EN
EN RU

Can online retailers scale profitably?

Posted on 28 March 2023

Online retailers’ stock prices plummet from pandemic peaks

Unfortunately for e-retail entrepreneurs hoping to attract capital, four major online-only retailers that have gone public in the past decade performed poorly on the stock market in the past year. They are: Chewy, Stitch Fix, The RealReal and Wayfair. What’s significant is that these are all successful companies that leverage the reach of the internet in innovative ways.

Chewy and Wayfair showed it’s possible to sell bulky items — pet supplies for Chewy and furniture for Wayfair — effectively online. Stitch Fix provides the kind of personalized fashion advice shoppers expect from their local boutiques, and does it at a scale enabled by the web. And The RealReal took the local consignment shop and turned it into a large, thriving online business.

They all won loyal followings and spots in the Digital Commerce 360 2022 Top 1000 Retailers database, a ranking of North America’s leading retailers and brands by online sales. Wayfair is No. 7, Chewy No. 14, Stitch Fix No. 46 and The RealReal No. 530.

Three of the four did very well during the pandemic as online shopping soared. The exception was The RealReal, which lost ground as health concerns made consumers leery of buying used clothes.

The success of Chewy, Stitch Fix and Wayfair during the COVID-19 lockdowns drove their stock prices in early 2021 to peaks far above their pre-pandemic levels. But it’s been a different story in 2022. Looked at collectively, these four leading online retailers’ stock prices are less than 13% of their 2021 peaks.

To be sure, it’s been a bad year for the stock market, and particularly for technology companies that benefited from the pandemic. The S&P 500, a broad market index, was at only 75.2% of its 2021 peak in late December 2022 and the tech-heavy NASDAQ at 64.3%. Even Amazon.com Inc.’s stock price has fallen to 44.4% of its top 2021 price. But the four online retailers have fallen much further, to an average of 12.6% of their highest price in 2021.