As was widely documented, online shopping really took off during the onset of the coronavirus pandemic last year, so much so that prior growth was almost overlooked, prompting some market participants to anoint e-commerce as a pandemic play.

However, the online retail thesis has much more to offer investors than leverage to the global health crisis, and that’s a positive for exchange traded funds such as the ARK Next Generation Internet ETF (NYSEArca: (ARKW). 

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While the U.S. economy is returning to some sense of normalcy and shutdowns are a thing of the past, online retail is still thriving this year.

“Consumers have spent $541 billion online from January 2021 to August 2021 (8 months), 9 percent more than the comparable period last year and 58 percent more than 2019 — Considering that many were unable to leave their homes in 2020, the year-over-year (YoY) growth highlights the staying power of habits formed during the pandemic,” according to Adobe Digital Insights.

The actively managed ARKW isn’t a dedicated retail ETF, but it offers ample exposure to e-commerce. For example, Shopify (NYSE:SHOP) is a top 10 holding in the fund. This is an important example because online retailers, including those using the Shopify platform, are proving adept at boosting conversion rates.

“Retailers are also getting more people to hit ‘buy’ and not abandon their shopping carts: Conversion (percent of visitors who make a purchase) is now 4.1 percent on desktop (up 1 percent) and 1.9 percent on smartphones (up 3.7 percent) in the first eight months of 2021. Shoppers are making larger purchases as well, with average order values seeing a 13 percent increase at $169,” adds Adobe Digital.

In other words, there’s some positive momentum for e-commerce and the ARKW holdings with exposure to that industry with the start of the 2021 holiday shopping season just a few weeks away. For example, $1 of every $5 spent on retail today occurs online, up from $1 of $6 four years ago. That’s impressive because it shows that inflation, which is suddenly a real issue in the online retail space, isn’t yet deterring consumers.

“For the month of August 2021, online prices are up 3.1 percent YoY and up 0.1 percent month-over-month (MoM). In the month prior (July 2021), online prices were up 3.1 percent YoY and down 0.7 percent MoM. This is the 15th consecutive month where online prices have risen on an annual basis. Consider that as a historical benchmark, from 2015 to 2019, online prices fell 3.9 percent on average each year,” according to Adobe Digital.

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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.