These 2 Mega-Trends Should Put This Recent IPO on Your Radar

Founded in 2013 and recently having gone public in May 2021 this company’s mission is to make global e-commerce border-agnostic, offering its clients a worldwide reach with a localized…

shopping experience. Through its volume-based sales model, Global-e Online‘s (NASDAQ:GLBE) earns revenue in two ways: service fees and fulfillment services. Service fees are simply what the company receives for integrating its platform into a merchant’s sales system, while fulfillment services revenue comes from its shipping and handling offerings.

Essentially, the company simplifies the numerous intricacies of selling products internationally; language differences, currency changes, country-specific tax policies, and localized pricing adjustments are just a few examples. By doing the leg work for its merchants on these various fronts, Global-e increases their international sales success rate by 60%, highlighting how valuable its services are.

In just over seven years, Global-e has grown its gross merchandise volume  (GMV), or the total amount of goods sold through its merchants, to $326 million as of the second quarter of 2021, leading to revenue of $57 million over the quarter. However, with a target addressable market (TAM) of $736 billion according to the economic research firm Forrester’s 2023 cross-border e-commerce sales forecast, the company’s growth story is just beginning.

Two trends powering Global-e’s stock

Along with the overall movement toward online retail, Global-e has two mega-trends squarely backing its operations: merchants shifting their focus toward direct-to-consumer (D2C) sales and the growing interest from small and medium businesses (SMB) in selling globally online.

Regarding D2C, Global-e empowers businesses of all sizes to take ownership of their online shopping experience with their customers. This removes many physical retail risks and governmental and local complexities that a merchant would normally face as they expanded internationally. Furthermore, with social media driving brand power more than ever, companies need to perfect their shopping experiences to build prestige, and Global-e simplifies this process beautifully.

On the SMB front, Global-e is entering somewhat unchartered waters, allowing it to tap into a market with huge flywheel potential as it grows. This flywheel potential comes from making new sales using the Global-e’s interface, giving the merchant insights into what products or pricing work best. Without Global-e’s integrated platform, even a single international sale is wildly complex for a small business owner, who needs to sort out currencies, account for tax policies, figure out shipping and handling, and more. Taking this one sale and multiplying it by hundreds of orders throughout hundreds of potential countries, the task becomes far too complicated for an entrepreneur on their own. Global-e makes it possible, giving the merchant additional sales and precious insights into its global customers, as each incremental sale grows its database of customer information. These insights ultimately power Global-e’s flywheel effects as its merchants gain valuable customer data, generating additional future sales potential.

Target addressable market and growth runway

As previously mentioned, Forrester estimates that by 2023, the TAM for cross-border e-commerce will be more than $700 billion, representing 500 times upside to Global-e’s GMV target of $1.35 billion for 2021. Despite accounting for…

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