In order to get an idea of how much the pandemic’s arrival affected consumer habits, all we have to do is look at a few statistics. About a month into the pandemic, in mid-April 2020, Amazon’s online grocery store, Whole Foods Market, had expanded their order capacity by more than 60% and had begun picking up goods from more than seventy more shops. In the USA, between February and April of that year, food and retail sales were down by 7.7% year-on-year, but e-commerce sales of both were up by about 15%. Consumers were avoiding going into public spaces and were sometimes forcibly confined to their homes, they reached for their electronic devices for all things shopping.
There is also reason to believe these new shopping habits might be here to stay. Evidence from the credit card usage of 10 million people in Japan indicates that a section of the elderly population stuck to their routines of shopping online even after COVID restrictions were relaxed. Also, the loyalty programs of e-commerce providers tend to keep their customers hooked even when they could go out to the store themselves. E-commerce giants like Amazon and Alibaba reaped the fruits of all this new behaviour.
Last year, between July and September, Alibaba stocks had increased in value by over 60% compared with March, when the pandemic had started. The company was also very active in asserting its dominance over the e-commerce market space, preparing for their annual Single’s Day shopping spree with aggressive discounting and livestreamed sales of more than 250,000 brands. Over 11 days they took in $74 billion. In October, they paid out $3.6 million in order to double their holdings in Sun Art Retail Group, taking the driver’s seat in one the biggest online hypermarkets in China and outshining their e-commerce competitors JD.com and Pinduoduo.
In 2021, the company had to face considerable challenges in the form of regulatory crackdowns and power outages. Their revenue growth is expected by KGI Asia to have slowed to 32% during the July-September quarter, and analysts are anticipating a 12% slump in profits. Comparing the price of Alibaba stocks in mid-October to a year before, they had shrunk by over 30%. However, looking ahead to the final quarter of the year, analysts predict earnings per share to grow by $2.09. It is possible, too, that the Chinese government will ease up their regulatory pressure in months to come. Alibaba stock market evaluation in October was $424 billion.
Amazon has also had to overcome a few challenges in 2021, namely supply chain problems, labour shortages, and increased shipping costs. The company will have to spend ‘Several billion dollars’ to deal with these issues in Q4, says CEO Andy Jassy.
Amazon is not the only company that will probably see a slowdown in sales in weeks to come due to consumers making their way back to physical shops. To compare with 2020, when Q4 sales growth was up by 44%, 2021 will likely be up somewhere between 4% and 12%. Because these kinds of trends are common among retail stocks in this period, analysts do not see a reason for concern. In fact, after it was reported that Amazon’s sales growth in Q3 2021 was only 15%, the resultant fall in share price of 4% was less than expected.
Like Alibaba, Amazon doesn’t believe in a passive approach to business. The brand has started a new “Try before you buy” fashion package to please their customer base, and are making plans to deal with the increased demand of the holiday period. Still dealing with a shortage of workers, they intend to hire 150,000 people to help keep up with orders. (Last year it was 100,000). Lastly, Amazon has increased their employees’ average starting wage to over $18 per hour to keep them happy.
E-commerce has become a part of our everyday lives, even though sections of the population will be taking the opportunity to physically go shopping when they can. Amazon and Alibaba will probably have their hands full as people grow more and more accustomed to the conveniences of online shopping.
On the financial side, the price movements of top e-commerce retailers like Amazon and Alibaba stocks can provide both opportunities and risks for those who engage in online trading with app platforms as CFDs.
CFD trading allows you to trade on the upward or downward share price movements of e-commerce giants like Alibaba and Amazon without purchasing any underlying asset, in this any actual shares in these companies. To begin CFD online trading with App based platforms, search out a reliable and regulated brokerage that offers security, guidance, and the latest trading tools. And before you start online trading with app platforms as CFDs, remember to start with knowledge and caution.