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ETFs Play COVID-19-Induced Holiday Shopping Pattern

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After almost round-the-year coronavirus fear, the Holiday Season is peeking into the calendar. It is time for consumers to stack up their shopping carts. Over the past few years, online sales have gained precedence.

The coronavirus outbreak has raised the appeal for the space even more as it has less to do with human contact. So, one can imagine the likelihood of exponential gains in eCommerce stocks and ETFs this year.

Per a Yahoo Finance article, SecurityNerd that offers eCommerce shipping tips, indicated that about 54% plan to cut in-store holiday shopping compared to previous years. About 43% will reduce in-person holiday gift exchanges, about 38% respondents’ gifts will shipped directly to recipients, and about 40% are worried about package theft.

Big Four accounting firm Deloitte expects a rise in holiday retail sales between 1% to 1.5%. On the other hand, market research firm Forrester sees retail sales declining 2.5% for the full year, as quoted on Forbes. However, both see a considerable increase in online shopping.

The Forbes article highlighted that Forrester sees online retail jumping 18.5% this year and attaining 20.2% overall penetration in North America. Deloitte predicts e-commerce holiday retail sales to grow between 25% and 35% from November through January, reaching $182 billion to $196 billion in total.

“For the last four years, e-commerce growth has averaged between 13% to 17% increase, and last year it was up 14.7%. This year it will go ballistic, somewhere around 25% and it may go higher,” per Deloitte’s vice chairman and U.S. leader retail and distribution, as quoted on the Forbes article.

"The spread of COVID-19 in the US has triggered such an increase in e-commerce since March that shipping volumes have consistently been at Christmas peak or Cyber Monday levels every day. Now we're headed into a peak on top of a peak,” said FedEx (FDX) Chief Marketing Officer Brie Carere, as quoted on CNN.

A huge jump in online demand may lead to an additional “7 million packages flowing through delivery channels every day”, per Satish Jindel, president of ShipMatrix, as quoted on Bloomberg.

Hence, shopping will be done early too as both consumers and retailers would like to avert overcrowding or the last-minute spike in online buying and the resultant shipping problems. So, it is wise to tap stocks and ETFs as early as now since the shopping frenzy will begin soon. Below we highlight a few ETFs that could see solid gains in the fourth quarter.

ProShares Online Retail ETF (ONLN - Free Report)

The underlying ProShares Online Retail Index is a specialized retail index that tracks retailers principally selling online or through other non-store channels. Amazon is the top holing in the fund (read: 4 ETFs To Play The Hot Events Of Q4).

Amplify Online Retail ETF (IBUY - Free Report)

The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of revenue from online and virtual sales.

iShares Transportation Average ETF (IYT - Free Report)

Amazon, FedEx and United Parcel Service started holiday hiring to cater to increased online shopping demand and parcel delivery. FedEx and UPS intend to hire a total of 170,000 seasonal workers this year. In this regard, IYT is a great choice as the fund invests about 13% in FedEx and 9% in United Parcel.

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

The fund provides 100% long exposure to online retailers and 50% short exposure to retailers that rely mainly on in-store revenues.

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