It hasn’t been easy being an online retailer this year. E-commerce stocks have sold off in 2022 as investors abandon tech and growth names, seeking to reduce risk to their portfolios as the economic outlook grows increasingly uncertain. in the context of rising interest rates and high inflation. Investors have pivoted away from names like Wayfair and Etsy that have shown strong performance during the pandemic. But with many of these stocks trading at large discounts, there could be some value for investors, especially if they expect the holiday season to outperform current expectations, which are in rather low level. The National Retail Federation expects holiday sales growth of between 6% and 8% in 2021 — roughly in line with inflation. In the forecast it is possible to bet that online and in-store sales will increase between 11% and 13%. But some forecasts are less optimistic. Adobe Analytics predicts US online sales for November and December will grow 2.5% year over year. Included in the October forecast is the expectation that some consumers will start buying gifts earlier this year to spread the impact of gift shopping on budgets already strained by gas and food prices. and higher rent. “What we’ve seen so far this holiday season is a complete reversal from what we’ve seen,” said Polly Wong, president of direct-to-consumer marketing firm Belardi Wong. over the past few years”. . “The last couple of years we’ve really seen an incredible amount of sales demand, if you will, really early in the season.” That hasn’t materialized so far, Wong said. Her observations, based on data from hundreds of clients she works with, echo findings from Adobe Analytics, published on Wednesday, which showed online sales started slow for the month. 11. Adobe said that as of Monday, shoppers spent $64.59 billion online, up 0.1% year-over-year. Wong said the first two weeks of November were “very soft”, but trends have increased “significantly” in recent days. The jump in the third week of the month makes her optimistic that sales will improve over Thanksgiving weekend when shoppers will take advantage of the Black Friday and Cyber Monday sales. According to Wong, categories will be important. She expects apparel brands to outperform home furnishings, which are still being negatively impacted by strong consumer demand during the pandemic. According to Adobe, the pace of toy purchases increased in November compared to October, but shoppers still seem to be waiting for better deals to buy items like electronics. Adobe predicts the five-day period, known for its bargains, will account for 16% of the entire season’s spending. ‘The most promotional we’ve ever been through’ During an earnings call earlier this month, Joey Zwillinger, co-founder and CEO of Allbirds, said he predicts this holiday season will be “the most promotional the most we’ve been through since founding the company in 2016.” When Allbirds went public last November, it received a warm welcome. Its shares were up 90% at market launch, bringing its value to $4.1 billion. Shares ended Wednesday’s trading session at $2.79, or a valuation of about $416 million. According to FactSet, despite the drop, the average rating on the stock is too high. Allbirds have made a number of changes in strategy over the past year. Most notable was the decision to start selling its products through wholesale partnerships with retailers such as Dick’s Sporting Goods, Nordstrom and REI. “They’re facing a tough macro environment, but they seem committed to increasing margins and narrowing their losses next year, and we think the brand will benefit from the exposure.” created by high-quality wholesale distribution and the growth of brick-and-mortar stores,” Wedbush analyst Tom Nikic said in a research note earlier this month. “And with $180 million in net cash, we think they have enough liquidity to weather the current challenging macro environment.” Nikic admits that loss-making businesses aren’t very attractive to investors at the moment, but he says that “long-term risks/rewards are tilted to the positive here.” Wong declined to talk about specific companies, but she predicts that wholesale partnerships will become a more important part of the strategy of companies rooted online. Many direct-to-consumer companies start opening stores as their brands mature. Storefronts have given brands more exposure and allowed new customers to feel and see products in person. But stores are expensive, and some companies in this space expand too quickly. That may have put brands in less desirable positions. Wong said e-commerce companies can’t miss being in brick-and-mortar stores, because that’s where the majority of sales still take place. However, wholesale partnerships do some of the things that stores already do — increase exposure — with less risk. In an interview with CNBC’s “Squawk Box,” Warby Parker talked about his plans to keep opening stores next year. In 2022, it opened 40 stores. According to the company, even though it has started its business online, 90% of Americans still buy their glasses in stores. Co-founder and co-CEO Neil Blumenthal says their stores payback within 20 months and have “four-walled EBITDA of more than 35 percent”. Shares of Warby Parker are down 63% since the start of the year. Blumenthal attributed the decline to corporate sentiment, but said the company is growing faster than other optical companies. “I think [investors] should expect an ongoing commitment to sustainable growth and what we mean is a strong, ambitious type of growth coupled with increasing profitability,” he said. “Although macro pressures could mount, we think WRBY will be more flexible than more discretionary commodities,” said Jake Dollarhide, co-founder, chief equity analyst at Piper. Founder and CEO of Longbow Asset Management, said he counts Amazon and Chewy among his top 10 holdings, said, citing the strength of the AWS, Prime business and stock valuation as reasons. so I think any surprises they might have – a strong Christmas – could really benefit the stock,” Dollarhide said. Amazon shares are down about 43.5% year-to-date. The average price target for the stock is $135.94, implying a 44% gain from Wednesday’s closing price. “Dollarhide’s interest in Chewy is a bet on the spending power of high-income consumers and the convenience of the online pet retailer’s subscription model,” he said. Chewy’s subscription service, which periodically provides pet food, medicine and other supplies, will help it defend its market share against competitors like Petco. their pets are all willing to spend their money on their pets,” he said. “…For me, the three types of recession protection have always been alcohol, coffee, and pets.” Chewy stock has dropped 29.2% this year, but Petco’s value has halved.Chewy has an average overweight rating and a price target of $43.71, according to FactSet.Chewy stock closed Wednesday. Also, it’s worth noting that many direct-to-consumer brands are targeted at more affluent consumers who still have money to spend on holiday gifts , even if they are careful Thank you for your purchase. “Consumer stays at home for a year or two, buys a lot of products – and in every category – and now she spends on services and experiences, restaurants and travel. I think the competition to Winning the wallet is very fierce,” Wong said.