2020 was a great year for e-commerce. Facing challenges from the pandemic, global consumers took to the internet to get shopping done, and many e-commerce stocks skyrocketed by triple-digit percentages as a result. Etsy (NASDAQ:ETSY) and Jumia (NYSE:JMIA) are two examples that did just that.

But these two names are far from done growing. Here's which one looks like the better buy right now.

Etsy: Combating an ocean of "sameness"

Etsy has been a top destination for handmade products that can be purchased directly from craftspeople. But the e-commerce platform has been trying to expand its share of the massive online retail pie by encouraging shoppers to make it a more regular part of their shopping needs, rather than a place to find the occasional gift or custom item. Of the over-46 million customers the company reported in 2019, most of them only made a purchase on Etsy once a year.

2020 was a big year for the company, though. Because of effects of the pandemic, the number of Etsy shoppers exploded to nearly 70 million (as of the end of September), driven by social distancing requirements and the need to purchase face masks. And aside from the addition of new customers, many existing ones started making more frequent visits to the platform. The company is leaning into this boom with new TV and social media ad campaigns emphasizing that it offers all the retail categories one might find at a traditional retailer, but with the added perk of offering unique items within those categories.

In fact, across categories like home and personal accessories, apparel, and beauty and personal care, Etsy has been far outpacing average e-commerce growth by a wide margin. Through the first nine months of 2020, the value of merchandise sold on Etsy doubled from a year ago to $6.68 billion. However, across its core geographies in North America, Western Europe, and Australia, this is still small potatoes considering total retail sales tally in the hundreds of billions.

I expect Etsy's trajectory to flatten slightly in 2021 as it starts to lap the sudden acceleration in digital shopping activity from the start of the pandemic. However, this is still a relatively small company (valued at a market cap of $26 billion as of this writing) and is highly profitable (adjusted EBITDA profit margin was 32% through the first three quarters of 2020). The stock was up 300% last year, but the future still holds plenty of promise for this specialized retail site.

IMAGE SOURCE: GETTY IMAGES.

Jumia: An emerging market catching up on the digital front

Jumia stock's 500% run-up in 2020 makes even Etsy's epic run look modest in comparison. Currently valued at a market cap of $3.9 billion, though, this is still a very small company -- even though it has become the leader in digital shopping on the African continent.

It may come as a surprise, then, that the value of merchandise sold on Jumia actually declined by 18% through the first nine months of 2020 to 605 million euros ($730 million). What gives? Historically, Jumia sold items directly to shoppers, primarily electronics like smartphones. This is an important category to control in Africa as economies there make the migration to a more digital era. However, purchases made in these electronics categories were infrequent, and Jumia's growth started to peter out. It has thus been shifting gears to a third-party platform where outside sellers can list goods for sale -- typically smaller-value but more daily-need-oriented goods (more akin to Etsy's model). This shift in revenue mix is largely responsible for the decline in revenue over the last year.

However, there's positive progress here. Annual active customers increased 23% to 6.7 million at the end of September. And as a result of the higher activity on the platform due to smaller daily purchases, Jumia reported a gross profit on product sold (after order fulfillment expenses) for the first time during the third quarter of 2020. Though revenue decreased, adjusted EBITDA losses shrank to 91.2 million euros ($110 million), compared to a 129 million euro ($156 million) loss the year prior.

A lot is riding on Jumia being able to continue its evolution from an infrequent shopping destination to a more basic-needs site, and it's attempting to accelerate this process by marketing its Jumia Pay service, a digital wallet aimed at consumers who don't have traditional bank accounts. This two-pronged attack has helped other e-commerce companies in emerging markets (like MercadoLibre (NASDAQ:MELI) in Latin America) supercharge their growth. Armed with 147 million euros ($178 million) in cash at the end of September and an additional $231 million raised in December by selling new stock to investors in the U.S., Jumia could be spearheading a new digital revolution in Africa.

The better buy is...

Both of these relatively small e-commerce sites could have plenty of room to run in the decade ahead, but with similar valuations (both stocks trade for about 20 times trailing 12-month sales), I think Etsy is the better buy right now. Jumia is most certainly the higher-risk but potentially higher-reward option, but it will be a long road ahead before it reaches profitability, and it has yet to return to revenue growth after transitioning to a third-party merchant platform. Etsy, on the other hand, has already established itself as a high-growth company and turns a tidy profit. At this juncture, I think more investors will find its stock more attractive than Jumia's, although I believe the latter is most certainly worth keeping regular tabs on.

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