The Global X E-commerce ETF (NasdaqGM: EBIZ) is impressing as e-commerce takes over the retail landscape and the fund’s success is driven by more than just Amazon.com (NASDAQ: AMZN).
EBIZ reflects the performance of the Solactive eCommerce Index and looks to invest in companies positioned to benefit from the increased adoption of E-commerce as a distribution model, including companies whose principal business is in operating eCommerce platforms, providing eCommerce software and services, and/or selling goods and services online.
Some market observers believe changes in consumers’ behavior, which were apparent before the virus, are merely being hastened by the COVID-19 pandemic and that online is where it’s at for retailers – a theme that’s expected to be sticky for years to come. However, integral to boosting the e-commerce thesis over the long haul are reducing challenges in the industry’s economics and scalability.
“Recent sales numbers illustrate how e-commerce is made for the stay-at-home economy. May sales were up 92.7% YoY in the U.S. For May and June, consumers spent more than $53 billion online, totaling 22% of all U.S. retail sales for that period,” according to Global X research.
EBIZ Covers Plenty of Bases
More businesses are shifting their focus to online sales in a bid to adapt to the changing environment and consumer trends. For example, car dealerships are even switching to a fully online system to help customers select cars at the touch of a button.
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 ETFs that target the e-commerce segment. Demographic trends are driving those shifts.
“Notably, U.S., e-commerce home improvement sales increased by 149% YoY, leading footwear (64%) and apparel (41%). Looking abroad, U.K., online grocery sales increased 76% YoY, demonstrating how COVID-19 stoked penetration in historically weak areas,” notes Global X.
EBIZ offers broad-based online retail exposure, including a position in Amazon, though it’s not excessively allocated to that name as are some retail ETFs.
“The e-commerce boom has some retailers like Zara closing physical stores. In tech, giants Google and Amazon are responding to recent sales trends with digital advertisement enhancements, services support, and expanded digital payment services,” according to Global X.
The Amazon exposure in EBIZ, though slight compared to rival ETFs in this category, is enough to have the fund up 36% this year, making it one of the best-performing ETFs in this group.
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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.