Not many businesses dominate quite like Amazon (AMZN 2.19%) does. The massive tech enterprise is currently valued at nearly $2 trillion. This huge figure comes from a rapidly rising share price, which has soared $1,000% in the past decade and 7,400% in the past 20 years.

This "Magnificent Seven" stock has rewarded its shareholders in remarkable fashion. However, investors might want to consider another e-commerce business that could be flying under the radar right now. It might even be a better buying opportunity than Amazon.

Amazon's dominance can't be overstated

I believe we should first take the time to appreciate Amazon. The company originally sold just books online during its founding in the 1990s. But now, virtually any item you can think of can be purchased on the popular website.

This wide reach has resulted in nearly 40% of all money spent online in the U.S. going through Amazon.com. That's a tremendous statistic. Even more telling, Amazon's online stores raked in $235 billion in net sales in the past 12 months.

The company relentlessly focuses on low prices and a wide selection. And if that wasn't enough to provide customers with a great shopping experience, Amazon's massive and developed logistics footprint enables fast and free shipping. It's hard to compete with this.

Besides e-commerce, Amazon has a strong position in other categories, namely cloud computing, streaming entertainment, and digital advertising. It has multiple growth engines that can propel it.

A beaten-down niche player

While Amazon deservedly gets a lot of the attention, investors need to get familiar with Etsy (ETSY -1.29%). Its shares have been obliterated. They currently trade 80% below their peak price, reached in November 2021.

Etsy operates an online marketplace that sells unique, handcrafted, and vintage goods. This specialization separates the business from Amazon's mass-market focus. In fact, a survey found that 83% of Etsy buyers found items on the site that they couldn't find anywhere else. Amazon is the elephant in the room in the e-commerce world, but at least Etsy finds a way to stand out.

This company possesses an economic moat, too. As of March 31, it had 96.4 million buyers and 9.1 million active sellers on the platform. This two-sided ecosystem creates powerful network effects.

Etsy doesn't handle inventory itself, so it also doesn't need to invest in warehouses or delivery trucks. This makes it an asset-light operation that generates consistent profits. In the past five years, the company's operating margin has averaged an impressive 15.9%.

As I mentioned earlier, Etsy shares have gotten crushed. This is where the opportunity lies for investors. The stock trades at a dirt-cheap valuation. The current forward price-to-earnings ratio of 12.5 represents a 43% discount to the S&P 500. However, based on the factors discussed, one could easily argue that Etsy is an above-average business.

The challenge with buying shares right now, particularly when the company is struggling to drive meaningful growth, is that it's hard to know when the situation will improve. Gross merchandise sales in the first quarter of 2024 were down almost 4% year over year. Etsy could continue to struggle for a little while longer.

However, for investors who have a time horizon of five years, this stock could work out nicely. According to the Federal Reserve Bank of St. Louis, online shopping only represents 15.9% of all retail sales in the U.S. On a global level, I'd suspect that proportion is a lot lower. This gives Etsy a favorable backdrop to achieve healthy, profitable growth over the long haul.

Once the company is on a better footing, I believe the valuation multiple will follow suit. This makes now a good time to buy the stock.