E-Commerce Growing to $500 Billion, Augmented Commerce Coming


There is no greater gift to geeks like us than Mary Meeker's Internet Trends report. If you haven't seen the 2018 version yet, what are you waiting for? Time to read 300 slides in 30 minutes. The key takeaway we remember from last year is the consumerization of the enterprise, and that much of the user interfaces of today's mobile and web apps are directly inspired by 1980s video games. Not surprising, since many of the people building companies today and making design decisions grew up together with the maturation of the video game industry. This year's report has a great section on China and sovereign investment on edge technologies, but lets leave that rabbit hole for another time since we covered that last week.

In this entry, we want to highlight takeaways around payments. The story that comes through the deck is that digital commerce and digital payments are intertwined, and both are rising. E-commerce has grown to $450 billion per year, up from $180 billion in 2010. As share of total retail sales, E-commerce has doubled from 6% to 13%. In terms of everyday transactions, consumers claim to have only paid for items in retail stores 40% of the time, with digital channels comprising the other 60%. This category lumps together everything from P2P payments like Venmo (7%), to money movement through messenger apps (7%! Really!?), to shopping through smart home devices (3%). While this survey sentiment doesn't yet line up with actual retail dollars, it's fascinating to see consumers using so many emerging payment mechanisms.


So we are experiencing this broad digitization of commerce, with E-commerce living in the web and in our mobile apps. But the world is on the verge of another shift, which is augmenting the physical space with embedded digital commerce. Meeker highlights retail stores that use traffic heatmaps to optimize layout, and smart devices in shoes that measure in-store sales conversion (from fitting to purchase). We add the technology of Angus.ai, which is similar to what is likely under the hood at Amazon's stores, and at some point will be at Whole Foods. A machine vision algorithm can watch product stocks, measure sales in real time, and send workers to replenish them. Physical is becoming digital, which we believe have a deep implication on the types of payments companies that succeed. Not point of sale, but point of intent.