Wall Street thinks that the end of the pandemic will shift focus away from online sales. They’re dead wrong, and their mistake is giving us an excellent moneymaking opportunity.
I mean, on paper, their assumption makes some sense.
After all, millions of us have been on lockdown for more than a year and But while that may cause an uptick in revenue at physical retailers, I believe this will be a short-term bounce.
The future of retailing belongs to e-commerce. And that’s particularly true of the niche market for handmade goods that has shifted online with huge momentum behind it.
And even if you don’t think about it very often, that’s a market with a global value of $718 billion, according to forecasters at IMARC.
And I’ve found the tech firm with a unique way of capturing this lucrative niche.
Even better, the firm just reported a whopping quarterly earnings increase: a 900% jump in per-share profits.
The Digital Gallery
Now then, when I say the future belongs to e-commerce, you don’t have to take my word for it.
According to eMarket, before the pandemic hit in March 2020, e-commerce had a global value of $25 trillion, making it 20% larger than the U.S. economy.
And while the adoption rate may slow a bit as the physical economy gains steam in the months ahead, we’re still looking at huge long-term growth.
Research firm Oberlo still forecasts the global e-commerce market to increase by more than 14% this year. At that rate, it’s doubling every five years.
And while the pandemic might not be pushing businesses to move online for much longer, the ongoing rollout of 5G wireless is going to make things a whole lot easier for companies that provide services online.
But I talk more about how to make the most money possible off that entire trend right here.
For now, the growth of e-commerce bodes well for a savvy e-commerce leader in the field of unique and handmade goods.
See, until last year, conventional wisdom held that it was very difficult to sell fine art and other unique items online.
The so-called experts believed that collectors had to see original art and hand-made objects in person to get emotionally invested enough to write six-figure checks.
Covid changed all that. With galleries closed all over the world, collectors turned to the Web for their next acquisitions.
Consider that in July 2020, a painting by pop-art sensation Roy Lichtenstein sold at a live streaming auction for $46.2 million, beating forecasts by 54%.
Even this stat understates the success at play here. The online event drew 80,000 people from all over the world.
That’s 13,233.3% above the 600 folks who usually attend these posh events.
Or take Asian-Canadian painter Matthew Wong. In June 2020, one of Wong’s pieces sold for a cool $1.8 million at an auction streamed live on the Web.
That is literally 2,150% above the $80,000 that officials at Sotheby’s thought the painting would command – and more than 8,081% higher than his gallery value just two years before.
But high-end, six-figure art is just the tip of this trend.
New Home Offices
As the pandemic forced as many as 100 million of us to work from home, people started spending more on decorating their home offices, living rooms, and so on.
That’s boosted interest in “collectibles.” By that, I mean unique or custom-made items and decorations that people use to express themselves and give their space a more personal touch.
The natural online portal for this kind of art and collectibles is Etsy Inc. (ETSY), the leader in this highly profitable e-commerce niche.
The company was founded in 2005 in Brooklyn as a way for individual arts-and-crafters to sell their wares. Unlike competing e-commerce sites, Etsy is built around the notion that the item you’re buying is unique.
The ability to ask for personalization is built-in right there on every product listing, through dedicated contact with the maker.
Today the site has listings for all kinds of art pieces, on every imaginable medium.
And I’m not just talking about your regular paintings, although there’s plenty of that, too.
On Etsy, you can find rare pieces such as unique photos, carvings made out of distressed wood, prints, patterned blankets or shades, or even huge stuffed animals made to your precise specifications.
Many are only made once, making your item a true collectible.
Everything and More
Nowadays, however, most of Etsy’s sales come from homewares and home furnishings. Whether it’s personalized pet furniture, pillow-cases with a unique message or print, or wall art, Etsy is selling billions of it.
That’s no figure of speech. In the first quarter of this year alone, Etsy handled $2.9 billion of merchandise sales. That’s 144.1% higher than in the first quarter of last year.
Etsy even offers an Augmented Reality (AR) function in its mobile app, to let users see what a piece of art would look like on their wall before they buy it.
This increased demand for customization and uniqueness isn’t going away.
Just consider the more than 12 million face masks, worth a total of $133 million, that Etsy sold in April 2020, alone.
Many of those face masks were customized for the buyer – not only in terms of size, but color, shape, and print as well.
So it’s no surprise I see Etsy as a great buying opportunity. As I mentioned earlier, the firm just crushed on earnings with a 900% jump in per-share profits.
Ironically, the stock sold off because the company didn’t offer guidance for the full year.
Don’t let that worry you. Etsy has been growing earnings per share by an average of 90% a year, doubling every 10 months.
Even half that rate would give us a double in under 20 months.
So, whether you’re interested in art or not, Etsy stock is definitely a collectible that deserves a place in your portfolio.
Cheers and good investing,
Michael A. Robinson