Connected Consumer

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.

 

Source: Statista, 27 August 2020

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 firms. 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 also 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: Search engines, online advertising and social media are increasingly the starting point when searching for and/or discovering products and services online.
  • Decisions: E-commerce, web portals and mobile apps provide consumers with convenient and reliable product choices. Companies involved in the decision-making process are dominated by online disruptive firms taking market share from traditional businesses.
  • Delivery: The proliferation of e-commerce has led to rapid growth within digital payments, and is also pushing companies to look for supply chain efficiencies to deliver goods everywhere within a specified timeframe – also known as ‘same-day’ or ‘next-day’ delivery.
  • Data & Enablers: Digital companies that help not only digital natives, but also digital migrants who need to transform themselves to remain relevant.

Why now for the digital economy?

We believe the digital economy is a multi-year investment theme. As such, we believe the ongoing shift from offline to online will continue to benefit trends such as online commerce, digital media consumption, electronic payments and digital transformation.

Furthermore, the digital economy revolution is still in its early stages, with 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

Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.
This promotional communication does not constitute on the part of AXA Investment Managers a solicitation or investment, legal or tax advice. This material does not contain sufficient information to support an investment decision.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the U.K. by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the U.K. Registered in England and Wales, No: 01431068. Registered Office: 155 Bishopsgate, London, EC2M 3YD (until 31st December 2020); 22 Bishopsgate, London, EC2N 4BQ (from 1st January 2021).
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.