It’s hard to believe that just a decade or two ago, online shopping was a niche market, reserved only for tech-savvy and early adopters. Today, this soon-to-be $5 trillion industry is anything but niche, with an increasingly growing number of people around the world conducting much of their shopping online. However, as prominent as eCommerce is in our daily lives, it is expected to grow even bigger — and investment opportunities will come with this growth.
The World is a Shopaholic
So just how big is eCommerce? At the end of 2018, the market was already massive, reaching $3 trillion in retail sales. Not only is this a giant number, but it is also rapidly growing. In just three years, between 2015 and 2018, the market grew by a whopping 93%¹.
In the US alone, online shopping has become the norm, with 83% of Americans making an online purchase on Amazon in just six months². However, despite the greatly increased penetration, it doesn’t seem like the market’s expansion is nearing its end, as eCommerce is projected to grow to $6.5 trillion by 2023¹.
The Daily Shopper
Despite gaining much attention around dedicated shopping days and sales, such as Black Friday, Cyber Monday, Amazon Prime Day and the Alibaba-created Singles’ Day, online shopping is a daily activity for a growing number of people around the world. From ordering a pizza to buying a new house, nearly everything can, and is, bought online these days.
One prominent example of just how common online purchasing has become is the fact that when Tesla unveiled its electric Cybertruck, about 250,000 people went online to preorder it³. The car costs tens of thousands of dollars, so the fact that so many people ordered one just shows how common and simple it is to make substantial purchases online.
Naturally, much of the growth of eCommerce was prompted by external factors. The most obvious factor is the spread of internet access. As more people around the globe gain internet access, the more they will be able to shop online. It is the same for the growing number of smartphones around the world. In fact, 47% of consumers today say that they shop more using their mobile than by going to the store⁴. This number alone shows the potential of growth eCommerce still holds, as more than half of the world’s population today still doesn’t own a smartphone⁵.
The Shopping Cart has Many Items
When thinking of eCommerce, names like Amazon and Alibaba instantly come to mind, alongside online marketplaces, such as eBay and Etsy. However, the global online shopping industry spans much more than just online retailers. Payment providers, delivery companies, cybersecurity companies, software providers and many other sectors also contribute to this multitrillion-dollar behemoth.
Moreover, with the introduction of new technologies in the coming years, the industry could expand into new realms. Drones and autonomous cars may be used for quicker and more efficient deliveries, 5G technology will enable IoT devices to place orders themselves and Augmented Reality (AR) could be a real game changer, by making trying on clothes in-store obsolete.
Investing in eCommerce
To enable investors from around the world to gain exposure to the industry, eToro has created the ShoppingCart Smart Portfolio. This portfolio focuses on the pure players of the industry, comprising stocks exclusively from online retailers and marketplaces. If you would like to follow the industry and are considering investing in it, you should add ShoppingCart to your watchlist.
Your capital is at risk.
Smart Portfolios™ is a portfolio management product. Smart Portfolios should not be considered as exchange traded funds, nor as hedge funds.
This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not, be taken as a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilising publicly available information.