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Online Retail: Investors Too Late or Still Time to Profit?

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  • (0:45) - Online Retail: Are We Still In Early Stages?
  • (2:10) - Who Are The Growth Drivers of Online Retail?
  • (4:05) - Who Is Struggling With Online Retail?
  • (8:45) - How Much More Growth Can We Expect?
  • (11:10) - Amplify Online Retail ETF: IBUY
  • (15:00) - Marketplace Sector Growth & Company Selection For IBUY
  • (19:25) - What's In Store For The Online Retail Sector?
  • (22:30) - Episode Roundup:

Retail has been an area that investors have avoided for much of 2017, but is that fair to the online segment of the industry? This corner of the market still has great growth prospects and is really the only hope for many struggling brick and mortar players right now.

To discuss this trend, we have Christian Magoon, the founder and CEO of Amplify Funds, to guide us through the space for today’s Dutram Report. Christian’s firm has an Online Retail ETF (IBUY - Free Report) , so he is definitely well versed in what is going on the world of online commerce these days.


First off, we discuss an incredible stat that less than 10% of U.S. retail sales in 2016 came from online purchases. I was quite shocked by this, but Christian and I go over how the online retail boom may actually just be in its first few innings, and that there is plenty of room to grow in this space.

In particular, we highlight the trends of growth in the grocery market. Obviously, groceries account for a huge level of retail purchases, but we are quickly seeing companies like Amazon (AMZN - Free Report) and Wal-Mart (WMT - Free Report) bring this to the online world as well.

But if you just thought this was a domestic story, you’ll definitely want to listen to this podcast. In it, we also take a look at some foreign markets which are really embracing online shopping, and which areas are a bit behind the times. In fact, the U.S. trails a number of countries (including China, the UK, South Korea, and Germany) when it comes to the retail ecommerce as a percentage of total retail sales, so you can argue that many are quite a bit ahead of us when it comes to ecommerce adoption.

The Fund

But for investors looking to play the growth in online shopping, how do you choose? Sure, some investors might just want to buy Amazon, but Christian argues that might not be the best way forward for most. Instead, a more diversified approach that can get some of the higher growth names may be a better way to play the space.

We take a look at some of the top players in this segment, as well as some key distinctions between the key companies here. For example, IBUY is actually broken down into three groups; traditional, travel, and marketplace. We highlight some of the most important names in each, but I am sure you can guess that firms like eBay (EBAY - Free Report) make it for the marketplace side, while Expedia (EXPE - Free Report) is an obvious addition for the travel segment.

Another important factor to note about IBUY is that the fund isn’t just focused on companies selling clothes or other items on the internet. It is instead a diversified play on companies that use the internet to get at least 70% of their revenues. That is why we see companies such as Netflix (NFLX) or GrubHub (GRUB - Free Report) on the list, despite the fact that most don’t really think of them as ‘retail’. So, in many ways, I like to think of this as an internet consumer ETF more than anything, but check out the podcast for a more thorough discussion of this important aspect of IBUY.


And as you might expect, IBUY has been able to trounce its main competitor, the SPDR Retail ETF (XRT - Free Report) from a performance perspective. The heavy presence of brick and mortar companies in XRT easily dragged it down against the market and other consumer counterparts, while IBUY didn’t face the same issues.

Clearly, this could be a fund to watch for investors seeking a play on the consumer market, but are worried about the ‘Armageddon’ happening in the world of traditional retail these days. All that, and more, are discussed on this edition of the Dutram Report, so make sure to listen to the podcast for additional information!

Bottom Line

But what do you think about the online retail market? Do you agree that it is more than just Amazon? Make sure to write us in at podcast @ or find me on Twitter @EricDutram to give us your thoughts on this, or anything else in the fund market.

But for more news and discussion regarding the world of investing, make sure to be on the lookout for the next edition of the Dutram Report (each and every Thursday!) and check out the many other great Zacks podcasts as well!

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