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ETFs to Benefit From Surge in E-Commerce Sales

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The year 2020 seems to be a banner year for online sales, primarily thanks to the COVID-19 pandemic, which has ramped up the digital shift. Consumers have made a radical shift toward online shopping in order to avoid direct contact or go out of home.

According to the Brick Meets Click and Mercatus, U.S. online grocery sales hit a record $7.2 billion in June, up 9% from May. Number of customers (active during past 30 days) using online grocery pickup or delivery advanced 6% to 45.6 million in June from 43 million in May. Order frequency also grew from 1.7 to 1.9 orders per month for active households (read: 4 Sector ETFs Up More Than 30% in First-Half 2020).

Per eMarketer, U.S. e-commerce retail sales are expected to jump 18% this year with 12.2% growth coming from older buyers in the age group of 65 and older. The surge would follow a 14.9% gain in 2019. Most of the sales were driven by a surge in click-and-collect including curbside pickup. The company expects U.S. click-and-collect ecommerce sales to grow to $58.52 billion, up 60.4% from the eMarketer initial forecast of 38.6% growth.

Who Wins?

Per the report, the top 10 e-commerce retail businesses are expected to grow at above-average rates of 21.8%. Amazon (AMZN - Free Report) will continue to gain U.S. ecommerce market share while Walmart's (WMT - Free Report) accelerating e-commerce growth will take it to the No. 2 position for the first time.

This is because the mega retailer is gearing up to roll out a subscription service similar to Amazon Prime later this month. The new offering called Walmart+ will cost $98 per year with subscriber benefits including same-day delivery of groceries and other goods, fuel discounts, and other special deals.

Other e-commerce players like eBay (EBAY - Free Report) , Apple (AAPL - Free Report) , Wayfair (W - Free Report) and Target (TGT - Free Report) will also continue to benefit from the e-commerce boom (read: ETFs to Ride the Wave of 3 Key Coronavirus-Led Trends in 2H20).

Amid such solid trends, we have highlighted some ETFs for investors seeking to tap the surge in online sales.

Amplify Online Retail ETF (IBUY - Free Report)

This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 48 stocks in its basket and has attracted $633.8 million in its asset base. It charges 65 bps in fees per year and trades in average daily volume of 104,000 shares. The product has gained 47% year to date.

ProShares Online Retail ETF (ONLN - Free Report)

This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 24 stocks in its basket. The product has amassed $192.1 million in its asset base and trades in moderate volume of around 58,000 shares a day on average. It charges 58 bps in annual fees from investors and has risen 55% so far this year.

ProShares Long Online/Short Stores ETF (CLIX - Free Report)

This fund seeks to benefit from both outperforming online and underperforming physical retailers through the long/short strategy. It combines the 100% long position in retailers that primarily sell online or through other non-store channels with a 50% short position in those that rely principally on physical stores by tracking the performance of the ProShares Long Online/Short Stores Index. The approach reduces equity market exposure and results in less volatility than long-only equity strategies. With long positions in 24 stocks and short positions in 48 stocks, the ETF has accumulated $205.2 million in its asset base and trades in average daily volume of 57,000 shares. It charges 65 bps in annual fees from investors (read: Online Retail ETF Hits New 52-Week High).

ProShares Decline of the Retail Store ETF (EMTY - Free Report)

This ETF seeks capital appreciation from the decline of bricks-and-mortar retailers through short exposure to the Solactive-ProShares Bricks and Mortar Retail Store Index. The benchmark holds 48 securities in its basket. EMTY charges 65 bps in annual fees and trades in average daily volume of 61,000 shares. It has accumulated $34.4 million in its asset base.

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