Thanksgiving is upon us and online merchants – and their related exchange traded funds – will have something to be extra thankful for this year. Online shopping will account for nearly half of all Holiday shopping, according to the National Retail Federation (NRF).
46.1% of shoppers will be browsing for and buying gifts online this holiday season, more than any other year since the NRF started tracking online purchasing intentions about a decade ago. That number actually shoots over 50% to 52.9% when you include only buyers, making e-commerce the third most-popular way of
making a holiday purchase behind only discount and department stores, at 55.9% and 55.6%, respectively.
Simple exposure to consumer discretionary ETFs may dilute the profitability of this trend, so ETF investors may want to get their investment a little more granular.
There are two ETFs ripe for exposure to these big box online merchants, the PowerShares Nasdaq Internet Portfolio ETF (PNQI) and the First Trust DJ Internet Fund ETF (NYSEarca: FDN) both have Amazon.com (AMZN) as their top holding, and count companies like PayPal and eBay among their major holdings.
It also helps that these ETFs have experienced banner years even when compared to other relatively hot internet and tech ETFs. FDN is up 22.75% in the past year and PNQI has also posted a fantastic 17.16% advance, setting both well above their long-term trend lines.
In care your worried Amazon won’t be able to meet the increased demand, they have manned-up for the season, creating over 100,000 seasonal jobs – in addition to 25,000 full-timers – to manage their fulfillment centers and 20 sortation depots.
However, its not all a slam dunk for online retailers, the NRF poll found a surprising trend of shoppers that Amazon can’t capture – buy-online, pick up in store and ship to store options have grown in popularity, as 45% of the surveyed respondents that are taking to the web signaled a desire for at least one purchase to be picked up in store.
The holiday shopping season is an American pastime that will not be going away, no matter which way consumers evolve. Who wins the season and which investors benefit the most though will always be awarded to the firms that stay nimble and respond most quickly to changing consumer demands. For now, the herds at the store and long lines are giving way to a more comfortable, cozy shopping experience – the one at home on the couch.
