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Time to Flock to E-commerce ETFs Ahead of Holiday Season?

Sanghamitra Saha
Updated

Retail sales and the holiday season are closely connected. The period begins in late November and covers the entire December. With around two months remaining until Christmas, retailers are busy stocking up, hiring and posting ads.

Faster Growth Rate for Online Sales This Holiday Season

Total retail sales are expected to grow between 4.5% and 5% during the holiday period, up from 3.1% recorded in 2018, according to Deloitte's annual holiday forecast. Among this, online sales are on the way to be up in the range of 14% to 18% compared with 2018, according to Deloitte. Deloitte expects e-commerce sales to hit $144-$149 billion during the holiday period.

Meanwhile, NRF expects online and other non-store sales to be up 11-14% this year to between $162.6 billion and $166.9 billion, up from last year’s $146.5 billion. For the total retail segment, NRF sees holiday retail sales to be up 3.8-4.2% to between $727.9 billion and $730.7 billion.

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Salesforce.com expects U.S. digital commerce revenue to rise 13% annually this year, with total sales poised to hit $136 billion in the United States and $768 billion globally. The stellar growth rate embodies much faster expansion in online sales than the overall retail segment.

According to Adobe Analytics, Cyber Monday – an event where massive deals are offered for online shopping – hauled in $7.9 billion in 2018, up 19.3% year over year. And Cyber Monday 2019 could be even bigger to hit a new milestone. Amazon AMZN, Best Buy BBY, Target TGT, Walmart WMT are some of the companies that are set to offer hefty deals this Cyber Monday (read: Should You Buy Apple ETFs Ahead of the Holiday Season?).

Investors should note that “2019 is the shortest possible holiday calendar scenario,” with six fewer days between Thanksgiving and Christmas than in 2018. To make for this shortfall, Walmart is “launching online deals earlier than ever before.” Several other retailers may follow the suit.

Consumers’ Preference Shift Toward Online Buying

As of now, online retail sales make up about one tenth of total retailin the United States. The space is developing fast, courtesy of increased usage of smartphones and other mobile Internet devices.

In fact, an analysis by Coresight Research shows that thesurge in online shopping throughout the year, thanks to a deluge of deals, is slowing the momentum of holiday season buying.

The latest news is that the biggest mall owner in the United States, Simon Property Group SPG, is collaborating with online shopping site Rue La La’s parent company to come up with a new kind of website that would offer people deals (read: Is the Retail Picture Truly Gloomy? ETFs in Focus).

Faster Global Penetration of E-Commerce

Per Statista , in 2016, 58.3% of global Internet users had bought products online; the number is expected to increase to 63% by the end of 2019. More than the United States, the real growth opportunities lay in the under-penetrated emerging markets. With digital-buyer penetration likely to exceed 65% of Internet users globally in 2021, the e-commerce industry is set to expand.

ETFs in Focus

Internet – Commerce industry comes from a top-ranked Zacks industry (top 21%). Investors can definitely be part of the euphoria with Global X E-Commerce ETF EBIZ, Online Retail Amplify ETF IBUY and Proshares Online Retail ETF ONLN. These are funds are now trading at a one-month high (see all Consumer Discretionary ETFs here).

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Click to get this free report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Amplify Online Retail ETF (IBUY): ETF Research Reports Best Buy Co., Inc. (BBY) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Simon Property Group, Inc. (SPG) : Free Stock Analysis Report ProShares Online Retail ETF (ONLN): ETF Research Reports Global X E-commerce ETF (EBIZ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report