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