Ecommerce & Enablers

Ecommerce & Enablers

In 2020, SARS-CoV-2 (hereon referred to as “COVID” or “coronavirus”) swept across the globe, emerging as one of the defining pandemics of our times. The spread of COVID has had two contrasting effects on mobile financial services. On the one hand, consumer discretionary spending came under pressure at the end of 1Q20 as world activity paused amid shelter-in-place orders. This caused i) a significant decline in sales through physical channels, drastically reducing overall transaction volume and the number of payments being processed digitally; and ii) an increase in unemployment that has caused a temporary (yet lingering) reduction in remittance send volumes around the globe. However, the crisis in the physical world has driven consumers en masse to adopt digital, mobile-first banking, payments, and remittance tools as their access to physical bank locations has been restricted. This mass migration will prove to have a profound impact on the acceleration and rise of fully digital financial services.

An Unprecedented Push for eCommerce and Its Enablers

One of these themes is eCommerce – the business model experienced significant mainstream attention and adoption prior to the pandemic, but with millions of people staying at home, retail stores closed, and supply chains disrupted to the point of creating inventory shortages in physical retail, eCommerce has received an unprecedented push during COVID. In the US and Canada for example, Commerce Insight reported a 129% growth in e-commerce orders during the first four months of 2020 compared with the same period last year1 .

While some of the growth is attributable to existing merchants and eCommerce shoppers, the pandemic has also shifted a significant number of first-time users online along with merchants from categories that traditionally have had low digital penetration. We can see this from the uptake in businesses like Wix and Shopify, which provide tools to build a digital eCommerce presence. Shopify reported an increase in total new store creations by 62% between March 13 and April 24 relative to the six weeks leading up to that period2. Much of the new store creation came from product categories with low digital penetration such as food, beverage, tobacco, baby products, fitness, entertainment, and leisure and hobby, indicating that much of the growth is being driven by merchants moving online for the first time.

Another key eCommerce enabler, payments, has also seen significant growth from new verticals. In its 1Q20 earnings report, PayPal highlighted that retailers, quick service restaurants (QSRs), and wine shops have surged online by “building websites in less than a day for delivery and curbside pickup”3. Square Online Store saw weekly gross payment volume (GPV) up more than five times since mid-March, underpinned by strong new merchant acquisition4. Many offline merchants have realized the importance of building a digital footprint and an omni-channel customer experience – in other words, COVID has not only accelerated the pace of eCommerce adoption but has opened up entire new categories for faster digital penetration.

Demand for logistics and fulfillment solutions has also soared, commensurate with the increase in eCommerce activity. While overall logistics activity has fluctuated, particularly in countries that have enforced restrictions on the movement of goods between cities, businesses are anticipating a need to accommodate a rise in logistics coverage, fulfillment, and complexity. Logistics technology solutions catering to fleet and supply chain management, real-time logistics visibility, and route optimization have all seen increased business interest. From the above, we believe that both eCommerce and its enablers (shop digitalization tools, payments, logistics) should benefit from the COVID tailwind and will experience a longer-term valuation re-rating.

Massive eCommerce Adoption in Under-Developed Markets

This acceleration and re-rating will be even more prominent in those countries where eCommerce penetration has lagged that of most developed eCommerce markets like the US and China, and in categories that lagged the penetration of initial mainstream eCommerce categories like electronics, fashion and books. These regions, including Latin America, Southeast Asia, and Russia, have seen a major acceleration in adoption. During their 1Q20 earnings call, Sea Limited – the parent company of Southeast Asia eCommerce leader Shopee – noted that COVID materially accelerated a shift to an online lifestyle benefitting the market and segments where Sea operates, with Shopee setting a record high of $6.2Bn GMV in 1Q20 representing YoY growth of 74%5. MercadoLibre, Latin America’s top eCommerce player, likewise reported an outsized 34% YoY growth in consolidated marketplace GMV in their 1Q20 earnings6.

In Russia, our portfolio company Ozon – Russia’s largest multi-category ecommerce platform – has also experienced explosive growth in GMV and average order value (AOV) amid the COVID pandemic as consumers have been compelled to either purchase more product online or, in the case of many technology laggards, try eCommerce for the first time. In the words of CEO Alexander Shulgin, “while some people may be happy to revert to shopping in traditional retail stores, millions of Russians have developed a new habit – they enjoy the selection, price and convenience of buying different types of products online and will continue to do so more often.” Another beneficiary of the crisis is Ozon’s marketplace business, where it serves merchants by providing a platform to advertise and sell products. Thousands of new sellers have come on to the marketplace in rapid fashion, accelerating the formation of a selfreinforcing loop like those seen in eCommerce-mature markets such as the US and China.

B2B eCommerce

eCommerce has not only picked up on the consumer end but has also increasingly seen validation on the B2B side. Businesses relying on lengthy, traditional supply chains were heavily impacted by the COVID-related supply disruptions, driving many to consider digital procurement channels for the first time. In China, Alibaba and JD played an integral role in using their marketplace platforms and logistics networks to enable the uninterrupted flow of orders and deliveries to retailers, many of whom used innovative channels to continue selling to their customers, including Tencent’s “mini-app” (小程序) ecosystem.

Our own portfolio company Hipac (海拍客), an eCommerce marketplace servicing brick-and-mortar retailers in the infant care sector, confronted this issue early in the lockdown. Because diapers share a common raw material input with PPE, a critical shortage soon materialized as retailers ate into their remaining physical inventory. Small and medium-sized retailers dependent on middlemen and regional distributors for stocking flocked to the Hipac marketplace en masse. As a digital marketplace of nation-wide manufacturers and brands, Hipac was one of the only channels that could efficiently source stock across a wide range of SKUs with transparent pricing. With factories taking longer than customer demand to come back online, the persistent supply shortages have emphasized the inefficiencies of traditional, relationship-based supply chains. Moreover, as a technology company, Hipac was able to help many store owners digitalize their footprint, including providing marketing tools to maintain their customer relationships in the face of declining physical foot traffic. In this manner, we expect that B2B eCommerce players, particularly those in developing nations reliant on traditional supply chains, will reap the benefit of an acceleration in the overall eCommerce adoption curve.

As customers flock to eCommerce platforms, many of these businesses have seen their customer acquisition costs (“CAC”) decline materially, in some cases even shifting from a demand to a supply-constrained dynamic. In our discussions with these eCommerce businesses, many are actively deciding how to best take advantage of this opportunity – whether to continue spending marketing dollars at the same rate to accelerate customer acquisition, or reduce marketing spend to meet planned growth, normalizing economics and conserving cash. Either way, we expect that the overall landscape of eCommerce, particularly in those countries with significant competition, will change during and post this crisis, rewarding those players who have better on-the-ground execution and are willing to aggressively take advantage of the current opportunity.

About Princeville Capital

Princeville Capital is an investment firm focused on backing rapidly growing technology-related companies around the world. The firm looks to support entrepreneurs seeking not only capital, but a value-added partner who can help them fulfill their aspirations to create companies of global scale. The firm has a worldwide network of relationships built over decades of experience investing in and advising rapidly growing companies in the technology sector. Princeville Capital has offices in San Francisco, Berlin, and Hong Kong.


“Global E-Commerce Transaction Trends by Location.” Covid-19 World Commerce Impact, Commerce Insight, 19 June 2020,

“Shopify Announces First-Quarter 2020 Financial Results.” Shopify, Shopify, 6 May 2020,

“Q1 2020 Shareholder Letter.”, Square, 6 May 2020, financials/2020/Q1/2020-Q1-Shareholder-Letter-Square.pdf.

“Sea Limited Reports First Quarter 2020 Results.”, Sea, 18 May 2020, static/resource/seagroup/pressrelease/2020-05-18%20Sea%20First%20Quarter%202020%20Results.pdf.

“Mercado Libre, Inc. Reports First Quarter 2020 Financial Results.”, Mercado Libre, 5 May 2020,