newsinsights

Browse our recent blogs, articles and papers below and sign up here for our regular newsletter. 

Online Retail Monthly Report | June

Learn more about our online retail ETF

 

Key Takeaways

  • Amazon Prime Day, Amazon’s annual 2-day deal event exclusively for its Prime members, is moving to the month of June this year on June 21 and 22.  Last year’s Prime Day was delayed until October, so this year’s resumption to the summer months will provide good visibility into the strength of online retail sales in the post-pandemic environment.
  • Research from Whistl shows that 36% of online shoppers in the UK shopped more frequently during the lockdown period and 49% of shoppers over the age of 65 increased their online spending.  And even as restrictions have eased and High Street has reopened, 63% have maintained their online shopping habits with 15% even increasing their online shopping frequency. [1]
  • Apparel/accessories is the highest growth category, up 18.9%, as the pandemic has unleashed pent-up demand for clothing. The increased adoption of digital grocery will continue to propel the growth of the food/beverage (18.1%) and health/personal care/beauty (16.1%) categories.[2]
  • A greater emphasis on technology and omnichannel retail to elevate the consumer experience is emerging in China, as Alibaba and JD.com are offering omnichannel integration to their retail partners, such as online inventory checks to online ordering and in-store pickup.  The rise of 5G in China has also helped usher in the era of augmented reality (AR) and virtual reality (VR) experimentation. (eMarketer)
  • IBUY’s May rebalance saw the addition of some new names such as recent IPO ContextLogic (Wish.com), a US-based, global online ecommerce marketplace platform, and there were revenue-weight increases to KE Holdings, a Chinese online platform for housing transactions and services, and Pinduoduo, the largest agriculture-focused technology platform in China, which has emerged at the largest online grocery retailer. 

 

Performance Review

EQM Global Online Retail Growth Index Performance

May

12 Month*

-2.83%

2.34%

Past performance is no guarantee of future performance. Source: Bloomberg *NTR Index, in USD.  YTD figures from 31.05.20 inception to 31.05.21.

 

Breakdown of Performance

The EQM Global Online Retail Growth Index has delivered a positive return of 2.34% since inception as online retail sales growth has been sustained and the disruption of traditional retail continues even as physical retailers have reopened. But a “go-away in May” sell-off in technology and growth names negatively impacted monthly performance, with the Index declining almost 3.0% in May.

The top performance contributor in May was US-based fitness equipment and online subscription service Peloton Interactive, up more than 12% on reports that it has fixed its treadmill manufacturing issues and it received an upgrade from JP Morgan. 

Berlin-based online meal kit delivery service HelloFresh gained 10% as it expands it grocery offering, HelloFresh Marketplace, available in Europe. The expanded service offers subscribers the option of adding additional groceries to the order. The service is also expected to be rolled out in the U.S.

The largest negative contributor for the month was Etsy, a US ecommerce company focused on handmade or vintage items, down more than 17% in May. Etsy had been a big beneficiary of the mask-wearing trend and investors are asking “what’s next?” post the pandemic as it faces tough year-over-year comparisons.

Past performance is no guarantee of future performance. Source of all data: EQM Indexes.

 

Global Online Retail Performance Table (As of 31.05.21)


1M

3M

6M

YTD

12M

SI

Global Online Retail UCITS ETF (Acc)

-2.89%

NA

NA

-2.41%

NA

-2.41%

EQM Global Online Retail Growth Index;

-2.83%

-6.95%

10.76%

2.34%

84.29%

-2.29%

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 31/05/2021

 

Industry News

According to Digital Commerce 360 estimates, nearly $1 in $5 spent on U.S. retail purchases during the quarter were sourced online. Digital growth remains high and fiscal stimulus has helped fund retail spending. U.S. ecommerce reached $196.66 billion in Q1, up 39.0% year over year from $141.52 billion in the same quarter of 2020.[3] 

eMarketer forecasts that apparel/accessories will be the highest growth category in online retail, up 18.9%, as the pandemic has unleashed pent-up demand for clothing as consumers retool their wardrobes for the reopening environment and adjust to their post-pandemic sizing.[4] Globally, 35.82% of people reported weight gain during the pandemic, with 71.25% gaining in excess of 5 pounds.[5] Amazon is UK fashion buyer’s site of choice according to eMarketer, with 3 in 5 saying they visit the site to shop at least once a month.  UK-based ASOS came in second, followed by eBay and Boohoo.

The expected increase in adoption of digital grocery will continue to propel the growth of the food/beverage (18.1%) and health/personal care/beauty (16.1%) categories. U.S. online grocery sales will surpass $100 billion this year, or 12.4% of ecommerce sales, with many consumers adopting this option for the first time.[6] 

A greater emphasis on technology and omnichannel retail to elevate the consumer experience is emerging in China, as Alibaba and JD.com are offering omnichannel integration to their retail partners, such as online inventory checks to online ordering and in-store pickup.  The rise of 5G in China has also helped usher in the era of augmented reality (AR) and virtual reality (VR) experimentation. (eMarketer)

Amazon Prime Day, Amazon’s annual 2-day deal event exclusively for its Prime members, is moving to the month of June this year on June 21 and 22.  Last year’s Prime Day was delayed until October, so this year’s resumption to the summer months will provide good visibility into the strength of online retail sales in the post-pandemic environment.

 

Constituent News

The IBUY online retail ETF was rebalanced in May. 

One new addition to the Index included ContextLogic, the US-based operator of the website Wish.com.  Founded in 2010, Wish is global ecommerce platform that generates revenue by charging a commission on sales made on its marketplace.  The company make its public debut in mid-December of 2020. Wish has a user base of 100 million monthly active users (MAUs) and 500,000 merchants. It targets young, value-conscious shoppers.  Wish also gamifies the shopping experience using features like sweepstakes to encourage return customers. Wish delivered YOY revenue growth of more than 75% when it reported its first quarter results in May, with sales of $772 million USD.[7]   

Other new additions to the Index included, Dada Nexus, a China operator of local on-demand retail and delivery services; Purple Innovation, a US online retailer of mattress products; Vroom, a US online retailer of cars, car products, and accessories; Upwork, a US-based provider of temporary services, similar to Fiverr; the RealReal, a US-based online consignment store for luxury goods; and online fashion retailer Revolve Group. 

Companies that exited the Index this quarter were Manchester-based Boohoo Group, an online fashion retailer.  The company warned of a slowdown in revenue growth, after experiencing supply chain issues last year. IAC/Interactive Group, Lands’ End, and Petmed Express also left the Index, due to disappointing revenue growth.

US-based meal delivery service Doordash and KE Holdings, a Chinese online platform for housing transactions and services are now the two largest holdings in the Index based on their YOY revenue growth. 

 

Outlook

  • Online Retail Remains Strong Even as Brick and Mortar Reopens: The retail landscape has been permanently transformed by the pandemic as new shopping habits, categories, and preferences have been established in a new era of “consumer convenience”.
  • Technology Enhanced Online Shopping Experience: New delivery and service options and new technological features such as augmented and virtual reality have emerged, further elevating the consumer shopping experience beyond traditional retail.
  • Apparel Retail and Personal Care See Positive Outlook: While other areas of online retail are facing tough comparisons, apparel/accessories and personal care retail is poised for future growth as consumers retool their wardrobes and once again are seen outside the home. The online home fitness category should be another beneficiary of this trend.

 

Learn more about our online retail ETF here

Tell us how we can help