In the eCommerce world, Amazon.com (NASDAQ: AMZN) is the 800-pound gorilla, maybe more. As such, the stock often takes on out-sized weights in related ETFs. However, the Global X E-commerce ETF (NasdaqGM: EBIZ) is an example of a thriving online retail fund that’s not overly dependent on Amazon.
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.
During the Coronavirus pandemic, some Amazon sellers took to other competing platforms to move their goods and that trend could be to the benefit of some EBIZ holdings.
“Many Amazon sellers were already expanding to other eCommerce platforms pre-pandemic,” reports S&P Global Market Intelligence. “But experts say the crisis has prompted some sellers to accelerate those efforts and showcase goods on the growing third-party marketplaces of retailers including Walmart Inc., Target Corp., and eBay Inc. Others are looking to form new partnerships with shipping companies and eCommerce infrastructure providers like Shopify Inc.”
EBIZ Excellence
Amazon is merely the sixth-largest holding in EBIZ at 4.85%, but that’s not derailing the fund from a solid performance this year. Up more than 15% over the past month, the Global X fund is higher by more than 20% year-to-date.
“Some of these third-party sellers, who tend to be small and medium-sized businesses, want to reduce their dependence on Amazon at a time when the e-commerce market leader is grappling with a surge in demand and strains on its shipping operations, experts say. Amazon temporarily halted shipping services for nonessential goods in March but resumed that service in April,” according to S&P Global Market Intelligence.
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.
With some of the largest weights to Shopify, Etsy, and eBay, just to name a few, among all ETFs, EBIZ is levered to trend in shifting seller preferences.
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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.