The coronavirus pandemic has changed nearly every aspect of our lives, from how we work to how we shop and how we stay entertained. This shift has proven lucrative for a number of companies, like Zoom and Instacart, that met our needs in this new reality.
But with the vaccine already rolling out and a return to a certain level of normalcy anticipated for later this year, will these companies continue to thrive?
With consumers doing more of their shopping online, Amazon recorded more profit in the first nine months of 2020 than it did in all of 2019, MarketWatch reported. Jonathan Treiber, co-founder and CEO at RevTrax, an offer management platform, predicts that e-commerce will continue to be profitable in 2021 — which is good news for Amazon.
“For shopping, the shift to e-commerce was accelerated because physical stores were closed and people avoided them,” he said. “Post-pandemic, when consumers are more comfortable shopping in stores again, that will drive channel demand and sales in-store that would otherwise go online during the pandemic. Of course, online shopping habits will stick directionally, but for online sales to keep growing at the current pace and for physical retail to reopen with people spending money in-store would mean that retail sales overall are growing at an unlikely rate. In short, channel preference will shift for many consumers back to more of a balance between online and in-store post-pandemic, such that sales gains for e-commerce will largely stick.”
In its IPO filing, DoorDash reported that its revenue for the first nine months of 2020 was up more than three times from the same period in 2019, Reuters reported. The company also reached a landmark profit of $23 million for the first time in its history during the second quarter of 2020. However, Treiber predicts that DoorDash will not have a repeat of its 2020 boom this year.
“Stay-at-home orders have been a boon for food delivery services for those that want to order in and can’t dine out,” he said. “Once dining out becomes an option post-pandemic, delivery will be less attractive to diners who want to enjoy the in-restaurant experience they haven’t had in a year. This means restaurant revenues will shift from largely delivery to a much greater mix being dine-in. DoorDash and other delivery services are most at risk because of this pent up demand for in-dining experiences post-pandemic.”
As of October 2020, Instacart had more than doubled its valuation from the beginning of the year amid surging demand for grocery delivery caused by the pandemic, CNBC reported. And that valuation could climb even higher for its initial IPO expected this year — Goldman Sachs is set to lead the IPO and could value the grocery delivery app at around $30 billion.
Experts believe that some of the users who tried grocery delivery service for the first time last year will continue to use services like Instacart even after it becomes easier to resume old shopping habits again, MarketWatch reported.
Netflix added nearly 15.8 million new subscribers in the first quarter of 2020 — almost double the Wall Street prediction that it would add a little less than 8 million for the quarter, Forbes reported. Although growth slowed in the following quarters, the company’s free cash flow remained positive at $2.2 billion for the first nine months of 2020, CNBC reported.
Treiber believes the demand for streaming will continue through 2021, with some consumers pivoting to streaming entertainment during their commutes to work rather than only consuming at home.
“Streaming services have grown with people consuming entertainment from home,” he said. “However, they are likely to see those consumption patterns extend into the commuting time many people will have once again, at least for public transit commuters.”
However, Netflix subscriber growth is likely to remain on its downward trend, Treiber said: “New subscriber growth will likely slow as people aren’t home as much, but I would expect consumption patterns to shift and churn to remain somewhat stable.”
Target reached $64.4 million in sales over the first three quarters of 2020, a 19.3% increase from the previous year.
“Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options,” Brian Cornell, chairman and CEO of Target Corporation, said in a statement to investors. “As a result, we’ve seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels.”
Investing resource Seeking Alpha predicts that 2021 will also be a lucrative year for the big-box retailer: “Target is well-positioned for a strong 2021 as consumers return to their normal shopping habits and the company’s same-day delivery service continues to grow.”
Zoom quadrupled its revenue from the previous year in the second and third quarters of 2020 as it became the go-to video conferencing platform amid the pandemic, The Verge reported. Treiber predicts that its growth will slow, but that its subscriber base won’t dip down to pre-pandemic levels.
“Once people are free to commute and re-enter physical offices, most people surveyed have said they would like to continue a hybrid of working from home and in-office, meaning people will work from home more than pre-pandemic,” he said. “That will still create a need for subscription video conferencing software, such as Zoom, although people won’t likely use it as much as during the pandemic when it was 100% virtual.”
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