Ecommerce stocks are getting hammered as shoppers get back to spending like it’s 2019

Friday, May 6, 2022 by Robinhood Snacks |
Online retailers have a “pull forward” problem (Noam Galai/Getty Images)

Online retailers have a “pull forward” problem (Noam Galai/Getty Images)

The return of (IRL) retail therapy… While you ditch front-porch packages for fitting rooms and food courts, online retailers are being left in the dust. In yesterday’s big selloff, shares of Shopify sank 15% after the popular ecomm platform saw sales slow for the fourth straight quarter.

  • Ripped receipt: Shopify’s sales rose 22%, to $1.2B, but that was a fraction of its 110% gain from the same quarter last year.
  • Troublesome trifecta: Execs blamed inflation, labor shortages, and a return to IRL shopping for the slowdown — and said the rest of the year doesn’t look much better.

Caribbean cruise > cyber sales... In the past two years, nearly a fifth of every dollar spent in the US came from online orders. Yet with consumers returning to their 2019 spending habits — on concerts, vacays, and Sunday brunch — the boom in e-buying is losing momentum. US ecommerce sales have dropped 3X compared to 2020 levels. That’s showing up in the bottom line of some of the biggest pandemic winners:

  • Shares of Wayfair tumbled after the online furniture seller lost nearly 2M customers and $320M in sales last quarter.
  • Both Etsy and eBay lowered their sales forecasts for the year, and didn't say when (or if) they’d return to pandemic-era profits.
  • A week ago, Amazon’s stock had its worst day in over a decade after cooling sales led to its first quarterly loss since 2015.

The Great Normalization is here... Ecommerce sites benefited from a huge pull-forward boost in demand during the pandemic, fueled by stimmy checks and boredom. As Visa’s and Mastercard’s earnings showed, consumers are still opening their wallets — they just have new priorities. For platforms like Shopify, it means adjusting expectations for the new new normal of more balanced spending.