Data confirm that e-commerce and online retail sales are booming, which is good news for ETFs, such as the ProShares Online Retail ETF (ONLN). ONLN follows the ProShares Online Retail Index.
“ONLN’s strategy pinpoints retailers that principally sell online or through other non-store channels, such as mobile or app purchases, and separates them from those reliant on bricks-and-mortar stores,” according to ProShares. “Analysts expect the growth of online retail to continue. About 10% of global retail sales today are made online, leaving tremendous room for growth. Recent data indicates that figure could double by 2030.”
ONLN is up 27.31% this year and data confirm the fund’s ascent is credible.
“Consumers spent $517.36 billion online with U.S. merchants in 2018, up 15.0% from $449.88 billion spent the year prior,” according to a new Internet Retailer analysis of industry data and historical U.S. Commerce Department figures. “That’s a slight slowdown from 2017, when online sales grew 15.6% year over year, according to Commerce Department figures.”
What’s Next for ONLN Online Retail ETF
An important factor for ONLN and rival online retail ETFs is that e-commerce continue seizing a larger slice of overall retail sales and that is exactly what is happening.
“Ecommerce represented a growing share of the retail market in 2018, taking a 14.3% share of total retail sales last year, up from 12.9% in 2017 and 11.6% in 2016,” notes Digital Commerce 360. “More significant is that ecommerce sales represented more than half, or 51.9%, of all retail sales growth. This is the largest share of growth for purchases made online since 2008, when ecommerce accounted for 63.8% of all sales growth.”
Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through exchange traded funds that target the e-commerce segment.
Amazon.com Inc. (NASDAQ: AMZN), which controls about 40% of the U.S. e-commerce market, and Alibaba Group Holding Ltd. (NYSE: BABA), which dominates China’s growing online retail market, combine for almost 40% of ONLN’s weight.
“Amazon.com Inc., No. 1 in the United States and in Internet Retailer’s 2018 Top 1000, continues to increase its strong hold of the U.S. retail market. Internet Retailer estimates that the total value of transactions from U.S. consumers on Amazon.com reached $206.82 billion in sales last year (including sales of Amazon’s own products and of marketplace sellers), a 16.3% jump from 2017,” notes Digital Commerce 360.
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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.