E-commerce emerged as one of the more intriguing businesses of the early 21st century. A handful of companies achieved regional dominance in the space. They also benefited from pivots into different businesses where they succeeded, making the largest of these companies conglomerates.

However, the business environments and technologies underlying these businesses have seen rapid changes. In light of this changing landscape, investors would do well to shift from certain internet and direct marketing retail stocks to others -- and one move might be particularly prudent.

Stock to sell: Alibaba

The e-commerce conglomerate most likely to disappoint shareholders is Alibaba (BABA -1.40%). This might surprise some investors as founder Jack Ma's vision turned Alibaba into the largest e-retailer in China.

Its plan to break up into six different segments could bolster the stock. The segments -- which include businesses dealing with digital commerce, digital entertainment, and cloud intelligence -- could mean the sum of the parts becomes more valuable than the former whole.

However, other factors could inhibit investors from capitalizing on the breakup. For one, Chinese companies like Alibaba have faced the threat of delisting if they do not comply with the SEC's audit requirements. U.S. and Chinese regulators agreed to a deal in 2022 that brought Chinese companies into compliance last year, but with tensions continuing between the two governments, the political risk remains a concern.

Moreover, growth has slowed dramatically. In the fourth quarter of fiscal 2023 (ended March 31), revenue of $30 billion grew only 2% year over year. Revenue for fiscal 2023 grew at the same rate, so the recent results are not a one-time occurrence. Alibaba reported a GAAP profit in the quarter, earning a net income of $3.2 billion. Still, that came primarily from an increased value in equity investments.

Admittedly, revenue growth could improve, a factor that might make Alibaba's current price-to-sales (P/S) ratio, which stands at 1.8, appear tempting. But with the political risks surrounding Alibaba, investors are likely better served by looking elsewhere for returns today.

Stock to consider: Sea Limited

Investors should remember that China is not the only economic hub in East Asia, and the future of one Singaporean conglomerate looks exceptionally bright. Sea Limited (SE 0.28%) started as the gaming company Garena in 2009, which is still the name of its gaming segment today.

In 2015, it expanded into e-commerce, becoming the leading e-retailer in Southeast Asia through its Shopee segment. Today, Shopee accounts for 70% of company revenue. Moreover, its fastest-growing division, Sea Money, has become an increasingly important company in the fintech space, giving access to digital money to its primarily cash-based customers.

Like other retail and gaming companies, Sea Limited experienced a massive surge in the early months of the pandemic amid a temporary bump in indoor activity. Unfortunately, the subsequent bear market reversed nearly all of those gains, and the stock trades at a discount of more than 80% from its all-time high.

Some of Sea Limited's struggles continue. The decline of its popular Free Fire game and its emergence from the pandemic has pressured Garena, bringing about a 43% revenue decline year over year in the latest quarter.

Still, Shopee revenue growth of 36% and a 75% surge in Sea Money's revenue led to overall revenue of $3 billion, an increase of 5%. And because Sea reduced the cost of revenue and operating expenses during that time, it reported a quarterly GAAP profit. Its net income was $87 million, improving from the $580 million loss in the year-ago quarter.

Indeed, the stock is still down more than 25% over the last 12 months. However, it has risen more than 40% from its 52-week low, and its P/S ratio of 2.7 is near all-time lows. If the gaming segment begins to stem its declines, Sea stock could regain the momentum that boosted it during the pandemic.