Most tech stocks are performing exceptionally well during this pandemic. Unlike other businesses, these technology companies quickly adapted to a work-from-home world with almost no disruptions to everyday operations.
One tech stock that has caught my attention is dotDigital (LSE:DOTD) that has already risen by 65% over the last 12 months. But given the immense opportunity before it, I still think it’s got plenty of room left to grow. Let me explain.
The tech stock driving e-commerce sales
Setting up an online store these days is a relatively simple process, especially with e-commerce solutions like the one provided by Shopify. The real challenge is driving customers to the website, especially when competing with other online retailers like Amazon.
But dotDigital has created a tool to help even the smallest webstore succeed. The software-as-a-service (SaaS) firm has developed a cloud-based marketing platform called Engagement Cloud. The platform offers real-time analysis of customer data. Using the results, it generates new emails, text messages, and social media posts that personally resonate with individual customers.
In other words, dotDigital enables its clients to have a highly effective, targeted, digital marketing solution, at an affordable price. And the entire process is fully automated.
Out of the three marketing channels, email campaigns continue to be the most effective. In the latest annual report, the tech stock’s management team reported that on average, a client achieves an additional £42 worth of sales for every £1 spent on the platform. That’s quite an achievement in my eyes.
An unseen opportunity for growth
It should come as no surprise that online retailers have seen a surge in sales. Consumers are turning to online stores to fulfil their shopping needs now that Covid-19 has forced more than 750,000 non-essential UK stores to close.
But enforced closures might have sparked a transformation within the retail industry. According to the research firm Growth Intelligence, more than 85,000 new online businesses have launched since the start of the pandemic. dotDigital already serves a long list of more than 4,000 brands worldwide, but its pool of potential customers has now expanded substantially.
That’s especially so as most of these new online businesses are likely to rely on platforms provided by Shopify, Microsoft or Adobe. Why does that matter? Well, dotDigital has formed partnerships with all three, allowing users of each platform to seamlessly integrate Engagement Cloud.
dotDigital: a tech stock I’d buy more of
The business operates in an industry that was growing by nearly 20% each year before the pandemic hit. And Covid-19 has only accelerated this growth both in demand and supply.
Yet despite such rapid growth, online sales still represent less than a third of total consumer sales in the UK. With more than 70% of a market left to expand into, e-commerce has an immense amount of room to grow.
And thanks to the strategically formed partnerships with three of the largest e-commerce platform providers, I think dotDigital has created some serious competitive advantages. Combining this with its proven marketing effectiveness makes it a tech stock, I want to buy more of.
But if you think the opportunities within ecommerce end with dotDigital then you are sorely mistaken. There's another ecommerce giant out there that I have my eye on:
Covid-19 is ripping the investment world in two…
Some companies have seen exploding cash-flows, soaring valuations and record results…
…Others are scrimping and suffering.
Entire industries look to be going extinct.
Such world-changing events may only happen once in a lifetime.
And it seems there’s no middle ground.
Financially, you’ll want to learn how to get positioned on the winning side.
That’s why our expert analysts have put together this special report.
If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains...
Zaven Boyrazian owns shares in dotDigital. The Motley Fool UK has recommended dotDigital Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.