Even though most e-commerce companies have already experienced the greatest boom their industry will likely ever see, there are still reasons to invest in them. This industry was heavily sold off during 2022 as businesses came up against tough comparisons. Though many have seen strong rebounds in 2023, plenty of reasons to buy them remain.

At the top of my list of top e-commerce stocks are Shopify (SHOP -0.05%) and MercadoLibre (MELI 0.29%). Read on to find out what makes these two great buys now and why they will be excellent investments over the next decade.

Shopify

At one time, it was thought that no small- or medium-sized business could compete with Amazon. However, tools from Shopify made it possible for smaller competitors to succeed.

Shopify's product suite includes all the basics to launch an e-commerce store, including inventory tools, credit card processing, and online store templates for just $39.99 per month. However, it also has products that allow its clients to step up their commerce game, including international products, point-of-sale solutions for physical retail, and a proprietary payments platform.

After reporting Q1 results and various business moves, investors sent the stock 25% higher. So what caused this jump?

Shopify had ambitious plans to offer a fulfillment network and acquired a vast warehouse network to achieve this goal. However, the company announced in its Q1 results that it is no longer pursuing this goal as it sold most of its logistics business to Flexport. Because Flexport is now the official partner for Shopify shipping, the transition should be relatively smooth and Shopify customers shouldn't see a difference.

This was a positive move for investors as the entire initiative wasn't in line with Shopify's software-based product line, which provides higher margins over the long term. On the flip side, Shopify sold its logistics investments at a heavy loss, as the sale is valued at $1.04 billion. Compared to its $2.1 billion Deliverr acquisition just under a year ago, not to mention all of its other investments like Six River Systems and the various warehouse network, this is a serious writedown.

But, the market is a forward-looking entity, and even though this likely wasn't the best use of capital to start, Shopify isn't burning a hole in the ground to make it work -- which is why investors viewed this move as positive.

Beyond its sale, Shopify reported a great quarter, with revenue up 25% to $1.5 billion. Still, the company reported an operating loss, losing $193 million in Q1. But after the spinoff of its logistics business, its margins should improve as the logistics industry is capital intensive. Also, Shopify announced another round of layoffs, affecting 20% of its employees -- a move that will boost margins over the long haul.

Of course, at 13.6 times sales, Shopify's stock isn't cheap. However, it is still below its pre-COVID valuation, showing investors they aren't drastically over-paying for the stock. But with its essential role in e-commerce for smaller competitors, it will continue to be a force in the industry for years.

MercadoLibre

Few stocks have managed to keep up their rapid growth rates post-COVID like MercadoLibre. MercadoLibre is the e-commerce leader in Latin America and has products for digital payments, consumer credit, an e-commerce website, and shipping logistics. Often dubbed "the Amazon of Latin America," MercadoLibre is one of the few companies living up to an ambitious comparison.

In Q1, MercadoLibre grew revenue at a 58% year over year currency-neutral (FX) basis. Digging in a bit deeper, MercadoLibre's commerce revenue growth accelerated to 54%, the highest figure in at least five quarters. This was coupled with fintech revenue slowing to 64% growth because MeracadoLibre is no longer aggressively growing its credit division (because it saw a rapid spike in past due debts).

Last year, it was fintech that powered MercadoLibre. This year, it's looking like commerce will take the reigns, with shipping fees and ad revenues increasing MercadoLibre's take rate (how much the company makes for every dollar spent on its commerce platform).

Unlike Shopify, MercadoLibre is already profitable, posting a solid 6.6% profit margin, up from 2.9% last year. Still, MercadoLibre trades at an expensive 105 times earnings because it's still working on optimizing itself for profits. Therefore, the price-to-sales ratio gives investors a better idea of how the valuation stacks up historically.

MELI PS Ratio Chart

MELI PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.

With MercadoLibre still well below its historical valuation range, investors don't need to worry about overpaying for the stock, even though it has risen over 50% in 2023. Plus, with Latin America's economic purchasing power likely to rise over the next decade, MercadoLibre is perfectly positioned to take advantage.