Online Retail Monthly Report | August

08 August 2022

Online Retail ETF Monthly Report: Key Takeaways

Ecommerce To Account for Almost a Fifth of Total Retail Sales in 2022, An All-Time High – Despite difficult pandemic comparisons, Insider Intelligence|eMarketer is expecting $505.8 billion in new online retail spending this year, an annual gain of 9.7%, totaling $5.7 billion USD globally. Ecommerce remains a key growth driver for retail. In China, 45.3% of retail sales will be transacted digitally, as opposed to the 12.5% ecommerce market share around the world. [1]

Amazon Prime Day 2022 Its Biggest Event Ever – Amazon shoppers purchased more than 300 million items, up from 250 million in 2021. Prime members worldwide purchased 100,000 items a minute. Although there was some evidence of a stretched consumer, buying items such as Frito Lay snack packs, higher ticket items sold as well. Total online retail sales on Prime Day (including other retailers who held events) surpassed $11.9 billion, an increase of 8.5% over last year’s event. Amazon also used its Amazon livestreaming service for the first time and had more than 100 million views. [2]

Amazon Posts Strong Earnings Quarter – Amazon’s second quarter earnings results beat on the top-line and they gave upbeat guidance for the third quarter. Amazon has been working hard to manage higher costs as pandemic-driven expansion left the company with too many workers and too much warehouse capacity. However, they have shifted business to marketplace to third-party sellers, which now represents 57% of its online business worldwide. Marketplace grew 3.3% during the quarter. [3]

Brits Plan on More Online Shopping – New research from Opinium and Digital River surveyed 2,000 UK consumers and despite financial struggles they are still planning to shop more online. Only 8% of respondents said they are looking to shop more in person, with 22% expecting to increase their online shopping. 33% of those surveyed said they have shopped online more frequently over the past 6 months. Although 58% of Brits have reduced their spending on non-essential items in the last six months, 47% continue to make at least one online transaction a week. 29% of UK online shoppers state that it is easier to track prices online than in person, while 29% of those planning to shop online more claim that items being cheaper online is driving them to buy this way. Additionally, payment methods have evolved to meet demand, with 15% of UK adults using buy now pay later (BNPL) services for online shopping, with 59% doing so to stretch their budget further. [4]  

Hong Kong’s Online Retail Market Too Crowded for Alibaba – Alibaba announced it would shut down Hong Kong’s Tmall operations on October 31. With Hong Kong’s online retail sales surging 24% in the first half of this year, demand does not seem to be the issue.The problem is increased competition, giving Hongkongers plenty of other online shopping platforms to choose from. The local Hong Kong market is dominated by HKTVmall and Pinduoduo has quietly expanded its presence there, but Alibaba’s Taobao remains popular as well. Alibaba plans to focus more resources on cross-border ecommerce opportunities in the region. [5]

Please note that past performance is not indicative of future performance.

 

Macro Outlook

Online Retail Returning to Healthy Growth State

As the impact of inflation wanes, consumer spending patterns should return to normal, and online shopping is still the preferred method of shopping, providing better inventory selection, competitive pricing, and the 24/7 convenience of shopping anywhere, anytime. While prognosticators over-estimated the impact of the pandemic on accelerating future growth, online commerce remains the fastest growing part of retail and the pandemic has solidified its impact and created a number of new categories. Meanwhile, companies like Shopify that overinvested during the pandemic are having to cut back as ecommerce growth returns to more normal levels. The days of astronomical growth may be over, but retail ecommerce sales will continue to rise strongly in 2022. Three of the fastest growing ecommerce markets will be in Latin America this year, in Argentina, Brazil, and Mexico, while Singapore, Indonesia, the Philippines, India, and Australia are all expected to grow in excess of 20% in 2022. [6] 

Please remember that when you invest in ETFs, your capital is at risk.

 

Online Retail ETF Performance (As of 31.07.2022)

 

1M

3M

6M

YTD

12M

SI

Global Online Retail UCITS ETF

9.17%

-22.36%

-51.60%

-61.16%

-72.01%

-72.54%

EQM Global Online Retail Growth Index

9.23%

-22.13%

-51.18%

-60.81%

-71.66%

-72.13%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/07/2022

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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