With a steady stream of data supporting the growth of e-commerce, including a compelling long-term trajectory beyond the coronavirus situation, the ProShares Online Retail ETF (NYSEArca: ONLN) is poised to build on its impressive 2020 performance.
ONLN seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. The index tracks retailers that principally sell online or through other non-store channels. The index uses a modified market-capitalization weighted approach, is rebalanced monthly, and is reconstituted annually.
Data confirm online retail has plenty of room to grow.
“Here’s a statistic that would probably surprise most people: According to the U.S. Census Bureau, e-commerce sales accounted for 11% of U.S. retail sales in 2019,” ProShares said in a recent note. “What may not be surprising is that e-commerce grew at over four times the rate of overall retail sales. Put those pieces together and, standing on January 1, you have a recipe for potential e-commerce growth. However, while eCommerce’s share of the retail pie is growing, it’s still only a slice.”
Great Set up for ONLN
The COVID-19 pandemic is forcing a slew of malls and retail store closures across the world. In the U.S., many non-essential retailers are temporarily closed and while traditional grocery stores remain open, many shoppers are opting to order from home and not risk contracting the coronavirus by venturing outside.
COVID-19 pandemic is forcing a slew of malls and retail store closures across the world. In the U.S., many non-essential retailers are temporarily closed and while traditional grocery stores remain open, many shoppers are opting to order from home and not risk contracting the coronavirus by venturing outside.
“Of course, e-commerce has been a central player during global quarantine, so what might growth look like in a post-pandemic world?” ProShares said. “At the beginning of the year, estimates were that U.S. e-commerce in 2020 would grow 12% over 2019.”
By 2020, an estimated 2 billion people are expected to be digital shoppers or a 19% jump from 2018 levels, as more people, notably from emerging economies where barely half the population is online, gain access to the internet. Almost one-third of consumers are already shopping online at least weekly and 75% at least once a month.
“It’s too early to tell what the impacts of COVID-19 may mean for the retail sector,” said ProShares. “What we do know is that disruptive secular trends were in place long before the pandemic hit, and they are likely to remain deep-rooted long after it has passed.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.