Betting on the growing popularity of online retail has paid off for investors over the past few years. During the pandemic, stores had to rely more on online shopping than ever before as lockdowns left consumers with limited options for buying goods.
As a result, many companies also improved their infrastructure to help facilitate spending online.
Big-box retailer Walmart (NYSE:WMT), for example, launched Walmart+ to compete with Amazon's (NASDAQ:AMZN) Prime subscription that enables customers to receive their purchases more quickly. A great benchmark to demonstrate just how strong e-commerce has been is by simply looking at Amazon's sales – in 2020, they soared 38% to $386 billion.
In the previous year, its top line only increased by 20%.
One exchange-traded fund (ETF) that you can invest in that holds Amazon and other top online retailers in its portfolio is Amplify Online Retail (NYSE Arca:IBUY). It has 80 holdings that include Newegg Commerce (NASDAQ:NEGG), Etsy (NASDAQ:ETSY), and Airbnb (NASDAQ:ABNB).
None of the stocks individually account for even 3% of the total weight of the fund but collectively, they've helped the ETF generate some impressive returns. In two years, the fund has risen by close to 130%.
Thus far in 2021, it has declined 5% as investors have pivoted away from growth stocks.
However, over the long term, this is still an attractive area to invest in; analysts from Research and Markets project that the global e-commerce market will grow at a compounded annual growth rate of 22.9% until 2027, when it will be worth an incredible $16.2 trillion.
