Retail and e-commerce sectors witnessed a remarkable surge this Black Friday, underscoring the growing consumer preference for online shopping.
Adobe Analytics reports that U.S. consumers achieved a staggering $11.8 billion in online e-commerce expenditure, marking an increase of 9.1% compared to the previous year, as noted in a Forbes analysis.
This exceptional sales figure presents substantial profit opportunities for leading e-commerce platforms like Shopify (SHOP Quick QuoteSHOP – Free Report), Amazon (AMZN Quick QuoteAMZN – Free Report), and eBay (EBAY Quick QuoteEBAY – Free Report).
The surge in online transactions, particularly during peak shopping days, bolsters the financial outlook for these e-commerce titans and indirectly benefits the Exchange-Traded Funds (ETFs) that encompass them.
The Digital Surge: Drivers Behind the Sales Ascendancy
The record-setting performance on Black Friday was propelled by a decisive pivot of consumers towards digital avenues, with e-commerce growth significantly eclipsing brick-and-mortar traffic.
Specifically, this year’s success is attributed to two pivotal factors: aggressive discount strategies and the widespread integration of technologies such as Artificial Intelligence (AI) and Buy Now, Pay Later (BNPL) solutions.
Notably, Adobe noted an astounding 805% increase in AI-driven traffic to U.S. retail websites compared to the preceding Black Friday.
Consequently, U.S. e-commerce sales surpassed Adobe’s growth projection of 8.3% for Black Friday. In parallel, Salesforce, which monitors online spending from 1.5 billion consumers engaging with global e-commerce platforms, reported that $79 billion was spent online worldwide that day, signifying a 6% increase, alongside U.S. sales reaching $18 billion, an upward trend of 3%.
Individual platforms exhibited extraordinary results. For instance, merchants on Shopify recorded an unprecedented $6.2 billion in sales on Black Friday alone, reflecting a 25% year-over-year increase and exemplifying the vast scale of their merchant ecosystem.
In the case of Amazon, its dominant marketplace and robust fulfilment services likely facilitated its substantial share of the overall online spending.
The robust sales data is anticipated to serve as a positive catalyst for these e-commerce platforms’ financial performance in the fourth quarter.
The Case for ETFs
While individual stocks such as Amazon and Shopify are direct beneficiaries of this trend, opting for ETFs offers a diversified, less volatile approach to partake in the burgeoning landscape.
ETFs provide immediate access to a myriad of e-commerce, retail, and related technological stocks, thereby mitigating the risks associated with any single company’s performance.
They encapsulate the overarching narrative of the digital retail revolution, ensuring that the underperformance of one stock may be compensated by gains from others—including those in logistics, payment processing, and software development.
ETFs Primed for Growth
The vigorous Black Friday performance indicates robust consumer enthusiasm for digital retail, positioning the following ETFs for sustained advancement.
Global X E-commerce ETF (EBIZ Quick QuoteEBIZ – Free Report)
This fund, boasting net assets of $53.1 million, provides exposure to 41 entities primarily engaged in e-commerce operations, offering software and services, and/or distributing goods and services online. Its top three holdings comprise notable e-commerce platforms: SHOP (5.26%) and Alibaba (BABA Quick QuoteBABA – Free Report) (5.16%).
EBIZ appreciated by 2.8% during the week preceding Black Friday and has risen 18.1% year to date, with a fee structure of 50 basis points (bps).
ProShares Online Retail ETF (ONLN Quick QuoteONLN – Free Report)
This fund, with a net asset value (NAV) of $60.09 per share, offers exposure to 19 companies at the forefront of the e-commerce trend. Its leading three holdings include AMZN (23.05%), BABA (11.92%), and EBAY (8.05%).
ONLN experienced a 3.4% gain in the week leading up to Black Friday, achieving a remarkable 34.7% increase year-to-date, with fees of 58 bps.
VanEck Retail ETF (RTH Quick QuoteRTH – Free Report)
This fund, valued at $256 million, grants exposure to 26 of the globe’s largest and most traded retail firms. Its foremost holdings feature e-commerce giants AMZN (19.62%), Walmart (10.37%), and Costco (7.35%).
RTH recognised a 3.7% increase during the week preceding Black Friday and has surged 12.9% year-to-date, with fees at 35 bps.
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