Monthly Global Online Retail Market Report | May
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- Global ecommerce sales are expected to hit $4.2
trillion this year according to Adobe, as the shift to online
shopping accelerated by the pandemic shows no sign of slowing down.
- Ecommerce has experienced 5-years of growth over
the last year. According to a report
from MullenLowe Profero, ecommerce
rose from 19.2% of total retail spend in 2019 to 27.9% in 2020, and that shift
is here for the long term with 71% of respondents revealing they will continue
to shop for items online post the pandemic.
- MullenLowe Profero’s report cites convenience as
a key factor promoting continued growth, along with rapid delivery options, as
it predicts an “era of convenience” in retail commerce in the post-pandemic
- Providing further evidence, Amazon reported
blow-out earnings on April 29th, with sales surging 44% which also
smashed earnings expectations, and its guidance for the second quarter implies
it expects this momentum to continue.
- Amazon also announced that this year’s two-day
Prime Day event will take place in June, instead of July.
Global Online Retail Growth Index Performance
Past performance is no guarantee
of future performance.
Index, in USD. *12 Month figures from
30.04.20 - 30.04.21.
The underlying index of our Online Retail ETF, the EQM Global Online Retail Growth Index, has delivered a
positive return of 131.14% over the last 12 months as online retail sales
growth has been sustained in an environment of higher consumer confidence,
rising employment, and government stimulus.
For the month of April, the index gained 4.26%.
performance contributors in April included German-based restaurant delivery
service Delivery Hero which was up over 22% for the month after posting
strong quarterly results for revenue and orders in the first quarter amid the “exceptional growth of quick commerce.”
US-based home goods online retailer Overstock.com was
another top performer for the month. The
stock was up 23% in April as the company reported a revenue increase of 94%
year over year as the home goods category remains strong. Overstock’s spin-out
of its blockchain business is also ahead of schedule.
US-based home exercise equipment maker Peloton
Interactive was the month’s worst performing name, down 12.5% due to
heightened competition in the category and a shaving of its “pandemic premium”
valuation as physical gyms reopen.
Past performance is no guarantee of future performance.
Source of all data: EQM Indexes. Data as of 30.04.2021
Global Online Retail Performance Table
As of 30.04.21
Global Online Retail UCITS ETF
EQM Global Online Retail Growth Index
Performance before inception is based on back tested data.
Back testing is the process of evaluating an investment strategy by applying it
to historical data to simulate what the performance of such strategy would have
been. 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 30/04/2021
Earnings reporting season has provided evidence of the
sustained growth in the online retail and marketplace retail segments even in
the face of physical store re-openings.
Amazon beat significantly on both the top and bottom
line and guided up in the second quarter as it expects it will see sustained
momentum from its annual Prime Day, even though it is now scheduled for June. Amazon’s strong Prime streaming results and Netflix’s
subscriber miss also suggests that heightened competition and a lack of new
content is driving demand for Prime, as opposed to the pandemic driving the
appetite for streaming.
Ecommerce marketplace software infrastructure firms Shopify
reported strong first quarter results as more and more retailers shuttered
physical stores and shifted their business online. Shopify’s revenue was up 110% over
Latin America has experienced a quantum leap in ecommerce
growth thanks to the pandemic. Retail ecommerce jumped 37% in the region in 2020
driven by pandemic lockdowns, but the shift online is not likely to reverse now
that the “genie is out of the bottle”.
Argentina’s Mercado Libra, the leader in Latin America, doubled
its operations in 2020. In Brazil,
ecommerce sales grew 68% last year
according to the National Confederation of Commerce, Goods, Services, and
Tourism (CNC) and eMarketer reports
ecommerce sales in Argentina grew 79%.
These numbers reflect a deep and accelerating transformation in the
region thanks to improvements in technology, logistics, and payment
Data from behavioural marketing technology provider Wunderkind that UK ecommerce
sales rose 2.5% week-on-week in April even with a 178% increase on shopper footfall
on the High Street, illustrating sustained digital demand despite the unlocking
of traditional retail in the UK. The
study suggests there has been a seismic and permanent shift online. Wunderkind,
comments: “There’s been much debate as to whether the boom in online could
successfully be sustained once retail reopened. And, from what we’ve seen so
far, even pent-up demand for real-life shopping experiences in the first week
of opening hasn’t deterred consumers from the ease and convenience of shopping
online, suggesting the shift to digital is here to stay.”
To quote Oppenheimer’s retail analyst Jason Helfstein, in
ecommerce, “the genie never goes back in the bottle.”
US online home goods retailer Overstock.com posted
first quarter net revenue growth of 94% year over year, but it is also seeing
interest on the heels of “cryptomania”.
Overstock’s aggressive moves into blockchain and trading platform tZero
has captured investor attention beyond online retail.
Amazon’s blow out quarter and announcement
that Prime Day will be moved up to June has gathered attention, but it is also
raising eyebrows in Europe as it reportedly opening a full-fledged fulfilment
centre in Dublin to service Ireland.
Ireland has been served for years from the U.K, but this move could
allow Amazon to avoid Brexit-related headaches shipping goods across the Irish
Delivery Hero reported strong quarterly results in the “quick commerce”
restaurant delivery category. This is
particularly interesting in light of concerns raised related to Deliveroo’s
failed IPO, suggesting that Deliveroo’s problems are stock specific and not an
indictment of the gig economy model.
Chewy, a US-based online retailer of pet
food and supplies has been a big beneficiary of the pandemic in part to the
rising use of its “autoship” feature which now makes up 70% of Chewy’s total
net sales. Many people also adopted new
pets during the pandemic, as households with pets increased 5.7% in 2020 versus
the previous compound annual growth rate of only 0.6% over the previous 5
years. In 2020, Chewy welcomed 5.7 million new active users, representing a 43%
year over year increase. While 2021 may
see a drop-off in pet adoptions, autoship and other value-added services like “Connect
with a Vet” telehealth will be continued source of growth.
The next scheduled quarterly index rebalance is the end of
- Pandemic Has Accelerated Online Retail Trend:
While online retail grew at a record pace in 2020, there are many studies
revealing its long-term growth outlook has been accelerated by 5 years. As a
result of the pandemic, permanent new shopping habits have been established, new
categories such as online grocery have solidified, and new delivery options
such as “click and carry” and “curbside delivery” have emerged.
Apocalypse Continues: UBS expects 80,000 physical stores to close over the
next 5 years in the U.S. and one-quarter of American malls to shutter in the next
3-5 years as the grim decade for traditional retailers dubbed the “retail
Retail Faces Positive Outlook: After a tough 2020, fashion retail has some
good news as much of the globe moves toward reopening. Moody’s Investors Service
upgraded its outlook for retail apparel to positive as it expects business
conditions to improve over the next 12-18 months as pandemic pressures ease and
those gaining the “Covid19” in terms of weight need to refresh their personal
and business wardrobes.
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