Online retail continues swiping market share from brick-and-mortar stores, a theme that is likely continuing extending the current decade and one that makes ETFs such as the Global X E-commerce ETF (NasdaqGM: EBIZ) more attractive for long-term investors.
EBIZ, which recently celebrated its first anniversary, reflects the performance of the Solactive E-commerce 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 E-commerce platforms, providing E-commerce software and services, and/or selling goods and services online,” according to Global X.
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.
“The separation between e-commerce and brick and mortar retail will blur as digital and physical shopping experiences become one in the same,” said Global X in a recent note.
Intersecting With Other Disruptive Tech
Recently, several brick-and-mortar retailers reported disappointing holiday sales, but overall sales were strong thanks to e-commerce.
Breaking down the retail segment, e-commerce sales this year made up 14.6% of the total, or up 18.8% for the same period last year, according to Mastercard’s recent data based on retail sales from November 1 through Christmas Eve. Overall holiday retail sales, excluding autos, increased by 3.4%.
Bolstering the long-term case for EBIZ is the intersection of online retail with other disruptive technologies.
“Augmented reality will give consumers the ability to try on and order clothes from the comfort of their homes, but physical stores with reduced footprints will feature unique consumer experiences, immediate purchases, and try-before-you-buy optionality,” according to Globa X.
Related: Why Exclusionary Tactics Can Work in Emerging Markets
This year, online sales are projected to surpass $4 trillion, with the biggest players in the field largely expected to capture a major share of the growing pie. For example, Amazon is estimated to account for half of all online sales by 2023.
“Coupled with IoT technologies that track consumer behavior and build datasets around it, and advances in AI, retailers could be able to predict consumer behavior at almost 100% accuracy,” said Global X. “We also expect to see e-commerce as a value add for small and mid-sized businesses, providing a medium for them to sell products outside of their locality and giving a means of accessing global consumer-base.”
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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.