TGIF – E-Commerce and E-Cash

The American Consumer has been active this holiday season and we believe the trend will continue and in fact accelerate. With the US economy humming along and the Stock Market at all-time highs, consumer spending is looking strong. From Thanksgiving Day through Cyber Monday, more than 174 million Americans shopped in stores and online during the 5-day holiday weekend, sharply beating the 164 million estimated. Our go-getter Meredith was certainly one of them. I was not. I never will be.

The irreversible trend of online shopping continues. UPS said an “unprecedented” surge in online orders is causing some delays in deliveries as the company has been scrambling to keep up with holiday shopping demand. UPS may increase driver work hours approaching 70 hour weeks through the holidays. You’ve probably been noticing UPS and FedEx trucks busy in your neighborhood even past 9pm. Online sales are forecast to jump by another 16% this holiday season. That could prove to be low. Also interesting, 65% of consumers have made purchases via mobile apps. It’s even more pronounced when you study the behavior of the younger generations. Retailers be warned.

People do still like to go to stores. They naturally like deals. 93% of advertisers plan to promote special holiday deals and discounts. That has been the way to get people off the couch and into stores. But not everybody marks items down during the holidays. You won’t find any markdowns at the Apple Store, Tiffany or Lululemon. Meredith has affirmed this time and again. When you make must-have products that stand alone, you can charge full price. That is great for the bottom line, which has been the issue for so many struggling retailers. They need to figure out how to capture the 20-year olds, and fast. Few retailers accept Bitcoin…

It’s the talk of the town. You can’t get away from it. The Bitcoin craze continued with the digital currency hitting $17K. It surged 40% in just 40 hours at one point this week. It was reported that if Bitcoin continued that pace, it would hit $2 Million by the end of the year. Really?!? It’s up over 1500% this year. This is either the biggest asset bubble in our lifetime or Cryptocurrencies are bigger than realized and are already changing the way transactions take place on a broader scale. My sense is the former because supply is so slim and demand so strong. But we are big believers in the Blockchain, which is a global software platform for digital assets. It consists of secure transaction records. Digital currencies operate on the platform. Blockchain lets companies and their partners manage and track digital transactions and securely store the information contained within those transactions. The Blockchain will be another game changer in this Digital age and the evolution of the world wide web.

A universal, digital currency makes a great deal of sense. But it isn’t clear how it would work. Cryptocurrencies are not backed by any national bank and are not regulated. That is part of its lure. But a currency needs stability. Why would a retailer want to exchange a product or good for a currency that could fluctuate in price so wildly? The retailer would love it if it went up 40% the next day after sale. But if it fell by that much, they’d likely be out of business. A stable digital currency will have a place. It will come. It’s only a question of time. I came across an interesting piece this week, which was an interview with famed economist Milton Friedman. He said this back in 1999, 10 years before Bitcoin went into circulation. “I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash.”

Bitcoin has proven to be an explosive asset. It has not demonstrated its ability to be a reliable e-cash instrument. Bitcoin futures will begin trading Sunday night for the first time ever, which will be an important tell on the true value of the cryptocurrency. Chances are, it will provide another prick in this massive bubble followed by a crash. But perhaps the bigger question is not what happens when the Bitcoin bubble bursts, but rather what happens if it doesn’t?

Have a nice weekend. We’ll be back, dark and early on Monday.


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