Franklin Templeton’s Matt Moberg writes about how the Covid-19 pandemic accelerated the trend towards e-commerce.
We are witnessing a sizeable and lasting shift to e-commerce across the economy – a shift that has been underway for decades, entirely catalysed by a single, revolutionary technological advancement – the emergence of the internet.
The internet made it possible for businesses and individuals to buy and sell items and services online, and in a very short period, consumers had the convenience of almost unlimited selection available to them from the comfort of their homes, 24/7, with just a few clicks of a button. As it stands today, global e-commerce is an area of tremendous opportunity, as the disruption we see is only just beginning.
The effect of Covid-19 on corporate and consumer behaviour has been pronounced and significant. This period has been a tailwind for e-commerce at a level unseen since the advent of mobile phones. For the first time in history, we saw an acceleration in e-commerce adoption despite gross domestic product declining globally.
The pandemic has created some of the greatest retail, payment, and distribution challenges in our lifetime. In a matter of months, the pandemic catapulted the industry forward, accelerating the adoption of online shopping, digital communications, website creation and other industry trends at a pace that had previously taken years. Companies across the e-commerce ecosystem have been responding with agility, speed, and continuous innovation. If nothing else, Covid-19 serves as a testament to our adaptability, as we are seeing e-commerce expand in remarkable and ingenious ways.
As we look ahead, we believe the impact of Covid will leave an indelible mark on consumer behaviour. Over the next year, live entertainment and travel should start to come back; perhaps not to pre-pandemic levels initially, but the inflection point is coming, and the direction is positive. Even so, we anticipate the utilisation and reach of e-commerce to continue to increase as some behaviours stemming from the pandemic are likely to be permanent.
The number of people shopping online globally has only increased since the onset of the pandemic, more and more industries are finding opportunities to grow their businesses online, and the development of new business models, such as those built around sharing economies, auctions, artisanal products, and social influence marketing, are all trends that support our long-term investment thesis for Disruptive Commerce.
We believe companies supporting these capabilities will thrive as we emerge from the pandemic, creating winners and losers in all parts of the economy, and for us, an opportunity.
*Matt Moberg is senior vice president and portfolio manager within the Franklin Equity Group.
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