The Future of E-commerce and The Contents of Our New Wallets

A recently-released report from Adobe's e-commerce division shows that the pandemic helped increase online sales nearly $190 million between March 2020 and this February. The headline-grabbing prediction of the first $1 trillion e-commerce year in 2022 should have sent e-commerce stocks soaring, but it didn't. What happened here?

A great case in point is Affirm Holdings (AFRM: Nasdaq) led by a former founder of PayPal (PYPL: Nasdaq), Max Levchin. Affirm reached a high in February, but has dropped 40% since then, primarily on the basis of weaker reported sales.

Affirm's entire business model challenges the notion of how our future wallets may look. How we pay for transactions has been driven historically by which card falls out of a wallet first. The decision to pull out cash, a debit card, or a credit card has not always reflected a rational consumer choice.

Affirm wants to reinvent how that wallet works. They hope to create an app that will let consumers optimize their financing choices and build stronger direct relationships with consumer brands. Others look to digitize the existing model and make it run faster and cheaper. Who will win?

See also: What is Insurtech?

Why Bet Short?
Yes, Affirm has a head start with a unique platform and marquee partners. However, many large incumbents like Walmart have hired talent away from other fintechs. They may quickly copy and paste the most popular elements of Affirm's offer into the next generation of their lower-cost traditional cards.

Why Go Long?
Affirm used the pandemic to establish solid relationships with some of the best consumer brands in the marketplace. Yes, people will head back to the mall soon, but more and more will want a contact-less experience that does more than provide revolving credit. They should expect better savings, smarter credit, and better recognition from brands for the better risk and reward they offer on an individual basis.

About The Author
Paul Tyler is Chief Marketing Officer for Nassau Financial Group, an insurance company based in Hartford, Conn. Nassau focuses on four business segments: insurance, reinsurance, distribution and asset management. Paul also oversees the company’s insurtech incubator, Nassay Re/Imagine, helping innovative startups. Paul earned a J.D. from Cornell Law School and an A.B. from Princeton University.

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