Page 14 - DIY Investor Magazine - Issue 26

THE FUTURE OF CONSUMPTION: ECOMMERCE ISN’T JUST AMAZON....
By Kevin Carter, CEO of the EMQQ – The Emerging Markets Internet & Ecommerce UCITS ETF Capital at Risk. The content of this document does not constitute investment advice, nor an offer to
buy any product or make an investment.
OVERVIEW
Ecommerce – the buying and selling of goods and services online has become a global phenomenon. In the western world, traditional highstreets and shopping malls are under pressure from their ‘ecom’ rivals whose product ranges, delivery speeds and convenience are improving every day. The high street is likely to look very different for consumers
in the post-Coronavirus world. Those of us in the UK have already seen names like Laura Ashley, Debenhams, Topshop, Carluccio’s, Oasis and Warehouse go into administration- and others are likely to follow.
But the big winners from Coronavirus have been providers of ecommerce and online services – with consumers blocked from their favourite shops, many have turned to online stores to buy what they need. Amazon, for example has seen surging share prices as consumers drop a reported $11,000 a second on the sitei. Companies with strong ecommerce offerings have had an opportunity to reach a new client base – and one that can be retained in future.
However, in the developing world, ecommerce is playing
a different role – providing first-time access to goods and services for people who never had shopping malls or high streets in the first place. This revolution is being driven by the falling costs of smartphones which are giving people their first computer, their first way to connect to the outside world and the first way for them to buy or sell their goods in a wider market. While Amazon is synonymous with ecommerce in the west, there are a wide range of companies serving emerging market consumers that are less familiar to western investors.
With more than half of the world’s populations, more than half of the world’s wealth and huge growth potential, more investors are looking at how they can gain exposure to the ‘Amazon’s of China’, ‘The Google of Russia’, ‘The Uber of India’ and other ecommerce providers serving emerging market consumers. The appeal of emerging markets is based on their demographics and rapidly evolving economies: emerging markets contain 85% of the world’s populationii - a huge number of potential buyers.
‘THE BIG WINNERS FROM CORONAVIRUS HAVE BEEN PROVIDERS OF ECOMMERCE AND ONLINE SERVICES’
Moreover, emerging markets are getting wealthier – with rising middle classes, consumers in those regions have greater disposable income. By 2025, annual consumption in emerging markets is predicted to reach $30 trillion – what consulting company McKinsey calls “the biggest growth opportunity in the history of capitalism”.
For illustrative purposes only
www.mckinsey.com/business-functions/strategy-and-corporate-finance/our- insights/winning-the-30-trillion-decathlon-going-for-gold-in-emerging-markets
Simply put, if company’s like Amazon, Uber, Facebook and Google can generate huge revenues and shareholder value while only targeting a small fragment of the world’s population, then the opportunity for companies that can unlock the spending power of emerging market consumers must be much larger.
DIY Investor Magazine | Dec 2020 14