Investing in the future – Ecommerce
There is no doubt that ecommerce is one of the most exciting investment sectors that exists today. Every aspect of our lives is affected by ecommerce. It is fast, high profile, and the numbers are breathtaking:
- Amazon processed nearly $89 billion in sales from 240 million customers;
- Visa and MasterCard have over 1,600 million credit cards in circulation;
- Apple and Google are now worth more than many entire countries.
Amazing as those number are, they pale into insignificance when you consider that the total ecommerce market was estimated to be $1.6 trillion in 2015. However, 20 years ago it didn’t exist, but it is forecast to grow to $3.5 trillion per annum by 2019.
It is easy to underestimate just how much of a global game changer the smartphone has been, and how it has changed ecommerce for everyone. You now carry a digital shopping mall in your pocket or handbag that offers every product in the world at the very best prices, all of which are available at the click of a button and delivered to your front door. It is compelling and it is convenient for people of all ages but, for younger people, it is simply how things work as they have never known anything different. For those companies that understand this fact, the potential to grow is unparalleled; for those that don’t, there is no future.
Stop and look at your (digital) life
Most of us are completely unaware of just how fast our individual, everyday habits are changing toward becoming digital citizens of a global economy. Our every communication is an email, a text, a post or a tweet. Every photo now rests comfortably in the cloud; every book is now read on a Kindle or iPad. The music we listen to is streamed as we browse flights and hotels, manage our bank accounts, pay our taxes or even video chat with our friends and relatives in distant parts of the world on our devices. When you stop and look around, you start to realise that without ever making a conscious decision, your life has become digital and there is no going back.
How to invest
The potential for ecommerce is unlimited – but only for those companies that get it right. For retail investors, it is therefore extremely difficult to try to pick the winners in the crowd, which is why specialist investment funds have been created that aim to do exactly that. Managers of ecommerce funds must constantly look for the companies that are best placed to facilitate, or benefit from the rapidly growing trend. Whilst it carries tremendous opportunities, it also carries a higher risk than the average equity investment fund. For that reason, investors should only allocate a small proportion of their available capital in this area. You should also consider it a longer term investment theme as these are the companies of the future (as well as today). Finally, did you know?
- We now send more than 100 billion emails every day!
- The video gaming market is now significantly bigger than Hollywood and the Music Industry - combined!
- In 2015 only 50% of the world had access to the Internet and only 30% have a smart phone so far...
To find out more about investing in Ecommerce as part of your overall investment strategy, contact us today.