Amazon’s famed Prime Day is fast approaching and with the stock residing above $2,000 for the first time in nine months, it is evident investors expect this Prime Day to smash previous records. Investors can tap into that trend with exchange traded funds such as the ProShares Online Retail ETF (NYSEArca: ONLN).
ONLN, which is a year old, tracks the ProShares Online Retail Index. That benchmark includes companies that principally sell online or through other non-store channels, such as mobile or app purchases, rather than through bricks-and-mortar store locations. Component holdings must be classified as an online retailer, an e-commerce retailer, or an internet or direct marketing retailer, according to standard industry classification systems.
As for being a relevant Prime Day trade, ONLN is definitely that. The ETF allocates about a quarter of its weight to Amazon, one of the largest weights to the stock among all US-listed ETFs.
“Online sales still only make up about 12% of total global retail sales,” said ProShares Global Investment Strategist Simeon Hyman. “Even as global e-commerce sales doubled over the last 5 years to about $2.8 trillion annually, the rapid adoption of online shopping is likely to continue as more global consumers start using mobile devices and gain handheld access to the Internet.”
Beyond Amazon Prime Day
Online retail has been rapidly expanding. Global e-commerce sales doubled between 2014 and 2018 to $2.8 trillion annually from $1.3 trillion. 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.
More data points support the long-term thesis for ONLN, one that extends well beyond Prime Day.
“More than 340 million people have become digital shoppers since 2014, adding to a population that is expected to surpass two billion people by 2020, a 19% increase from current level,” according to ProShares. “By 2020, online sales are expected to pass $4 trillion, and the biggest players are widely expected to capture a major share of the growing pie. Amazon is projected to account for half of all online sales by 2023.”
ONLN is up 27.56% year-to-date.
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