The pandemic has accelerated numerous trends that were already underway.
It is obvious that e-commerce companies have been one of the greatest beneficiaries. From Amazon to Shopify to BigCommerce, these tech-enabled businesses have seen record usage of their products.
But we aren’t just talking about buying food, household goods, electronics, and other lower price-point items though.
We are also seeing an explosion in online transactions for major life purchases, such as a car or home.
As I’ve thought through this nuance of the online shopping trend, it is quickly becoming apparent that every single transaction is going to be done virtually at some point in the future.
It would have been impossible to think people would buy cars or homes via the internet, especially if they had never seen them before, but that is exactly what we are seeing.
Here are two great examples:
1.OpenDoor — The company’s pitch is “Opendoor is the new way to sell your home.
Skip the hassle of listing, showings and months of stress, and close on your own timeline.
Get a free offer today!”
They sold more than 18,000 homes last year and did over $4 billion in revenue.
With existing home sales jumping 25% from June to July this year, the digital real estate transaction leader is poised perfectly to continue growing at an insane rate.
2.Carvana — This company empowers consumers to buy used cars completely online.
According to Bloomberg, “Carvana lets customers choose from more than 19,000 cars and complete purchases in as little as 10 minutes, according to its website.
Buyers have the option of picking up their car at more than a dozen vending machines located around the country, using a giant coin.
Its revenue doubled to $3.9 billion last year as it sold about 200,000 cars. It now sees a path to 2 million sales a year.”
These two examples are fairly straight forward.
They have moved a previously complex and painful transaction to the internet, while drastically reducing the friction required.
The rise in prominence for both organizations is also tied to the willingness, and in some cases the necessity, of consumers to make larger and larger purchases on the internet.
So if the digitization of commerce is happening for the largest purchases that consumers will make in their lifetime, will it eventually eat the entire stack of transactions?
Personally, I believe so. Another great example is court transactions.
The pain of going to court, standing in front of a judge for a speeding ticket, and then paying your fine is familiar to almost everyone.
My friend Sam Parr recently experienced a new digital version of this though.
The judge, lawyer, police officer, and defendant all appeared together via Zoom and it was live streamed to YouTube (that part is crazy!).
This “transaction” is a revenue generating opportunity for governments, so we are now seeing data points that even transactions between citizens and governments are being digitized. Y
our home, your car, and your court appearance — nothing is safe from the digital commerce tailwind.
If you take this trend even further, you quickly realize that it is the foundation on which the “Financialization of Everything” will occur.
I don’t even know if that is a real word, but it perfectly describes the idea so we’re going to roll with it ;)
The brain behind the pseudonymous @JohnStCapital Twitter account has been all over this for the last few months.
The perfect storm of digital transactions and the financialization of everything provides the opportunity for a different, improved world.
Investors will have more choice, better data, and hopefully better returns. Consumers will have their needs better served and tech-enabled businesses will capture greater and greater profits.
It is wild to think we are still having the digitization conversation more than 20 years after the internet began to be popularized, but this is part of the natural adoption of technology.
What once looked like an innocent online book store has grown to become the most valuable company in the world and a company that originally pitched investors on the idea of selling cars on the internet via giant vending machines has created more than $20 billion in wealth for the two founders.
Start thinking about every transaction you do.
They’re all going to be digital in the future.
There is immense opportunities in finding companies that will facilitate these transactions and owning equity in them early.
I’ll be looking for them as well, so send me any ideas
that you come across :)