When domestic investors think of e-commerce companies, Amazon is often the first name that comes to mind -- and rightly so. It dominates North America's online shopping landscape, after all, accounting for more than one-third of the U.S. e-commerce market. It's doing rather well in Europe too.
The online shopping business is evolving as one might expect it too, though. Amazon's competitors like Walmart and Shopify are becoming, well, more competitive if only by virtue of offering a solution online sellers increasingly need. Anyone operating in this space now has to step up their e-commerce game.
Enter Global-e Online (GLBE 2.44%). This up-and-coming company offers brands a simple, much-needed solution that opens the door to a growth opportunity which would have otherwise remained difficult to tap. More important to investors, Global-e Online shares will likely continue their recovery from last year's setback as more and more investors see what it can do with its technology.
Cross-border B2C is finally easy
Even if you're a regular online shopper, you may not have noticed or thought much about it. But, when you buy goods online in the U.S., they're almost always shipped from within the country by a domestic seller or organization with an official U.S. presence.
Practicality is a key reason this is the case. Even if a buyer and seller are willing to do cross-border business with one another, though, there often are impasses. The logistics of making payments to overseas sellers -- as well as the logistics of delivering an item from one country to another -- can be complicated to the point of not being worth the cost and trouble.
That's where Global-e Online comes in. It explains of itself:
"We pave the way for brands to expand globally with simplicity, breaking through the cross-border barriers that prevent international shoppers from purchasing, enabling retailers to sell to and from anywhere in the world, and global consumers to buy online seamlessly."
Think Shopify, but for businesses that enjoy lots of overseas demand for their products. Other companies offer cross-border B2C (business to consumer) solutions, for the record. It's just that none of them seem to do it quite as well or as seamlessly as Global-e Online. The company's impressive list of clients using its online store platform says as much. Brands including Hugo Boss, Pepe Jeans, and Marc Jacobs are all customers, the latter of which experienced a 130% improvement in international e-commerce once implementing Global-e's tools.
This is just a taste of what brands could do, however, now that the option to sell goods overseas is available, and simple.
In the right place at the right time
Businesses have been selling goods to foreign buyers for centuries now. But these buyers generally haven't been individuals. Even with plenty of international freight delivery service options, most overseas sales are still made to retailers and distributors, who then get these goods into the hands of localized customers. It can be a complicated and costly process.
As is always the case, though, time and technology are leading to new ways to make the international sales process more cost-effective. Selling directly to foreign customers is now a feasible option.
To this end, market research outfit Spherical Insights believes the cross-border B2C e-commerce market will swell from less than $900 billion last year to more than $8 trillion in 2032. This growth outlook jibes with others from Polaris Market Research, the United States' International Trade Administration, and Juniper Research, just to name a few. They're all saying cross-border direct-to-consumer retail sales will grow on the order of 20% per year for the next decade, give or take.
And it's not like Global-e Online isn't already capitalizing on this sliver of the retail market's growth thus far. The company's top line is on pace to improve 38% year over year this year, and then grow another 34% next year. Indeed, analysts' longer-term growth forecasts suggest this year's likely revenue of $566 million could readily reach over $1.1 billion in 2025, pushing Global-e out of the red and into the black in the very same year.
Above-average risk comes with above-average upside
The cross-border B2C movement's tailwind is the real deal, to be sure. Ditto for Global-e Online's place in this market's evolution.
Still, this is a stock that should be handled with care. The echoes of its well-hyped initial public offering are still ringing, keeping things abnormally volatile right now. Global-e also remains unprofitable at this time, making it difficult for the market to come up with a reasonable valuation-based price. The stock's price simply reflects everyone's best guess as to where the company will be in the foreseeable future. But that's a moving target. Shares could easily dish out plenty more red days before dishing out more consistent gains.
If you can stomach the likely volatility ahead, though, there's something here worth taking a shot on. Just don't take on too much of this higher-risk stock, and be sure to keep your finger on the pulse of the company's growth story. It should be outpacing the cross-border business-to-consumer market's expansion for the indefinite future.
