Missed out on Investing in Amazon? Invest in these Future "Amazon" Companies around the world
Updated: Jun 10
Now is the time to invest the e-commerce stocks that can deliver Amazon like returns
Investing in Amazon in 2010 or the dot.com bubble could have turned any substantial amount of money invested into millions of dollars and provided generational wealth for early investors.
While it is impossible for any of us to go back in time to dump our savings into Amazon stock, the good news is that we can use this prevailing trend of the last decades to invest in future “Amazon” stocks around the world.
We have seen e-commerce and online industries boom over the last 10 to 20 years in developed nations like the United States (currently around 90% internet penetration rate). However, most people are not aware that the average global internet penetration rate is only 60% with developing nations and continents severely lagging the developed world.
The truth is that the development of emerging countries will give birth to regional e-commerce giants in the areas of the world where current behemoths such as Amazon and Alibaba do not control market share.
The e-commerce trends of the past 20 years have provided the proof of concept that at a certain inflection point of development in emerging markets there will most likely not be a country or region that will be an exception to increasing e-commerce adoption.
Below are some companies in these emerging economies that could one day be the “Amazon” of their regions and provide life changing rates of returns for patient investors:
Jumia Technologies (JMIA):
Arguably, because Africa contains some of the least developed countries in the world, there is nowhere else that has more long term growth potential.
While Africa is a diverse continent with some countries having an internet penetration rate closer to the global average, the overall 2020 internet penetration rate of Africa is around 28%. The rates for some of the least developed countries are in the single digits.
What African economies tend to have in common is that they lack infrastructure or logistics to support e-commerce along with weaker banking institutions compared to the developed, western world. There is a significant unbanked population in this continent without checking accounts or methods of digital payments.
Jumia is the leading pan-African e-commerce platform operating in 11 of Africa’s fastest developing and largest economies, accounting for over 70% of Africa’s GDP to address these barriers of e-commerce adoption.
The company has three business segments: Jumia Marketplace, Jumia Logistics, and JumiaPay. The Jumia Marketplace is self-explanatory as an online store, but the more interesting segments are the latter two.
As e-commerce is still in its early stages in Africa, there is very little infrastructure to facilitate the delivery of goods. In some areas of Africa, there are not even reliable street addresses.
Jumia Logistics is tackling this issue with a large network of warehouses and pick-up locations/lockers for consumers while improving on the “last-mile” aspect of the delivery.
JumiaPay offers a safe, fast, and easy solution to facilitate online payments on the platform, which is necessary for the many African citizens without the financial services required for digital payments.
As Jumia executes and develops Jumia Logistics and JumiaPay, it should provide the company with strong network effects and competitive advantages against most competitors. Jumia recently went public in the stock market in 2019 and is far from profitability because it is burning cash to develop its business model.
This is probably the most risky stock on this list and should only be considered a high risk/high reward investment for investors with the most stomach for stock price volatility.
There is a reason why companies such as Amazon and Alibaba have not expanded into Africa. However, this stock is also a pure play on the African growth story. Regardless if Jumia is successful or not, Africa is certainly a continent ripe for opportunity in this industry.
2. Mercado Libre (MELI):
Mercado Libre is the largest online commerce and e-payments platform in Latin America (18 countries including: Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru).
The company started as an “eBay”-like platform where users could post items to buy and sell; however, it has since expanded where the company facilitates shipping and logistics for sellers in their Mercado Envios business segment.
The company also developed Mercado Pago to process digital payments, which has become so successful that it is used independently off the platform (similar to Venmo) and led to their Mercado Credito division. Mercado Credito offers credit to merchants to start and run their businesses from the data they have collected from Mercado Pago.
Overall, the internet penetration rate of the region is anywhere from around 60% to 80% depending on the country. While this is mostly higher than the global average, it is still significantly behind countries like the United States, indicating huge opportunity in these extremely fast-growing economies.
Most likely when Mercado Libre was founded, the company had infrastructure and digital payment issues similar to Jumia in Africa. However, the company has executed extremely well and is solving these hurdles. This has resulted in a 730% appreciation in stock price over the past 5 years at the time of this writing.
Their success has created a strong brand loyalty, which is hard for companies like Amazon to replicate in the region.
Although GDP for many Latin American countries slowed during the pandemic, in normal years, the GDP growth for the region tends to be higher than the global average. As Mercado Libre accomplishes its mission to democratize finance, we can expect even more extreme growth in the stock for years to come
3. Sea Limited (SE):
Sea Limited is the e-commerce powerhouse of Southeast Asia (8 countries including Vietnam, Philippines, Indonesia). Similar to the first two entries on this list, this business has three arms: the gaming segment (Garena), the e-commerce marketplace (Shoppee), and the fintech component (SeaMoney).
If each of these businesses were their own separate, publicly traded company, then each one could be worth holding in your portfolio.
Garena is the Southeast Asian publisher for some of the most popular games on the planet such as their biggest success, FreeFire.
Shopee has become one of the most dominant e-commerce platforms in every country it touches.
Finally, SeaMoney has been an extremely fast-growing fintech service providing financing and digital payment solutions.
The beauty of Sea Limited is that you receive each of these explosive business segments under the same stock ticker symbol, which share data and resources with each other in a region of the world experiencing strong economic growth.
Recently, Sea Limited has even expanded into Latin America giving it more exposure to emerging markets.
Early investors have been greatly rewarded as the stock price has reflected the tremendous growth of this company with a 1,108.62% return over the past 5 years.
As Sea Limited establishes even greater dominance in Southeast Asia and continues to expand globally, investors should place this stock on their watchlist and strongly consider it for the long-term.
4. Coupang (CPNG)
Coupang is a similar e-commerce company to Amazon operating in South Korea. Their mission is to make South Korean citizens wonder “How did I ever live without Coupang?”.
The company is South Korea’s e-commerce leader in a country where internet speeds and the percentage of internet users (over 92%) are some of the highest in the world.
Clearly there is huge upside for any company that can dominate South Korea’s online market in such a digitally connected country. However, Coupang’s lead in the South Korean e-commerce market is narrow as it controls approximately 25% market share with its closest competitor, Gmarket, around 20% market share.
Despite such a saturated market, Coupang is the best positioned to gain increasing market share with its customer centric business model.
The company has developed its logistics network over years to the point where roughly 70% of South Korea's population resides within seven miles of Coupang's logistics centers. This makes it easy for Coupang to offer next-day or even same-day delivery for most of its products through its Rocket Delivery service.
This also allows Coupang to offer item returns that are even more hassle free than Amazon in the United States. The company allows the customer to leave returned items on their front step to be picked up by their delivery person for fast refunds.
Coupang has shown its dedication to its mission by expanding its ecosystem with its food and grocery delivery services, Rocket Fresh and Coupang Eats, and its video streaming platform, Coupang play.
Investors should watch to see if Coupang can consistently grow its active customers and revenue as it takes shoppers away from brick and mortar retailers and smaller competitors, but also wait to see for any expansion plans.
Although South Korea is one of the fastest growing countries for e-commerce, it is still a small country compared to other developed nations. Time will tell if Coupang can compete overseas with presiding, entrenched leaders such as Alibaba and Sea Limited.
5. JD.COM (JD)
China is one of the greatest economic miracles and growth stories ever considering the country rose from a third world country to the second largest world economy in the past 30 to 40 years.
From 1978 to 2005, China’s annual GDP growth rate averaged about 10%, and some economists believe that China will become the largest economy before 2050.
Clearly, China presents a huge opportunity for investors, and JD.com seems to be a great stock pick to capitalize on China’s future as China’s largest direct retailer.
This Chinese e-commerce giant has delivered strong growth the past few quarterly earnings reports and has outperformed its peers such as Alibaba.
JD.com also controls one of the largest logistics networks in China and is a global leader in autonomous and drone delivery. Investors who believe in the continued Chinese growth story should put JD.com on their watchlist, but also watch out for any regulatory headwinds.
In recent months, JD.com has avoided the brunt of regulatory crackdowns that plagued several of China’s largest technology companies including an Alibaba anti-trust probe and the DIDI stock delisting. JD.com is not immune to these Chinese regulatory risks, and the recent stock market sentiment has crushed the stock prices of all large Chinese companies.
Risk tolerant, contrarian investors now have the opportunity to accumulate shares of companies like JD.com at attractive prices for the long-term or for when the market sentiment for Chinese stocks eventually reverses.