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EXECUTIVE SUMMARY

• Reports from several analysts now estimate that the transition from offline to online shopping has been pulled forward anywhere from 2 to 5 years, in large part because of the impact COVID-19 has had on consumer habits worldwide
• Q3 2020 saw the continued acceleration and growth of marketplace and e-commerce, with the public and private markets fully embracing the transition and the business models
• Some categories have emerged as huge winners in this shift, which is a direct result of COVID-19 and stay-at-home orders, most notably those that meet our basic needs hierarchy – namely, food, shelter and water:
  • Or in today’s parlance: Groceries (up 8% YTD), Home Improvement (up 27% YTD) and Alcohol (up 9% YTD)
  • Amazon has flourished as we might expect, but so have Walmart, Target, Home Depot (online sales doubled in Q2) and Dick’s Sporting Goods (online sales tripled in Q2)
  • While the back-to-school shopping season was a disappointment as ‘back-to-school’ did not really happen, one thing is for sure, we are in for a very digital holiday season
• Some of the macro trends we are following:
  • How e-commerce is benefitting from the current situation
  • E-commerce is expected to be 14.5% of total retail in 2020, a big step-up from prior years, as a record number of brick-and-mortar retailers seek restructuring protection
  • The transition from offline to online accelerates and 2020 will be remembered as the inflection point in the growth of e-commerce
  • Driven by the secular shift, e-commerce and marketplaces have seen significant growth in share price: Marketplaces up 71% YTD, e-commerce up 129% YTD
  • The home category has experienced tremendous growth throughout the year and some, like Wayfair, have acknowledged, it is “up for grabs” as the all-digital demographic moves into the core home consumer category
  • Etsy continues its rocket-ship growth with the stock price more than doubling, and achieving a ~$17Bn market cap, and by the way, homewares and home furnishings is its leading segment
  • The marketplace continues to evolve….
  • …and while business models may vary, one thing is for sure, the KPIs don’t lie: market trends, traffic sources, conversion and retention data, customer LTV, CAC, NPS, and service all matter