Amazon Prime Day 2023: A Shopping Bonanza Fueled by Record Sales and ETF Opportunities
Amazon’s annual two-day Prime Day event is off to a roaring start, exceeding expectations with record sales that are estimated to hit a staggering $14 billion in online revenue. This year’s event, taking place on July 11 and 12, has already seen a 12% year-over-year increase in sales during the first seven hours, according to data from Momentum Commerce. The average household is projected to spend $100 on Prime Day purchases, with protein shakes, Amazon Fire TV sticks, sunscreen, and Amazon’s Happy Belly brand grocery items emerging as top sellers. As shoppers embrace the deals, savvy investors can capitalize on the frenzy by diving into ETFs that hold significant stakes in the online retail giant.
Key Takeaways:
- Prime Day 2023 is breaking records: Early data indicates that Prime Day 2023 is on track to surpass last year’s sales, with estimated revenue topping $14 billion.
- Shoppers are embracing the deals: Average Prime Day spending per household is around $100, driven by popular products like protein shakes, streaming devices, sunscreen, and grocery items.
- ETFs offer a unique opportunity: Investors can tap into the Prime Day excitement by investing in ETFs with significant allocations to Amazon, a leader in the online retail space.
ETFs Riding the Prime Day Wave
Here’s a closer look at five ETFs that are well-positioned to benefit from the surge in online shopping driven by Prime Day:
ProShares Online Retail ETF (ONLN)
ONLN focuses on companies engaged in online or non-store retail, offering investors exposure to businesses shaping the future of retail. With Amazon as its top holding, accounting for 23.4% of the portfolio, the ETF also includes 17 other companies that are driving the e-commerce revolution. ONLN boasts an asset base of $101.8 million and charges an annual fee of 58 basis points.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
FDIS tracks the MSCI USA IMI Consumer Discretionary Index, a broad-based index encompassing 274 stocks, with Amazon claiming the top spot at 23.3%. This ETF has amassed $1.5 billion in assets and charges a comparatively low annual fee of 8 basis points. It carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Consumer Discretionary ETF (VCR)
VCR follows the MSCI US Investable Market Consumer Discretionary 25/50 Index, holding 304 stocks. Amazon, with a 23.4% allocation, is its largest holding, followed by Broadline Retail at 25.5%. VCR charges investors an annual fee of 10 basis points, representing a highly competitive cost. The ETF has managed $5.7 billion in assets and carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY)
XLY tracks the Consumer Discretionary Select Sector Index, offering broad exposure to the consumer discretionary space. It stands out as the largest and most popular ETF in the sector, boasting nearly $20 billion in assets and an average daily trading volume of 2.7 million shares. With 52 securities in its portfolio, Amazon takes the top spot at 22.5%. XLY charges an expense ratio of 0.09% and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH)
RTH tracks the MVIS US Listed Retail 25 Index, focusing on the 26 largest retail firms. The index includes companies engaged in retail distribution, online shopping, direct mail, and traditional retail formats. Amazon holds the top position with a 20.4% share. RTH has accumulated $213 million in assets and charges a fee of 35 basis points. It trades with an average daily volume of 5,000 shares and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Beyond the Headlines: Why Prime Day Matters
Prime Day isn’t just about discounts for consumers; it’s a vital event for Amazon, signifying the start of the crucial holiday shopping season. By fueling sales and boosting customer engagement, Prime Day sets the stage for the company’s success in the coming months.
Here’s why Prime Day matters for Amazon and the wider retail industry:
- Boosting Sales and Revenue: The event is a significant source of revenue for Amazon, driving a surge in sales and contributing significantly to its overall financial performance.
- Attracting New Customers: Prime Day provides an opportunity to attract new customers with enticing deals, expanding Amazon’s customer base and increasing market share.
- Strengthening Brand Loyalty: Generous discounts on Prime Day further solidify customer loyalty to Amazon, reinforcing its position as a leading online retailer.
- Driving Prime Membership Growth: By offering exclusive deals to Prime members, Prime Day incentivizes shoppers to join or renew their subscriptions, increasing revenue streams beyond product sales.
- Shaping the Retail Landscape: Prime Day sets a precedent for major online retailers and brands, leading to more frequent promotional events and a shift towards digital shopping experiences.
Conclusion:
Prime Day 2023 is shaping up to be a record-breaking event, reflecting the ongoing growth of online shopping and Amazon’s dominant position in the e-commerce landscape. For savvy investors, ETFs offer a convenient and diversified way to capitalize on this shopping extravaganza, unlocking the potential for growth and returns tied to the continued success of the online retail giant. As consumers eagerly browse through countless deals, investors are seizing the opportunity to invest in the power of Prime Day and its impact on the future of retail.
