E-commerce giant Amazon.com experienced a spectacular boost in 2020 when lockdowns restricted people to their homes and e-commerce sales expanded to capture 15.7% of all US retail sales by mid-year. The mammoth online marketplace did face its share of challenges in 2021, including supply chain disruptions, but going into 2022, sales “remain elevated”, reported Bloomberg. In fact, companies in the sector have driven up the demand for the industrial space they need to keep their goods, so that this type of property was priced higher than apartments or offices for most of 2021. Amazon bought 21 new properties for its part, whereas Walmart, with more brick-and-mortar properties, purchased 11 from March 2020 through November 2021.
At the start of February 2022, Amazon shares merited the biggest one-day gain in the history of the stock market in America, climbing 14% and increasing Amazon’s market value by $191 billion. This followed an impressive earnings report for Q4 2021, which drew approving nods from traders. (Another factor behind the surge was the company’s announcement that prices for Amazon Prime memberships would be raised.) If we compare e-commerce sales in the USA for December 2021 to the previous December, they were down by 3%. At the same time, bear in mind that November 2021 alone saw a 6% leap in e-commerce sales and that the dip from pandemic peaks is, perhaps, understandable.
For those trading CFDs on share price movements of e-commerce pioneers like Alibaba and Amazon, getting familiar with the company fundamentals as well as the freshest news relating to each business can help you make more informed trading decisions. Let’s look more closely at Amazon rival Alibaba going into 2022, as well as the e-commerce trends that look set to be key in years to come.
Alibaba had an embattled year in 2021. In April, they were served with a huge antitrust fine of $2.8 billion and ordered to restructure their business. Scrutiny from the Chinese government was strong and persistent, and January this year saw some new fines surrounding non-disclosure of business deals imposed by Chinese authorities, affecting not just Alibaba, but other mega companies like Tencent and Bilibili. The retail giant has also been battling fiercer competition from rivals Pinduoduo Inc. and JD.com.
Ever the warrior, Alibaba started this year in talks to turn its wing Freshippo into an expansive and efficient online grocery store, with the help of about $10 billion dollars in funds it planned to raise. This could end up making for a “More efficient fresh-food supply chain”, which “Can lower grocery unit costs within its fresh food operations”, reported Bloomberg. There are already 300 Freshippo stores in China, and their new distribution center is under construction in Wuhan. Alibaba CEO Daniel Zhang plans to interlink the company’s online and offline shopping experiences. Online groceries play a dominating role in the world of Chinese e-commerce, and Alibaba has striven to pioneer this area in more than one way. For example, it has offered the option to customers of combining their orders together to qualify for discounts. Back in 2020, Alibaba made the move of paying out $3.6 billion dollars to increase its ownership in Sun Art Retail Group Ltd, which is the largest chain of hypermarkets in China.
E-Commerce Around the Corner
Swedish furniture giant IKEA is upping their e-commerce offerings as well, as customers are now able to envision how furniture will look in their homes using IKEA’s Place app Augmented Reality. This kind of technology could establish a firmer place for itself in the world of e-commerce in years to come, as the experiences of “try before you buy” shopping and of product benefits could be simulated with higher and higher proficiency. The Metaverse is another area where e-commerce may be moving. Big name brands have already begun to set up virtual stores on non-physical real estate to offer their products. In addition, the kind of voice-activated search experience offered by Alexa and Siri looks likely to make its permanent place in the online marketplace. E-commerce is rapidly expanding to meet customers’ needs in a variety of novel ways.
The Road Ahead
Trading on share price changes as CFDs is always a question of education and staying in touch with the news. One particularly useful tool that helps traders to get a picture of times ahead in the financial world is professional market analysis, which can help you decide how to position your deal. In terms of what’s next for e-commerce, analyst Jeff Mills of Bryn Mawr Trust expects “A breakout of pretty significant proportions for Amazon”. Mills explains that “The supply crunch that everyone is dealing with right now might actually help Amazon because they’re probably best positioned.” However, times are still quite uncertain, so before online trading as CFDs, head first to the financial news section and learn about the companies you plan to trade from all angles in order to make more informed trading decisions.