Commerce Conversations

Our 2024 Predictions

Episode Summary

Join the Commerce Ventures partners as they reflect on their 2023 predictions, admitting where they hit the mark and where they missed. Dive into the key insights about the state of the Commerce Continuum, from the surprising resilience of buy now, pay later (BNPL) services to predictions on mass merchants and luxury markets. Our team shares their bold forecasts for 2024, covering everything from AI's impact on retailers to potential M&A shake-ups in the banking sector.

Episode Notes

Introduction:

• Overview of the podcast focusing on Commerce Ventures' annual prediction season.
• Discussion on examining the outcomes of 2023 predictions and their implications for 2024.

Review of 2023 Predictions:

Buy Now, Pay Later (BNPL) Implosion:

• BNPL usage remains high, defying expectations of implosion.
• Resilience noted despite economic challenges.
• Acknowledgment of misjudgment on BNPL providers' performance.

Consumer Balance Sheet Resilience:

• Surprising resilience in consumer balance sheets.
• Delinquencies did not rise as anticipated.
• Challenger banks found ways to adapt to challenges.

Private Equity Roll-Up of D2C Retail Darlings:

• Lack of roll-up activity observed, challenges faced by some.
• Economic factors and unexpected rate changes influenced outcomes.

Crypto's Persistence:

• Predicted crypto persistence in 2023.
• Acknowledgment of a cold year for crypto.
• Recent uptick in Bitcoin's value impacting the prediction.

Mass Merchants vs. Luxury Performance:

• Luxury sector booms, mass merchants face headwinds.
• Economic environment affects both sectors, with some deviations from expectations.

Incumbents Acquiring Venture-Backed Payments Companies:

• Successful prediction with Visa's acquisition of Pismo.
• Expectations for more acquisitions in the future.

Skyrocketing Consumer Borrowing Impact:

• Mixed outcomes with parts of the prediction playing out.
• Opportunities in credit servicing and data space observed.

Venture Funding Bottoming Out:

• Acknowledgment of being off on the timing.
• Return of scrappy founders observed in the market.

Venture Funding Continues to Fall:

• Scrappy founder mentality due to funding challenges.
• Adaptation to scarcity of venture dollars.

Retailers Invest in Automation:

• Confirmation of retailers investing in automation.
• Emphasis on AI's role in shaping the future of retail.

Outlook for 2024 Predictions:

AI Impact on Retail P&L:

• Prediction of AI-driven OpEx reductions at major retailers.
• Anticipation of actual impact on P&L.

Consumer Adoption of AI:

• Optimistic prediction of a significant number of Americans using AI daily or weekly.
• Examples from platforms like TikTok influencing AI adoption.

M&A Surge in 2024:

• Anticipation of increased M&A activity in the first half of the year.
• Factors include scale, revenue generation, and potential market closures before elections.

Crypto Market Resurgence:

• Prediction of a crypto market run-up in 2024.
• Factors include legal actions, regulatory clarity, and market sentiment.

Bank Industry Dynamics:

• Expectation of a bank collapse or acquisition due to challenges in commercial real estate.
• Potential impacts on the broader financial services landscape.

Chime IPO and Retail Market Response:

• Prediction of Chime's IPO and subsequent market reactions.
• Expectation of retail market emulation of successful models like SheIn.

Challenger Banks IPO Filings:

• Anticipation of IPO filings by large challenger banks.
• Questions about business model viability and profitability.

Interest Rate Changes:

• Expected sequence of events leading to interest rate reduction.
• Impact on lending and capital requirements for banks.