With an array of internet stocks faltering this year and consumer confidence fragile against the backdrop of soaring inflation, it’s understandable that investors may be glossing over e-commerce and online retail equities.

However, long-term opportunity remains with exchange traded funds with internet exposure, including the ARK Next Generation Internet ETF (NYSEArca: ARKW), and online retail is part of that allure. In fact, online retail is poised to reach a new milestone in the U.S. this year.

The latest reading of the Adobe Digital Economy Index indicates that U.S. consumers will spend $1 trillion online this year, and that’s after online retail sales jumped 9% last year to $885 billion from $813 billion in 2020.

“Adobe also found clear evidence of online inflation throughout the period, with prices rising for 21 consecutive months—and the effect is becoming more severe. In 2020, Adobe found, incremental online spending over the 2019 level totaled $237.9 billion, including $4.7 billion in spending simply due to higher prices,” reports Eric Savitz for Barron’s.

The actively managed ARKW isn’t a run-of-the-mill internet ETF. It lives up to the “next generation” in its name by not being heavily reliant on e-commerce and online retail stocks. However, the ARK Investment Management fund is more than adequately levered to online retail growth and trends.

“In 2020, Adobe says, online grocery shopping in the U.S. grew 103%, to $73.7 billion. Growth has since moderated. The total reached $79.7 billion last year, and is projected to top $85 billion this year,” according to Barron’s. “Adobe found that electronics remains the largest category for online shopping, at $165 billion in 2021, up 8% from 2020. Electronics was 18.6% of overall e-commerce last year, down from 18.8% in 2020 and 21% in 2019, largely a reflection of growth in other categories.”

This indicates that there’s breadth in the online retail space and that a variety of industries can and do drive growth.

For its part, ARKW has exposure to names directly tied to online retail, including Shopify (NYSE:SHOP) and MercadoLibre (NASDAQ:MELI). Additionally, the ARK fund offers exposure to the emerging social commerce theme by way of stakes in Twitter, among other social media firms.

The ETF is also a decent proxy on bitcoin, as Coinbase (NASDAQ:COIN) and the Grayscale Bitcoin Trust (GBTC) combine for 17.35% of the fund’s roster.

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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.