globally on Black Friday, a 75% increase from a year ago, or 80% of its sales from the entire holiday weekend a year ago. The top product categories were apparel and accessories, health and beauty, and home and garden, showing broad-based interest from online shoppers. Shopify President Harley Finkelstein said, "With more consumers than ever shopping online this year, we anticipate this weekend being one of the biggest e-commerce events in history, as consumers vote with their wallets and support the independent and direct-to-consumer businesses they love."
Like Etsy, Shopify has a unique opportunity in the pandemic to build out its seller base and grow demand, and investors should expect it to make the most of it.
