Technology has given today’s Connected Consumers unprecedented access to goods and services across the world. But what does the rise of e-commerce mean for companies, consumers and investors?
What is the Connected Consumer?
Significant advancements in technology over the years have played out in favour of today’s consumer. Widespread availability of internet means that today’s consumer is in a better position to make more informed purchase decisions anywhere, anytime, on any platform. Businesses must also evolve to keep pace with consumer demand, and fintech is increasingly important for companies to improve how they interact with their customers. Keeping pace with technological advancements will enable companies to engage their customers more deeply in a digital economy.
What is the Digital Economy?
The rise of smartphones has given consumers globally unprecedented access and choice when it comes to shopping. Digitally-savvy companies now offer a broader selection of goods, faster delivery, secure payments and 24/7 mobile access. E-commerce represents the part of this new digital economy that consumers are most familiar with today. Even though it feels like e-commerce has been around for a long time, just 11% of global retail sales are transacted online.1 We believe this should allow for many years of double-digit growth in the future.
E-commerce penetration is rising
Over the years, online retail has taken market share from offline retail, a trend we expect to continue in the long term.
Video: Digital Economy
of retail transactions are done digitally today; a number only likely to rise.1
of consumers surveyed in 2018 plan to make purchases on mobile – versus 40% in 2017 – with mobile usage a likely driver of digital growth overall.2
of total retail sales by 2020 are forecast to be accounted for by digital-native millennials, who are entering their peak spending years.2
What does this mean for investors?
Traditional businesses are reaching a critical juncture, where they must adapt to the digital age or be disrupted by more digitally savvy competitors. Retailers are rapidly adapting to the needs of these connected consumers to make shopping quicker, easier and more personalised. We believe this represents a significant structural opportunity for investors seeking long-term growth. Digital-native millennials are reaching their peak spending years, while older, wealthier generations are also increasingly connected and comfortable shopping online.
Investing in the Digital Economy
We see these trends as creating opportunities across the entire e-commerce value chain as traditional businesses embrace the Digital Economy. We refer to these opportunities as the four Ds:
- Discovery – companies that help people find products through search engines or digital marketing platforms
- Decision-making – e-commerce companies, web portals and mobile apps which provide consumers with convenient and reliable product choices
- Delivery – companies creating fintech solutions to keep pace with consumers’ increasing expectations of simple payment processes or using automation in order fulfilment for same-day delivery and returns
- Data & Enablers – digital companies which help traditional businesses migrate to the digital world
Why now for the Digital Economy?
The Digital Economy revolution is still in its early stages, and there is a growing number of new business segments emerging. For instance, the ‘Sharing Economy’ comprises high-profile companies, which are currently private, that will likely list in the coming years, expanding the investable universe and diversification opportunities.
1 AXA IM. BOFAM – Global eCommerce, October 2019.
2 Global Consumer Insights Survey 2020, PwC.
Quick Take with Mark Hargraves on the evolving economy
Thematic equities in focus
In many ways 2020 was an “extra”-ordinary year. People all around the world were forced into lockdowns, many businesses had to cease operations or were severely disrupted, whereas other parts of the ...
What investors need to know about the evolving economy
The five themes driving growth within the Evolving Economy
Ageing and Lifestyle
The number of over-60s is likely to grow more than 5 time faster than the under-60 population until 2030*
Forecast to grow 10-15% annually until 2025, the robotics industry is rapidly changing how we live and work
Huge demographic and environmental changes are forecast to make CleanTech a $1.3 trillion market by 2020
The growth of the global middle class is at a 150-year high, boosting consumption in Asia and the developing world