Mega Trends Driving Internet & E-commerce Growth Q4 2019
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Long-term, transformative forces that can influence or shape business, economies and cultures. Internet and e-commerce mega trends may have a profound impact on the way consumers and companies conduct business, communicate and consume entertainment.
Mobile Phone Industry: High Speed Internet Adoption
The advent of 4G mobile network technology meant that compromise in speed between mobile and fixed broadband was no longer one consumers had to make. Internet download and upload speeds are now as fast, if not faster than fixed broadband connections that require hard lines in homes.
4G stands for ‘fourth generation’ and refers to the fourth installment of mobile network technology that allows for faster internet connectivity. 4G allows compatible phones to load webpages quicker, download content and stream video and music without buffering. Consumers can now transact and consume information on their phones as quickly as they can on their desktop PCs.
In 2014, ~64% of mobile phones were equipped with 4G connectivity. As of 2018, that percentage had grown to 97.5%. Effectively all mobile phones, now have access to high speed internet comparable to desktop PCs.
High speed internet access on mobile phones is one of the key reasons why the mobile apps industry is approximately $100 billion and growing.
Over 97% of Global Mobile Phones have Access to High Speed Internet
4G | 63.8%
Other | 36.2%
4G | 97.5%
Other | 2.5%
Source: Bloomberg Finance L.P., data as of 9/30/2019.
Worldwide E-Commerce Growth
Global E-commerce is experiencing robust growth. Sales totaled nearly $3 trillion in 2018 and are forecasted to approach $5 trillion by 2020, representing a growth rate of ~65%.
The U.S. accounted for an estimated 17% of the market in 2018, with China and Rest of World at an estimated 44% and 39% respectively.
Source: U.S. and China E-Commerce Sales from Bloomberg Finance L.P., data as of 9/30/2019. Global Retail E-commerce Sales from eMarketer.
The above chart is for informational purposes only, includes the estimated growth of a certain sector and does not represent the O’Shares ETFs. It is impossible to predict future growth and actual results may vary.
Consumer Trends: The Biggest Opportunity
Developed countries are nearing internet adoption saturation. North America and Europe account for roughly 15% of the world’s population and are nearing full adoption at 89% and 88%, respectively.
Asia and Africa on the other hand, have populations exceeding 4 billion and 1 billion, respectively, accounting for over 70% of the world’s population but have much lower adoption rates. Just over half of Asia is online and that proportion drops to ~40% for Africa. As internet adoption rates in Asia and Africa converge with developed markets, growth in internet and e-commerce will likely follow suit.
Source: ‘‘Internet Users in the World by Regions – June 2019’’, Internet World Stats, data as of 9/30/2019. For informational purposes only
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The securities of small capitalization companies are often more volatile and less liquid than the stocks of larger companies and may be more affected than other types of securities during market downturns. Compared to larger companies, small capitalization companies may have a shorter history of operations, and may have limited product lines, markets or financial resources.
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