The Rise of E-Commerce: How Online Shopping is Reshaping the Retail Landscape

As consumer strength wanes, online shopping emerges as a popular method of discount shopping, with e-commerce projected to continue gaining market share through the end of 2023.

As we approach the final months of 2023, consumer spending has been impacted by high grocery prices and rising housing costs. However, consumers are still prioritizing experiences such as concerts, movies, and dining out. To afford these experiences, they are turning to discount shopping, with online shopping emerging as a popular method. This article explores the growth of e-commerce and its impact on the retail industry, as well as the potential beneficiaries and the role of logistics companies in adapting to the changing landscape.

E-commerce: The Next Generation of Retail

The question arises: if overall retail sales are declining, how will this affect consumer retail-oriented investments, including ETFs? While e-commerce ETFs may experience similar performance trends as retail ETFs, the long-term outlook for e-commerce remains positive. E-commerce represents the evolution of retail and has been steadily gaining market share even before the pandemic. This growth is driven by increasing access to technology and the rise of remote work, making online shopping an attractive option for consumers looking to save money.

Proprietary Estimates Show Strong E-Commerce Market Share in Future Quarters

Based on proprietary estimates and retail sales data, the third-quarter retail e-commerce report is expected to show a 9.0% year-on-year growth on an adjusted basis. This translates to a 15.8% market share of total retail sales, compared to 14.8% in the same quarter of the previous year. The increase in e-commerce growth is expected to be driven by discretionary items such as clothing and general merchandise, as well as nonstore retailers. Consumers seeking to save money are turning to online shopping, where they can easily compare prices and find discounts.

What Companies Can Benefit?

E-commerce giants like Amazon and Alibaba are poised to benefit the most from the growing trend of online shopping. These companies have a significant market share in their respective geographies and offer a wide range of products and services beyond retail, including entertainment, cloud computing, and logistics.

Traditional retailers can also benefit from the rise of e-commerce by adapting their operations to accommodate both in-person and online shopping. The integration of omnichannel operations, such as buy-online-pickup-in-store (BOPIS), can enhance the customer experience. Even companies with a brick-and-mortar presence can leverage e-commerce technology, such as inventory tracking, to improve efficiency. Walmart is a prime example of a retailer that has successfully transformed its operations, with e-commerce sales accounting for 14.0% of its U.S. net sales in the second quarter of 2023, compared to 11.9% in the same period of the previous year.

Logistics companies, particularly those with last-mile operations, such as FedEx and United Parcel Service (UPS), need to modernize their operations to keep up with the changing e-commerce landscape. As e-commerce demand increases, consumers expect faster and more convenient deliveries, especially in urban areas. These logistics companies stand to benefit from the higher volume of deliveries, provided they can maintain service levels and adapt to fluctuating demand.

What ETFs Can Benefit?

Several e-commerce ETFs hold companies like Amazon and Alibaba. These thematic ETFs, which often have ties to consumer discretionary/retail ETFs, also include technology, communications, and industrial stocks. While these ETFs may experience performance fluctuations along with retail sales, they are better positioned to withstand downturns in consumer demand due to the continued growth of e-commerce.


As consumers prioritize experiences and seek ways to save money, online shopping has emerged as a popular method of discount shopping. The rise of e-commerce is reshaping the retail industry, with companies like Amazon and Alibaba leading the way. Traditional retailers can also benefit by embracing omnichannel operations, while logistics companies must modernize their operations to meet the increasing demands of e-commerce. As the holiday shopping season approaches, online retailers and retail giants are well-positioned to capture market share through sales and discounts. The future of retail lies in the hands of e-commerce, offering consumers convenience and savings in an evolving landscape.






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