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E-Commerce: A Powerful Theme In Its Early Innings

Dec. 02, 2018 11:52 AM ET
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On November 29, 2018, Global X listed the Global X E-commerce ETF (EBIZ) on Nasdaq. EBIZ seeks to track the Solactive E-commerce Index, which focuses on companies positioned to benefit from the increased adoption of e-commerce as a distribution model. This includes companies whose principal business is in operating e-commerce platforms, providing e-commerce software and services, and/or selling goods and services online.

We define thematic investing as the process of identifying powerful structural trends and the companies that stand to benefit from the emergence of those trends. The majority of these themes are either driven by secular changes in consumer habits and demographics – what we call ‘People’ related themes – or by advances in disruptive technologies – known as ‘Tech’ related themes. E-commerce has been benefiting from both: consumer preferences are evolving to favor online shopping experiences, while simultaneously new technologies in artificial intelligence, the internet of things, and transportation are enabling online retailers to offer features beyond the limitations of traditional brick and mortar stores. We believe that these dual drivers of potential growth, combined with e-commerce’s still low overall level of retail penetration, make it a particularly powerful and compelling global investment theme.

How early is the E-commerce Theme?

While e-commerce has been around for over two decades and enjoyed significant growth across that time frame, its overall penetration of the retail industry still remains low. According to the US Department of Commerce, e-commerce as a percentage of total retail sales reached a new all-time high in Q3 2018, yet that percentage was still just 9.8%, leaving over 90% of the retail market still susceptible to online disruption.1 Such a low level of penetration implies that e-commerce is still in the ‘early adopters’ phase of the adoption curve, even despite the fact that surveys show

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Founded in 2008, Global X is a sponsor of exchange-traded funds (ETFs). We are distinguished by our Thematic Growth, Income, and International ETFs. Explore our insights on the trends and themes shaping global markets – from technology to commodities to emerging economies – at globalxfunds.com/research. Global X ETFs is a member of the Mirae Asset Global Investments Group. Important disclosures: globalxfunds.com/privacy

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