Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. The document is not intended to be construed as investment research. The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. All four of these businesses have notably outperformed the global market over the last five years on a compound basis. The company currently has an order backlog equivalent to 90% of sales. $2.7bn German-listed Jungheinrich is a leading provider of electric-powered warehouse trucks and integrated warehouse equipment solutions (racks, stackers, cranes, conveyors and software) to the retail sector. More than 50% of its customers already shop online. As a result, its website is being scaled to offer a product range more than five times the size available in its conventional retail outlet. Booker Group, the UK’s leading food wholesaler, is led by Charles Wilson, a major advocate of Amazon’s ‘long-tail’ approach. The former, a $14.5bn UK-listed home improvement business, owns This is the fastest-growing online home improvement retailer in the US, and the 80th largest internet retailer globally (according to comScore, a digital analytics firm). Potential concerns relating to fraud (whether over the use of credit cards online or product quality) are diminishing, particularly as retailers (and banks) improve the security of their sites, while customer feedback forums quickly help highlight those less trustworthy online businesses.īeyond many better-known listed retail brands which have reported online successes (such as Next in the UK or Foot Locker in the US), both Wolseley and Booker have developed notable online franchises. There also appears to be little that may halt growth prospects. It should not be forgotten that, while online may already account for some 15% of all US retail (but typically no more than 10% in Western Europe), in most of the emerging world, online today constitutes markedly less than 5% of all purchases. In other words, the longer-term potential remains highly significant and based on precedents from other industries (from televisions to mobile phones), once the e-commerce industry reaches a tipping point, where the S-Curve begins to slope upwards, then growth will likely be exponential. $2 trillion spent online may seem like a large figure, but even at this level, it would still imply that only 15% of all retail would occur online. If these assumptions prove correct – and historically, estimates have tended to err on the conservative side – then by 2020, the size of the online global retail market will have doubled. In the UK, for example, some 15% of all grocery sales in the week before Christmas occurred online (versus just 5% the year prior), while department store John Lewis estimated that over 30% of its December sales occurred online rather than in-store.Īgainst this background, most commentators foresee attractive growth potential for the online market, forecasting a compound growth rate of at least 15% annually for the next five years. Beyond the performance of these online behemoths, a whole host of other data points support the growing ubiquity of electronic commerce. Amazon highlighted a “record-setting holiday season” at the time of its results, while eBay recorded commerce volumes up 88% year-on-year. Wind the clock forward: last year, these two businesses respectively reported revenues of $75bn and $16bn. A year later, both Amazon and eBay began their services. Pizza Hut in America claims to be the first business to have offered its services online, in 1994, the same year that the first basic online banking propositions were also launched. Indeed, the World Wide Web (or what we now think of as the internet) only opened for commercial use in 1991. Most readers of this note will recall a world before it was possible to shop online.
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