According to the U.S. International Trade Administration, global e-commerce sales made up 18% of global retail sales in 2020. This figure is expected to increase to 22% of global retail sales by 2024, demonstrating that — slowly but surely — e-commerce is becoming a primary way consumers order goods in the modern era.
E-commerce is widely adopted in the U.S. for the most part, but the true growth in e-commerce comes from international regions. Many parts of the world barely rely on e-commerce for their retail needs, but as these regions begin to rapidly adopt online retail, these three companies could reap major benefits.
Sea Limited (NYSE:SE) is looking to become a global e-commerce company. Its e-commerce business — Shopee — got its start in Singapore in 2015, but it has since expanded across the world. Shopee is now a dominant e-commerce player across all of Southeast Asia and Latin America, and even has ties in India and Europe. With such a broad reach, Shopee became the most downloaded shopping app in the world in 2021.
This dominance has unsurprisingly led to amazing growth for the company. Revenue for its e-commerce segment reached $1.5 billion in the third quarter of 2021, which grew a whopping 134% year over year. Total revenue also grew 122% year over year, helped by its two other strong businesses that are growing at triple-digit rates. Many companies growing revenue at triple-digit rates are micro-cap companies, but Sea Limited is a large and established business — its market cap is $103 billion — making its growth that much more impressive.
Not only is Sea Limited a leading e-commerce company, it also has one of the world’s most popular video games and a resilient fintech business. The company continuously puts up strong top-line growth in all parts of its business, yet it is valued at just 12 times sales — the lowest valuation that Sea has seen in over a year. Despite the stock falling drastically over the past few months, Sea Limited is succeeding on all fronts of its business, making it one of my best ideas to buy today and hold for decades.
Pinterest (NYSE:PINS) stock has also been crushed like Sea Limited. From its all-time high set in early 2021, the company’s shares have fallen over 60%. This has led to Pinterest potentially becoming a value play: Pinterest’s forward price-to-earnings ratio is 24. This valuation is almost equal to Meta Platforms‘ valuation of 23 times forward earnings, despite Pinterest having magnitudes more growth potential.
For Pinterest, the growth story is in its average revenue per user (ARPU). The company’s platform has strong adoption both in the U.S. and internationally, but Pinterest is just getting started with developing itself as an e-commerce platform. It has struggled with monetization in the past, but it has recently taken steps to make it easy for consumers to buy items they see on the platform. The company has made it easier for sellers to tag items in pictures, so when Pinterest users see a product they like, it only takes them a few clicks to purchase.
The opportunity for Pinterest to grow its ARPU is massive. In Q3, Pinterest’s global ARPU was just $1.41 which pales in comparison to Meta’s global ARPU of $10. Considering that both companies currently sell at roughly the same price, Pinterest’s opportunity to grow in the online e-commerce market is immense, and I think this social media stock has more promise than any of its peers.
Coupang (NYSE:CPNG) might be the most undervalued international e-commerce stock today. It is valued at less than 2 times sales, lower than Sea Limited, Alibaba, and even Amazon. Despite this rock-bottom price, the Korean-based e-commerce giant is seeing impressive strength. The company has 16.8 million active customers, which make up almost one-third of the Korean population. Despite this strong leadership in the country, its active customers still increased 20% year over year in Q3, marking the 15th consecutive quarter Coupang has grown its active customer count by this much.
What makes Coupang truly special and unreplicable is its strong footprint in Korea. About 70% of Korean citizens live within just seven miles of a logistics center, making it possible for Coupang to offer same-day, next-day, or dawn delivery for almost all orders on its platform. This major infrastructure investment Coupang has made over several years would be incredibly hard and expensive to replicate by any competitor, and it has allowed Coupang to develop an extremely strong brand name and customer satisfaction.
The company is looking to expand into Japan, but that could take a long time to materialize. After all, the company would have to reinvest in infrastructure as it did in Korea all over again. However, if it can build up its impressive logistics infrastructure again, the company could see the same success it has had in South Korea. These two regions alone would allow Coupang to grow steadily for the next five years, and it is even eyeing other countries like Singapore and Taiwan. Even if you’re just looking at Japan and South Korea, though, the future looks bright for Coupang.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.