Data Continues Boosting The Case For Online Shopping ETFs

The Global X E-commerce ETF (NasdaqGM: EBIZ) could be poised to have another positive moment as data continue confirming the migration of shoppers to online venues.

EBIZ tries to reflect the performance of the Solactive E-commerce Index, which include companies that are positioned to benefit from the increased adoption of e-commerce as a distribution model, including but not limited to companies whose principal business is in operating e-commerce platforms, providing e-commerce software and services, and/or selling goods and services online, according to the fund’s prospectus.

A new report from the Commerce Department confirms the upward trajectory of e-commerce.

“The Census Bureau of the Department of Commerce announced today that the estimate of U.S. retail e-commerce sales for the third quarter of 2019, adjusted for seasonal variation, but not for price changes, was $154.5 billion, an increase of 5.0 percent (±0.4%) from the second quarter of 2019,” said the Commerce Department in a note out Tuesday.

Online shopping is now the second-biggest component of the U.S. retail market after overtaking grocery stores and restaurants. Investors can also focus on this quickly growing segment through targeted ETF strategies.

Favorable Data

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.

“On a not adjusted basis, the estimate of U.S. retail e-commerce sales for the third quarter of 2019 totaled $145.7billion, an increase of 4.4 percent (±0.4%) from the second quarter of 2019. The third quarter 2019 e-commerce estimate increased 17.3 percent (±1.4%) from the third quarter of 2018 while total retail sales increased 4.4 percent (±0.4%) in the same period. E-commerce sales in the third quarter of 2019 accounted for 10.5 percent of total sales,” according to the Commerce Department.

Not surprisingly, millennials are a driving force behind the move away from brick-and-mortar stores to more online shopping.

The millennial generation is classified as U.S. citizens born approximately between 1980 and 2000. Millennials account for one quarter of the nation’s population and are positioned to become a strong part of the workforce within the next decade.

EBIZ is up nearly 25% year-to-date.

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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.