Helped by the seemingly undaunted rise of Amazon.com (NASDAQ: AMZN), the Global X E-commerce ETF (NasdaqGM: EBIZ) surged more than 56% in the second quarter and market observers believe the rise of online retail is just getting started.
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.
“Amazon.com Inc. and other companies large e-commerce businesses, including Walmart Inc. and Target Corp., will likely ride an uptick in online shopping during the coronavirus pandemic to gain market share from brick-and-mortar retail in the coming years, experts say,” reports S&P Global Market Intelligence.
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.
EBIZ for the Long-Term
Data confirm the utility of EBIZ as a possible satellite holding for long-term investors.
“U.S. e-commerce sales will reach an estimated $709.78 billion in 2020, or about 14.5% of total U.S. retail sales, up from $601.65 billion, or about 11% of total retail sales, in 2019, according to market research company eMarketer,” reports S&P Global Market Intelligence. “That is the biggest jump in the e-commerce share of retail sales in a single year, Andrew Lipsman, principal analyst with eMarketer, said in an interview.”
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.
“Overall growth in the e-commerce space, coupled with an increased uptake of online shopping from consumers who moved online while brick-and-mortar stores were closed for months, are driving the increase, Lipsman said,” according to S&P Global Market Intelligence. “E-commerce’s share of total retail sales will remain at a similar level of 14.4% in 2021 as consumers return to physical stores, but rise to 15.5% in 2022 as the economy gets onto sturdier footing.”
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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.