07 Jul 2021
Posted in Business Fundamentals
Top 10 ecommerce companies by revenue benefited from pandemic-driven changes in consumer behavior in 2020, says GlobalData
- Of the top 10 ecommerce companies by revenue, 90% reported double-digit growth in revenue
- The pandemic-defying performance was mainly due to an increase in the number of active consumers visiting online retailers’ platforms
The COVID-19 pandemic necessitated change in consumer behavior, leading to an increase in demand for contactless delivery services from active and new users on ecommerce platforms, says GlobalData, a leading data and analytics company.
Among the top 10 publicly traded ecommerce companies, nine reported double-digit year-over-year (YoY) growth in their revenue. Amazon, Alibaba, Wayfair, Coupang, and Pinduoduo are the companies that registered over 30% YoY growth in their revenue.
Keshav Kumar Jha, Business Fundamentals Analyst at GlobalData, comments: “As COVID-19 cases increased and lockdown measures were implemented, consumers relied on ecommerce platforms for the purchase of household staples and other essential and home products, which led to an increase in Amazon’s revenue. The company’s online sales grew 40%, reflecting growing user activity on its online platform.”
Meanwhile, Alibaba recorded one billion annual active consumers globally on its retail platform during the fiscal year ended March 31, 2021. Besides the consolidation of Sun Art, the increase in the number of active users on the retail platform owing to faster fulfilment and delivery services helped the company clock over 40% YoY growth in revenue.
Jha continues: “Wayfair’s merchandising investments appeared to pay dividend as the company reported an increase of 53.7% in the number of active customers, and order frequency also increased with Last Twelve Months (LTM) orders per active customer increasing 5.4% in 2020 over that in the previous year. Impressive growth also enabled the company to offset the impact of increasing operating expenses on its profitability and Wayfair reported net profit for the first time in the last five-years.”
Coupang’s investment in product selection and additional offerings helped it attract more customers to its platform, with the company reporting 18.2% growth in the number of active customers on its platform in 2020. The increase in the number of active buyers and annual spending by each of them aided by greater breadth of products also helped Pinduoduo report record growth in revenue, which was the highest in the last five-years. However, an increase in payment processing fees and costs associated with the operation of the platform and increasing sales and marketing expenses led to a decline in Pinduoduo’s net earnings.
Rakuten was the only ecommerce player to report triple-digit decline in net earnings. Increasing operating expenses offset Rakuten’s revenue growth and the company reported a net loss in 2020.
Jha adds: “Ecommerce players need to fine-tune their merchandise strategy and focus more on overcoming order fulfillment and delivery constraints to maintain the momentum gained from the pandemic-driven changes in consumer behavior.”