2 E-Commerce Stocks To Buy In June, 2 To Avoid

Ecommerce, Selling Online, Online Sales, E-Commerce

E-commerce companies are currently witnessing declining traffic and sales as people return to shopping at brick & mortar stores with the reopening of the economy. While Cars.com (CARS) and iMedia Brands (IMBI) possess impressive growth potential given their innovative products and services and substantial market reach, conversely, Rakuten (RKUNY) and Farfetch (FTCH) might suffer declines in the near term due to their weak fundamentals. 

The e-commerce industry emerged as the backbone of the retail industry last year, generating $4.28 trillion in sales, representing a 27.6% year-over-year rise in 2020. These companies are investing heavily in tech solutions to analyze trends in consumer behavior and improving product filtering options and review sections to provide a personalized shopping experience to their users.

Rising investor optimism in the e-commerce industry is evidenced by the Global X E-commerce ETF’s (EBIZ) 49.8% returns versus the SPDR S&P 500 Trust ETF’s (SPY) 34.1% gains over the past year.

However, with rising brick-and-mortar sales with the reopening of the economy, e-commerce companies have been seeing lower traffic and orders. Therefore, we believe popular e-commerce stocks Cars.com Inc.  and iMedia Brands, Inc. are well-positioned to gain in the coming months owing to their strong fundamentals and loyal customer base. However, due to declining financials and weak market reach, we think shares of Rakuten Group, Inc. and Farfetch Limited could continue witnessing corrections in the near term.

CARS is a leading digital automotive marketplace that helps car shoppers and owners buy, sell and service their vehicles. The company also offers online subscription advertising products, credible user and automotive and dealer reviews, sale of display advertising, and other digital solutions.

On May 4, 2021, CARS reached a milestone of 10 million reviews from car buyers on its platform, powered by its DealerRater technology. The company hopes to become the broadest and largest automotive review platform because  more customers are reading these reviews before purchasing vehicles. In an announcement on April 29,  Dealer Inspire, a CARS company that provides disruptive technology and digital advertising solutions to the automotive industry, said it had  been selected by FordDirect, a Ford Motor Company (F) digital marketing and advertising platform, as a preferred website and technology platform provider for its 3,000 local U.S. dealerships. As the car shopping and buying process becomes more active digitally, with Dealer Inspire’s platform, FordDirect hopes to bring more efficiency in their marketing, operations and sales process, thus, delivering a better  customer experience.

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