Traditionally the Thanksgiving weekend was a bricks and mortar retailing bonanza. Now e-commerce is taking over. Adobe Analytics data show Cyber Monday was the biggest online sales day on record at USD 6.6bn, up 17% year-on-year (y/y), and with smartphone-generated revenue up 39% y/y. Earlier this month on China’s Singles’ Day, Alibaba’s one-day sales rose 40% to exceed USD 25bn.
But these impressive growth rates don’t mean we’ve seen the best of e-commerce:
- Evolution of technology. Internet and smartphone penetration rates are growing, particularly in emerging markets. Virtual Reality and artificial intelligence (AI) are improving the customer experience, while AI also supports efficient delivery.
- The convenience factor. Online stores are always open, price comparisons are easier, delivery is getting faster, and payment options are continuously improving.
- A bigger customer pool. A new global middle class, powered by emerging market population growth, could send sales volumes higher. Urbanization is driving consumption growth and improving internet access, supporting e-commerce, while population density in cities aids distribution.
So we see annual global online sales expanding at a 15–20% growth rate over the next decade. E-commerce will continue to increase market share: Amazon's 2017 market capitalization growth is nearly four times the combined value of the top 10 US mall retailers. E-commerce offers attractive long-term investment opportunities, and we think investors can benefit by investing in a diversified portfolio of equities like online marketplaces and retailers, and payment service providers.
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