U.S. May Retail Sales Held Up in Most Categories - While shoppers cut back on buying cars, electronics and appliances in May, spending overall largely kept up with inflation, according to the U.S. Commerce Department. Online retail sales increased 7.0% year over year. And MasterCard Spending Pulse saw momentum in both online and in-store sales. [1]
UK Online Retail Sales Fall -8.7% in May, But Clothing Sales Strong - Online clothing sales were up 14% from May 2021, with women’s apparel up 18% and men’s gear up 12%. Website traffic was up 8% year over year, but many retailers said they were dealing with “lengthy purchase cycles as consumers sit in the consideration stage for longer.” Data from research firm Attest, also found that while 26% of British shoppers have spent less money online in the last six months, 39% are spending about the same. [2]
Alibaba Losing Share to New Players, But China Ecommerce Growth Slower Overall - Alibaba was once the poster child for China e-commerce market, but new players are eating away at Alibaba’s market share. That has been reflected in share performance relative to names such as Pinduoduo, Meituan, and JD.com which are up considerably since mid-March. JD.com’s 6.18 shopping festival saw the slowest growth on record. Covid lockdowns have disrupted apparel production, and consumer demand was generally lower. Fitch expects China’s retail sales to only grow by low single digits this year, versus 12.5% in 2021. [3]
Online Retails Seek to Convert More Shoppers - There are more than 2 billion online shoppers worldwide, but despite the heavy traffic, U.S. digital retailers see less than 3% of all website visits convert into sales. That is a big discrepancy from brick-and-mortar retailers, which see conversion rates of 20% to 40% depending on the type of store. Customer retention is among the biggest challenges for online retailers, with an estimated seven of 10 shoppers abandoning a potential sale at checkout, but digital retailers increasingly are enhancing the customer experience through tactics such as 1) early access, 2) alternative payment solutions such as BNPL, 3) shipping perks, 4) personalization, and 5) easy returns. [4]
Please note that past performance is not indicative of future performance.
Macro Outlook
Online Retail Experiences Post-Pandemic Shift
As many online retail earnings quarters demonstrate, online retailers ramped up for the pandemic and demand for goods was pulled-forward. Even with higher fuel costs and inflationary pressures, a strong job market and pent-up demand is driving purchases in the service sector (travel-related, entertainment, dining) and among specialty market segments such as apparel. It would not be surprising to see further consolidation in the space as smaller online retailers seek the benefit from scale. Already, M&A activity in retail has risen in 2022, with 144 deals valued at US$25.19 billion announced in the first three months of the year—up 43% in value compared to Q1 2021. Dealmaking in the retail sector will likely be centered around the winners and losers of the pandemic. We believe IBUY’s growth weighting methodology, is well positioned to capitalize on that trend. [5]
Please remember that when you invest in ETFs, your capital is at risk.
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1M
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3M
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6M
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YTD
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12M
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SI
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Global Online Retail UCITS ETF
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-16.96%
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-42.88%
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-64.42%
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-64.42%
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-76.50%
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-74.84%
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EQM Global Online Retail Growth Index
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-16.83%
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-42.73%
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-64.12%
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-64.12%
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-76.20%
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-74.48%
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Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/06/2022
Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 30/06/22. Please note that all performance figures are showing net data.
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