Online Retail ETFs to Keep Soaring in Q3 as Virus Hits Hard
Reeling under the coronavirus chaos, people prefer staying indoors and shopping online for all essentials, especially food items. The spurt in online retail sales is benefiting companies like Amazon AMZN and Walmart WMT.
Going by a new survey by Brick Meets Click, online grocery sales rose 9% to $7.2 billion, comparing favorably with May’s $6.6 billion (per an article on PYMNTS.com). A 16% surge to 85 million in the total number of orders was observed in June in comparison to 73.5 million in May, according to the article. The survey’s findings also reflect a 35% rise in household penetration rate in June with the number of people ordering groceries online reaching 45.6 million as against 43 million in May. Also, there was a 9% sequential increase in purchase frequency as households placed 1.9 online grocery orders on an average for either delivery or pickup, up from May’s 1.7 (per the PYMNTS.com article).
Online Shopping Trend to Stay?
The coronavirus outbreak continues to aggravate in the United States, which is now on the cusp of 3 million infections. In fact, United States saw the highest number of 60,021 new coronavirus cases reported on a single day on Jul 8, per the CNN report. Given the current situation, at least 24 states have paused or rolled back reopening efforts for some time. The current scenario, which is like to prevail in the second half of 2020, signals at continued dominance of the ‘click and shop’ trend.
Going on, even as the U.S. economy is reopening in phases and social-distancing restrictions are being eased, people are trying to minimize human-to-human contact. It’s largely because the pandemic has resulted in some changes in the lifestyle and preferences of Americans. Most of the surveys have found that people are more interested in online shopping rather than visiting a brick-and-mortar store for their purchases of essential food items and supplies now. In fact, per eMarketer’s latest forecast, e-commerce sales are expected to grow 18% in 2020 to reach $709.78 billion, representing 14.5% of total U.S. retail sales this year.
Taking a look back, the first-quarter 2020 numbers show shoppers’ inclination toward online shopping. According to U.S. Department of Commerce data, consumers made around $146.47 billion online purchases with U.S. retailers, rising 14.5% year over year (per a Digital Commerce 360 article). Going by the same article, online purchases accounted for around 16.2% of total retail sales for the quarter, increasing 15.0% year over year.
ETFs to Ride the Tide
According to a Total Retail article, e-commerce sales are expected to grow more than 20% this year as there is an increasing number of first-time online shoppers.
Against this backdrop, let’s look at some ETFs that can benefit from the new shopping trend:
Amplify Online Retail ETF IBUY
The fund provides a cost-efficient way for investors to own a basket of companies with significant revenues from online or virtual retail sales. With AUM of $586.6 million, the fund has an expense ratio of 65 bps (read: Top ETF Stories of 1H Likely to Rule in Second-Half 2020).
ProShares Long Online/Short Stores ETF CLIX
The fund seeks investment results, before fees and expenses, that correspond to the performance of the ProShares Long Online/Short Stores Index. With AUM of $202.8 million, the fund has an expense ratio of 65 bps (read: Worst Market Drop in About Two Weeks: ETF Strategies to Win).
ProShares Online Retail ETF ONLN
The fund seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. With AUM of $191.7 million, the fund has an expense ratio of 58 bps (read: eBay At All-Time High: ETFs in Focus).
Global X E-commerce ETF EBIZ
The fund seeks to invest in companies positioned to benefit from the increased adoption of e-commerce as a distribution model, including companies whose principal business is operating e-commerce platforms, providing e-commerce software and services, and/or selling goods and services online. With AUM of $33.5 million, the fund has an expense ratio of 50 basis points (bps) (read: 5 Best Sector ETFs Halfway Through April).
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Amplify Online Retail ETF (IBUY): ETF Research Reports
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
Global X Ecommerce ETF (EBIZ): ETF Research Reports
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