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Online Sales Explode During US Holiday Season: 4 ETF Picks

Sweta Jaiswal, FRM
·4 min read

The coronavirus pandemic has definitely changed the way Americans shop. As forecasted, online has stood out to be the most-preferred platform during this holiday season. Notably, the pandemic has been a boon for the e-commerce industry as people continue to prefer staying indoors and shop online. No wonder that the current wave of digitization is favoring both ecommerce pureplays and traditional retailers, which are foraying into ecommerce to tap the surge in online shopping.

Online Sales Dominate Holiday Season

Online shopping is gaining favor among shoppers in an attempt to minimize human-to-human contact as coronavirus cases continue to surge in the United States. A report by Mastercard SpendingPulse highlights the same. Going by the report, holiday retail sales (after excluding automotive and gasoline) rose 3.0% during the expanded holiday season (Oct 11-Dec 24). Keeping up with the digitization trend, online sales surged 49% from 2019 levels. Online sales also accounted for roughly 19.7% of overall retail sales, up from about 13.4% in 2019.

Considering the high demand for online shopping, retailers are moving toward a hybrid/omnichannel model so that customers can enjoy quick delivery or collect items ordered online (BOPIS, curbside pickup), at their convenience and through apps that arrange personal shoppers. The SpendingPulse report also indicated that there was a 10.2% fall in overall sales at department stores and a 3.3% rise in online sales.

Going on, changing demographical preferences of a large chunk of population are driving them to increasingly look for work-from-home-friendly properties, as at least 21.8% of the labor force is working from home, per a Reuters article. This has resulted in increased demand for home decor and home-improvement products. Consequently, there was a 31% rise in online sales in the home furniture and furnishings segment, according to the SpendingPulse report. Moreover, online home improvement sales rose about 79.7%.

It is worth noting here that retailers introduced holiday shopping deals earlier this year with an extended promotional period amid the coronavirus crisis, largely to avoid rush at stores.

In this regard, Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated, also said that, “American consumers turned the holiday season on its head, redefining ‘home for the holidays’ in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth,” per the SpendingPulse report.

Notably, an ongoing research from Comscore reflected that total spending on the online platform across Thanksgiving, Black Friday and Cyber Monday (the ‘Big 3’ holiday shopping days) hit record levels in 2020. In fact, there was a 25% rise in total online consumer spending, in comparison to 2019.

Online Retail ETFs That Are Gaining

Against this backdrop, let’s look at some ETFs that are benefitting 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 $1.47 billion, the fund has an expense ratio of 65 basis points (bps)  (read: 5 Sector ETFs That Beat the Market in 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 $255.7 million, the fund has an expense ratio of 65 bps (read: Top-Performing E-Commerce ETFs & Stocks of 2020).

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 $930.4 million, the fund has an expense ratio of 58 bps (read: 5 ETFs to Buy as Fed Maintains Bond Buying).

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 $131.8 million, the fund has an expense ratio of 50 bps (read: Holiday Shopping Shifts to E-Commerce: ETFs to Tap).

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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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