Pandemic-induced e-commerce demand, coupled with a lift from consumers who spent a chunk of their $1,400 stimulus checks online, helped boost revenue for major e-commerce players Amazon.com Inc., eBay Inc. and Shopify Inc. and continued sales strength realized during the fourth-quarter holiday season.
Analysts predict that the three companies will realize more growth throughout 2021, albeit at a slower pace, as e-commerce resumes to a normalized pace after an unprecedented acceleration last year.
The trio posted strong first-quarter earnings in April that beat analysts' expectations, a sign that the companies maintained growth in early 2021 as consumers continued to spend a greater share of their retail dollars online.
Amazon, the No. 1 player in the U.S. e-commerce market, reported that its sales spiked 44% in the first quarter as Prime members shopped with greater frequency and across more categories than before the pandemic.
California online marketplace eBay reported a 42% boost in first-quarter revenue as consumers spent on categories such as limited-edition sneakers, sports trading cards and luxury watches, thanks in part to the government stimulus.
And Ottawa-based Shopify saw first-quarter revenue grow 110% year-over-year as more businesses set up shop on its platform and stimulus spending boosted gross merchandise volume for merchants.
The sales increase reflects an uptick in spending toward "higher value, higher price-point items," thanks in part to stimulus checks processed in March, said Mark Shmulik, a vice president and senior analyst with AB Bernstein. "Folks were looking to spend additional cash," he said.
But as some spending shifts back to brick-and-mortar retail and travel, retailers will see more "tempered" growth in the second and third quarters as cities such as New York open back up, said Nick Shields, a senior analyst with Third Bridge who covers the retail sector.
"Retailers are sort of thinking about that right now and concerned about that, but at the same time, they are trying to actively kind of stay top of mind among consumers," Shields said. "They may spend more on marketing and advertising over the next couple of months and into the summer."
According to S&P Capital IQ consensus estimates, Amazon's revenues are expected to reach $114.57 billion in the second quarter, up from $88.91 billion in the second quarter of 2020, and then climb to $118.53 billion in the third quarter and $148 billion by the fourth quarter.
Analysts expect eBay's revenue to reach $3 billion in the second quarter, up from $2.87 billion in the year-ago period, but level off to $2.89 billion in the third quarter. EBay's revenue is expected to increase to $3.11 billion in the fourth quarter.
Shopify, the smallest of the three e-commerce players, is expected to see second-quarter revenues reach $1.04 billion, an increase from $714.3 million in the year-ago period. Shopify's revenue is predicted to increase to $1.08 billion in the third quarter and $1.31 billion in the fourth quarter.
Shopify CFO Amy Shapero noted the expected slowdown in e-commerce growth during an April 28 first-quarter conference call, saying she expects Shopify's revenue to grow rapidly in 2021, "but at a lower rate than in 2020."
Amazon, however, may be able to boost sales higher in the second quarter due to the company's plans to hold its Prime Day shopping event in the second quarter, likely in the June timeframe, Shmulik said. The company can also use Prime Day to increase sales ahead of any brick-and-mortar retailers' back-to-school events toward the end of summer.
"It's something that generates excitement and interest from the consumer standpoint," Shmulik said. "That could be a nice catalyst to re-stimulate growth when it otherwise would be trending downward."
EBay is expected to see a slowdown in year-over-year gross merchandise value in the second quarter, said David Swartz, a Morningstar analyst, adding that the company's growth during the government lockdowns last year is "not really repeatable."
"Last year was just unusual," Swartz said. "It's going to be difficult for it [eBay] to meet any kind of growth rates that took off in the last few quarters."