E-commerce and online retail are still fairly new concepts in the traditional retail arena, but the novel ideas don’t stop there. Enter the social commerce concept…and the ARK Web x.0 ETF (NYSEArca: ARKW).

ARKW aims to capture long-term growth with a low correlation of relative returns to traditional growth strategies and negative correlation to value strategies. It serves as a tool for diversification due to little overlap with traditional indices. The actively managed strategy combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets, and this active strategy comes in the low-cost and efficient ETF wrapper.

ARKW YTD Performance

As the term implies, social commerce marries the concepts of e-commerce and social media. On an applied basis, it’s seeing companies such like Facebook partner with others like Shopify and Pinterest.

“The growth in online shopping has led to the acceleration of alternative shopping habits like social commerce. Growing at a 31.4% compound annual growth rate (CAGR) between 2020 and 2027, the global social commerce market is estimated to grow to $604.5 billion by 2027,” according to Stock Apps.

The ARKW ETF is Ready for Monumental Shopping Changes

ARKW components “are focused on and expected to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media,” according to ARK Invest.

ARKW is all the more important today as online retailers continue to swipe market share from old-guard brick-and-mortar rivals.

By 2020, an estimated 2 billion people are expected to be digital shoppers, 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.

“China’s social commerce market is estimated to grow at a 30.5% CAGR over the period of the analysis. According to eMarketer, the country is estimated to have 357.2 million social buyers by the end of 2020. That would be equivalent to 30.6% of the total population,” according to Stock Apps. “In 2021, the figure will rise to 392.2 million, 420 million in 2022 and 446.8 million by 2023. At the end of the forecast period, China is set to account for 37.9% of social buyers worldwide. Based on data from Statista, the number of social commerce users could be even higher as its 2020 estimate is 713 million.”

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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.