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This retail ETF is up over 70% YTD amid COVID-19

Christian Magoon, CEO of Amplify ETFs, joins Yahoo Finance's Kristin Myers to discuss the growing consumer interest in performing transactions online as many Americans stay at home during the pandemic.

Video Transcript

KRISTIN MYERS: Welcome back to live market coverage here on Yahoo Finance. Well, it's now time for our ETF Report, brought to you by Invesco. We're joined now by Christian Magoon, CEO of Amplify ETFs. So Christian, let's talk retail. Amazon has been doing incredibly well throughout this pandemic. We're seeing retailers move online. Now, your ETF, IBUY, is up over 50% year to date. But we have this recovery coming. Do you see that continuing going forward, as the economies re-open and people get back outside and into stores?

CHRISTIAN MAGOON: Yeah, Kristin, I think it's a great question because online retail stocks have really been the cat's meow this year. IBUY's one of the top-10 best-performing ETFs out of 2,200, excluding inverts and leveraged ETFs. So the question is, are all these gains being pushed, due to this kind of temporary-- at least we hope, temporary COVID situation.

I think some of them have actually benefited in an a big way or pulled sales forward. But you know, now we're into about three to four months of people buying online. Visa just came out with a study saying that week over week since April, they've seen e-commerce up 25% in terms of digital spending. I think consumers are making this transition that will last beyond COVID. They're forming the habit of buying online due to the convenience, due to the price-- competitive pricing, and the increased selection.

So while I do think it's probably going to be good for reopening when-- for brick-and-mortar stores, I do think online has captured some new amount of consumers, whether that's from groceries to furniture, just amazing gains in this area. And I think new habits are being formed that'll last going forward. E-commerce is still less than 15% of US retail sales. So we think we're early in the ballgame.

KRISTIN MYERS: So to that point, because you can't talk online retail without chatting brick and mortar, but we're seeing bankruptcies right now, 10-year high, as a lot of brick-and-mortar stores close. I mean, what do you see as the continuing pandemic impact on brick and mortar going forward? Which of course, it would only give a boost to those online retailers.

CHRISTIAN MAGOON: Yeah. So really, the dark side, if you will, of online retail gaining market share is not only all these bankruptcies, but these physical store closures. We could set a record this year. Well over 12,000 physical stores could close. We're seeing a fair amount of well-known brands file for bankruptcy, who are trying to work out a new solution. They have a model that just isn't working, especially in an economy that has this physical distancing. But you know, they had problems going into this.

So I think that they're we're going to see some more bankruptcies, some more store closures. We also could see some strategic partnerships. Certainly Amazon and Walmart are really trying to get more into each other's space. Walmart's trying to go more online. Amazon is trying to develop more of a footprint. So that should be good for many of these retail stocks, even some of the brick and mortars, potentially.

KRISTIN MYERS: Do you think consumers are going to want to stick with staying in, shopping at home going forward? How much higher-- how much more do you think online retail is going to be continuing to grow here in the United States?

CHRISTIAN MAGOON: Well, you know, I think there's a few factors that benefit online retail. Certainly currently, you know, this COVID crisis and physical restriction really helps out. But you're right. People do like to get in stores, have-- get away from their noisy neighbors, be able to walk around and touch items, experience them. That is a disadvantage for online retail.

However, you know, in this economy, we think price competitiveness is going to be more and more important. Many of the surveys show why people shop online is due to competitive and transparent pricing that they can't always find in store. In addition, we also see increased selection online. How many times have we gone in and they don't have our color or the right size? Online really kind of answers that dilemma. And then the convenience option-- this same-day shipping in many-- and delivery in many cities is really a game-changer.

So you know, ultimately, I think online will exist with physical, but they're going to merge in this omnichannel experience. I think the online retailers, though, are a bit in the catbird seat right now, in terms of their business model and kind of what they deliver to the consumer, in terms of benefits.