Retail is a broad, massive business with a global market worth an estimated $27 trillion, which leaves plenty of room for innovative companies to come in and create immense wealth for investors. Could you do well owning a veteran e-commerce company like Amazon over the long term? Of course, it's been a proven winner for many years.
But if you're looking to find what might become the next Amazon, What do you do? Well, you're in luck. Here are three e-commerce companies that are less proven, but each stock has the potential to help make you a fortune over the years to come.
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1. Opendoor Technologies
Real estate is probably not the first thing to come to mind when someone says "e-commerce," but that's exactly what real estate technology company Opendoor Technologies (OPEN -0.23%) is trying to do. It pioneered the iBuying business, which buys homes from people with cash offers through its smartphone app or website. Opendoor is turning homebuying into a process that resembles an e-commerce transaction.
To be clear, what Opendoor is trying to do looks pretty challenging. Buying homes at a commercial level costs billions of dollars, and it's hard to balance offering enough to get people to sell while having room to make a small profit when Opendoor resells the home. Zillow tried to compete with Opendoor and found the iBuying business too challenging, quitting altogether.
But the upside is enormous if Opendoor can succeed. The company sold 5,988 homes in the third quarter of 2021 for $2.3 billion in revenue. In the U.S. alone, 6 to 7 million homes are sold each year. Investors could be looking at a massive company down the road in a scenario where Opendoor even captures 5% of annual home sales over time.
2. Global-e Online
Cross-border transactions, where people in one country do business with a company in another, is one of the fastest-growing areas within e-commerce. According to AllTheResearch, cross-border e-commerce could grow 17% per year to $2.2 trillion worldwide by 2026. Global-e Online (GLBE 0.78%) offers software tools that make cross-border commerce easier.
For example, say you want to shop from an online store in Latin America; if you don't speak Spanish, you could have difficulty reading the website. Your money may also be in a different currency. What happens if you need to return a product? Global-e Online takes care of all of these hassles, taking a percentage of the transaction as revenue.
Global-e just wrapped up its 2021 fiscal year and grew gross merchandise volume (GMV), the total value of transactions on its platform, 87% year over year to $1.45 billion. In other words, Global-e's GMV represents less than 1% of its potential addressable market.
There will likely be more competition over time. Still, companies like Shopify (SHOP 0.14%) have chosen to invest in Global-e and partner with them versus creating their own solution, which shows the value of Global-e's services.
3. Shopify
E-commerce has been around since the internet became mainstream, but only in the past decade has it truly been democratized, making it something that any business can participate in. This is largely thanks to Shopify, which offer software tools that enable merchants to build an online store. It charges a subscription fee for its software tools and offers merchants a handful of additional services, like payment processing.
The company's collective GMV was $175 billion across all of its merchants in 2021, making it second only to Amazon in e-commerce market share in the United States. However, Shopify does business with merchants in more than 175 countries, so it's a global business that could continue growing over the years to come. Most companies cannot afford the expertise and cost to build an online store from scratch, so they turn to Shopify.
Shopify is already a proven winner, certainly more than Opendoor or Global-e Online, but the stock's recent sell-off has brought it down 64% from its all-time highs. The stock's market cap is now $82 billion, so its potential growth could be enough to become an eventual multibagger from its current stock price. Shopify's ability to acquire merchants and then grow with them makes it a company that could still see years of double-digit revenue growth.
