Who Gets Gold In The e-Commerce Olympics?
Do you know which country does the most online shopping? How does the US compare? Do you even know what proportion of shopping is done online in Australia? In today’s memo I want to take the pulse of e-commerce across the globe given its becoming such a wonderful opportunity for some businesses, and such a disturbing threat for other businesses.
You would be forgiven for thinking that the US leads the world in e-commerce penetration. However, the country that brought us venture capital and Silicon Valley doesn’t even make the medal podium in the e-commerce Olympics – coming in fourth with around $11 in every $100 of shopping spent online.
At the top of the charts is China, where around 17 per cent of retail sales now happen over the internet rather than in a traditional “brick-and-mortar” store. China leads from the UK (14 per cent of retail is online) and then South Korea (13 per cent e-commerce penetration), while Australia is in 7th place with just 7 per cent of sales taking place online today.
With the leading rate of e-commerce penetration combined with the world’s second largest economy, China also takes the prize for the world’s largest e-commerce market by total value of goods transacted. China’s e-commerce market is about one trillion (with a “t”) US dollars. This compares to a roughly $400 billion e-commerce market in the US.
Even more astounding is that despite a bigger market and higher penetration rate, e-commerce in China is growing quicker than in the US. Chinese online retail sales are increasing at a rate of about 30 per cent per annum, double the 15 per cent per annum growth in US online retail sales.
Source: US Department of Commerce; National Bureau of Statistics of China; Alibaba company documents
In the Montaka and Montgomery Global long portfolios we continue to be positively disposed to e-commerce winners in both China and the US. Additionally, in the Montaka fund we are selectively short the stocks of businesses that are losing ground to e-commerce competitors, from the US to Germany and even down here in Australia.
Roger's step-by-step guide to valuing the best stocks and buying them for less than they're worth, Value.able, is available exclusively at rogermontgomery.com. Skaffold is an online stock-picking application that rates ASX-listed stocks from A1 to C5. Watch a demo of Skaffold at www.skaffold.com.