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Online Retail Monthly Report | August

 

Learn more about our Global Ecommerce ETF here.

 

Key Takeaways 

  • One bright spot in the underlying index of our Global Ecommerce ETF was Amazon’s buy now, pay later (BNPL) offering in India, which has amassed 2 million users and processed 10 million transactions in India since it launched in April of 2020.[1] 
  • Following a 25.7% surge in ecommerce sales in 2020 to $4.2 trillion, eMarketer expects retail ecommerce sales worldwide to continue to climb 16.8% to $4.9 trillion.[2]
  • Last year, the pandemic fueled rapid acceleration of online buying in several countries that were somewhat lagging. This year, India, Brazil, Russia, and Argentina are all projected to post at least 26% growth in retail ecommerce sales in 2021.[3]
  • eMarketer is expecting U.S. ecommerce to make up 18.9% of total holiday retail sales in 2021, reaching $206.88 billion, up from 17.5% in 2020, when e-commerce sales hit $878.26 billion.[4]

 

Performance Review

Concerns about the impact of the “reopening trade” was a negative performance headwind in July, causing a decline of 8.27% for the month.  With the Delta variant and cases rising in the U.S. and around the world, even among the vaccinated, investors are likely to re-evaluate those concerns. 

Not helping matters was that ecommerce behemoth Amazon missed sales expectations. But this is not that surprising given the tough comparisons it faced at the peak of pandemic growth. And Chinese tech names also sold off due to regulatory crackdowns there. 

The top performance contributor in July was US-based custom postage stamp retailer Stamps.com, which was up 63% on news it was being acquired for $7 billion by private equity firm Thomas Bravo.[5]

U.S.-based used car retailer Carvana was another top performer given the favourable backdrop for used car sales as the company’s revenues are growing 67%.[6]

The largest negative contributor for the month was KE Holdings, a Beijing-based online platform for housing transactions. The housing broker was warned last month by the Chinese State Administration for Market Regulation (SAMR) about suspected anti-competitive practices. The recent death of its billionaire founder Zuo Hui, who built the company into China’s largest platform for housing services, has also made investors nervous regarding the company’s future prospects, especially given further crackdowns on Chinese tech companies. 

Please note that all performance figures are showing net data.

 

Global Online Retail Performance Table (As of 31.07.2021)

 

1M

3M

6M

YTD

12M

SI

Global Online Retail UCITS ETF

-8.32%

-2.37%

NA

-1.88%

NA

-1.88%

EQM Global Online Retail Growth Index

-8.27%

-2.18%

-6.90%

-1.64%

41.89%

-1.64%

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 31/07/2021. Please note that all performance figures are showing net data.

 

Industry News

Amazon Misses - Amazon’s global online store net sales increased 13% YOY in Q2, but growth slowed significantly compared to last year’s comparison when volume surged 40% YOY amid the pandemic-driven spike in ecommerce sales.[7] 

Stamps.com Acquired - US-based custom postage stamp retailer Stamps.com gained more than 60% on news it was being acquired for $7 billion by Chicago-based private equity firm Thomas Bravo at a 67% premium.[8] 

Taboola Buys Connexity - Taboola.com Ltd., which helps companies advertise on some of the world’s most popular websites and apps, agreed to buy e-commerce firm Connexity Inc. for $800 million.[9] 

China’s online retail sales hit RMB $1.8 trillion - China’s online retail sales increased 10.9% year-on-year to RMB 11.8 trillion ($1.8 trillion) in 2020.[10] 

Extra Costs for Retailers - Salesforce predicts that retailers will spend a whopping $223 billion more on retail-related costs, like logistics, wages, and more, in H2 2021 than they did in the same time period last year, per a forecast cited by CNBC.[11]

 

Constituent News

  • Global Ecommerce ETF Index holding Stamps.com gained more than 60% on news it was being acquired for $7 billion by Chicago-based private equity firm Thomas Bravo at a 67% premium.[12]
  • German food delivery company Delivery Hero gains as Jeffries flags its grocery potential and upgrades the stock.
  • Canadian ecommerce platform Shopify shares declined despite a big Q2 earnings beat.  The company gave conservative guidance, but Wall Street expects sales to rise over 50% in 2021 to surpass US$4.5 billion and by 33% in 2022 to US$6 billion.  The company is also now entering the payment processing business with Shop Pay.[13]
  • Creative image collection platform Shutterstock, announced the launch of Shutterstock.AI and will be offering computer vision and predictive performance solutions to enhance creative performance. 

 

Outlook

  • Covid cases on the rise – The delta variant threatens to stall the resurgence in traditional retail, favouring online shopping.
  • Online shopping to remain strong even after the pandemic – The BIS Bulletin, an IBM (2020) survey of 3,450 executives in 20 countries, revealed that three quarters project that online platforms will dominate more shopping and customer service interactions during the post-pandemic period.
  • Online commerce rising around the world – As internet access and adoption rapidly increases globally, the number of digital buyers continues to grow, especially given pandemic acceleration in previously untapped markets such as India, Brazil, Russia, and Argentina, now all expected to grow at least 26% this year. 

 

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