The bible of the internet


Mary Meeker laid out her annual report on the state of the internet and e-commerce last week, and I waded through the full 294 slides so you don't have to. (The full report is here——for those who want all the detail.) The report by Meeker, a partner at venture capital firm Kleiner Perkins, has become the bible for internet followers and, as usual, contained some surprises.

To me, the most startling number was that sessions on mobile shopping apps surged 54% last year (use of mobile apps overall rose just 6%). The 54% covers all types of products, many of which are easier to buy on a mobile phone than insurance is, but, still: The time for a robust mobile strategy was yesterday (minus about a year and a half).

It was also striking to see that 6% of all online product purchases began with something that someone saw in a social media feed. The figure represents all product sales online, so the applicability to insurance needs to be sorted out, but the 6% is triple the percentage from just two years earlier, suggesting that there is upside for those promoted product placements. 

As always, the report showed a continued surge in online commerce—up 16% in 2017, even faster growth than the 14% increase in 2016. The online share of the value of total consumer purchases in the U.S. reached 28%, up from 20% in 2013. When people were asked how they conducted their 10 most recent transactions, 60% occurred digitally.

The social and mobile trends, on top of the general growth of online commerce, suggest to Meeker that companies will increasingly sell directly to consumers—but that companies must target their efforts well. She reports that many of the best mobile apps, for instance, used video and "gamification" and that successful offers were increasingly personalized.

Amazon may, though, soak up much of the increase in e-commerce: Already, 49% of product searches in the U.S. begin at Amazon, and most of the searchers never leave the site.

Although Meeker didn't specifically address insurance, some observations in the report suggest both opportunities and challenges for the industry.

On the plus side, she said the world is moving more toward subscription models, rather than sales of individual products—and subscriptions sound a lot like automatically renewable insurance policies. The number of gig workers available to help inexpensively with, say, parts of the claims process—a la those employed by our friends at WeGoLook—reached 5.4 million in the U.S. last year, up from 3.9 million in 2016. The cost of cloud computing fell 11% last year, on top of the 10% drop the year earlier. 

On the challenges side, profits are increasingly being competed away. The price for an offline good fell 1% since the start of 2016, and the cost of an identical good online declined 3% over the same period. In addition, some insurance costs were negative outliers in her general economic analysis. While prices have been falling for almost every category of household expenditure in the U.S. for decades, the percentage of household income devoted to pensions and insurance climbed from 7% in 1972 to 8% in 1990 and now to 10% in 2017. The percentage devoted to health insurance went from 5% in 1972 to 5% in 1990 and now to 7%. 

Either we take advantage of the opportunities presented by digitization and meet the challenges, or ... perhaps Amazon or some other tech giant will.

Have a great week. 

Paul Carroll

P.S. As advertised last week, we finalized the agreement between our Innovator's Edge information platform and SAP. Here is the announcement:

Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993.

Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.