December of 2019. It would be weeks before the first case of COVID-19 was diagnosed in China. And months before The World Health Organization declared a global pandemic. That month, I wrote a piece outlining the seven trendlines that would define the decade of the 2020s.
See also: The Seven 2020 Trendlines
I noted that the decade of the 2010s was about an apps-based economy accessed by smartphones. The decade of the 2020s, however, would lead to ecosystems that aggregate discrete activities, sometimes accessed through multiple connected devices, and across many different, once-physical activities.
I called that vision the connected economy: one that would transform how consumers shop, pay, bank, be well, live, communicate, travel, eat, have fun and work. Consumers would spend much of their time inside just a few everyday connected ecosystems that would enable all — or many — of those activities.
Over the decade of the 2020s, I predicted that we’d see just about every device connected to the internet and capable of enabling a transaction — between machines, between people, between businesses and every other possible permutation.
New networks, intermediaries and enablers would emerge to disrupt the payments and commerce status quo, while opening new doors to those who could see the connected economy’s potential and wanted to shape its future.
I concluded that the connected economy was inevitable and would happen faster than anyone might think, even though it would be decades in the making — and that it wouldn’t take the entirety of the decade for it to become visible.
In 2019, my vision of the connected economy was more than a hunch on my part, or a premonition that something so terrible as a global pandemic was on the horizon. It was rooted in an intellectual framework for what has become the defining principle of the growth of the global economy over the rest of this decade and beyond.
It was rooted in how platforms work, are monetized and scale — and the role of friction, inertia and time in what problems they solve and how they solve them.
Fast-forward almost two years.
Today, multi-sided platforms not only streamline digital engagement inside a specific vertical or use case, but they make it seamless and secure for consumers and businesses to engage across the verticals that form these new ecosystems. In the process, these connected ecosystems are redrawing the competitive landscape, mudding the once-bright lines between verticals.
Restaurant aggregators that once connected restaurants and consumers who wanted food delivered at home are now powering retail’s last mile — becoming convenience stores and/or partnering with retailers so they can step in to fill that role.
Super apps consolidate the once discrete payments and mobile wallets with shopping, savings, investments, credit, promotions, deals and discounts inside a single ecosystem.
Big retailers — physical and virtual — now leverage their scale and customer base to extend their repertoire of offerings to include the digital delivery of healthcare, prescriptions and financial services.
Automotive OEMs now see cars as the ultimate mobile commerce platform as they explore the intersection of payments and new modalities, with telematics and car operating systems forming the basis of a car-centric ecosystem.
eCommerce marketplaces that once defined online shopping are being challenged by contextual platforms and new social networks, which create immersive experiences that both entertain consumers and motivate them to buy.
In October of 2021, we now see green shoots of the connected economy everywhere as brands become platforms, platforms become connected ecosystems, payments create new connected economy opportunities and innovators use technology to give platforms a new connected economy reality.
“Stay in your swim lane” no longer seems like useful advice for many who see the connected economy’s potential, and aspire to take a key role in shaping it.
Healthcare Taps Digital to Create Connected Ecosystems
Healthcare is having its connected economy moment — and it’s coming from everywhere.
In April of 2020, Verizon said it was going to buy video teleconferencing platform Bluejeans with healthcare as its primary use case — competing with many of the pure-play telehealth providers already in the market. It’s now integrated with Apple Health. 5G and the availability of connected devices opens up a new channel between the patient and her healthcare providers in cases where physical provider engagement is not possible or desired. Operating room pilots using 5G and its video platform are underway, with the aim to match consumers who need a specialized surgical procedure with a surgeon who can perform it hundreds or even a thousand miles away. Talk about democratizing access to healthcare.
Walgreens is taking its physical retail footprint digital through a “be well” connected-economy ecosystem that brings retail, healthcare and financial services together in a single app. Consumers are rewarded for making healthy purchases online and in-store, providing further incentives to fill prescriptions that doctors have prescribed for them.
Walgreens has also invested $1 billion in VillageMD to open new retail clinics and further integrate physical and digital healthcare experiences into this “be well” ecosystem. Its partnership with DoorDash now makes it an on-demand provider of retail and healthcare-related products for consumers who like living in the bring-it-to-me economy.
Walmart Health and Amazon Care have both connected their retail footprints and consumer bases with physical and digital healthcare services — opening physical clinics where patients can be seen and can receive a variety of medical services, along with access to telehealth. Walmart has also launched health insurance in a few states. Amazon Pharmacy connects consumers with prescription discounts, Amazon-registered payments credentials and free delivery.
Best Buy recently bought HealthTech company Current Health, a remote monitoring platform giving doctors access to a patient’s basic vitals. The Best Buy CEO foresees a future at the intersection of new connected devices, healthcare and the home, with the aim of improving the quality of care and quality of life for patients and providers.
And HealthTech innovators like Sprinter are leaning into the use of on-demand diagnostic lab services and their own W-2 workforce, comprised of what they call “Sprinters,” to improve patient and provider care. Working with existing labs and physicians, Sprinters are dispatched to a patient’s home to perform blood draws in advance of doctors’ visits, surgical procedures, regularly scheduled treatments and other medical procedures, saving consumers and providers both time and money.
Grocery and Restaurants Converge to Become ‘Eat’ Sector
In our connected economy framework, grocery and restaurant converge to become the “eat” sector. And we are now starting to see evidence that the “eat” connected-economy pillar is taking off.
Ghost Kitchen Brands and Walmart announced the expansion of their Canadian pilot to the U.S. They will aggregate food from 30 or more national chains inside of Walmart stores. Where available, the millions of consumers who shop at Walmart stores every week can now walk up to a kiosk and order ahead for takeout as they complete their shopping. Walmart wants a bigger bite of consumers’ “eat” budget — beyond its current 56% share of sales that come from grocery products — and this is one way to get it.
More recently, Instacart acquired the catering software platform FoodStorm as a way to expand and streamline prepared foods and catering activities for grocery stores. This move expands the options for grocery stores to capture more of the consumer’s takeout/food delivery services — a nice complement to Instacart’s new 30-minute delivery window. The acquisition also gives catering operations — which were ghost kitchens before there were ghost kitchens — a way to leverage the Instacart platform (consumers and delivery drivers) and to turn their catering operations into a direct-to-consumer platform with new revenue possibilities.
More details: The Instacart Way to Innovating in the Connected Economy
Cars as the Ultimate Mobile Commerce Platform
GM CEO Mary Barra said at the firm’s investors day last month that the future of GM would include subscription services that would rival Netflix’s by 2030. At the same time, innovators such as CarIQ are turning cars into a payments form factor by authenticating each purchase using IP that binds the vehicle ID and the car operating system with a payments credential.
Car OEMs are now advertising cars by promoting what happens inside of them — the in-car experiences powered by tech, voice, commerce and connected experiences — as the brands themselves take second stage.
Online car platforms are sowing their own connected economy seeds. Last year, Vroom bought a data company, CarStory, as a way to more efficiently price cars for purchase and sale. In the future, it may even prompt new car purchasing opportunities by giving consumers insight into the value of the car they already own and what inventory is available for them to buy — all inside their platform.
After that acquisition, Vroom CEO Paul Hennessy told me how data will open the door to new ways to serve their customers better, including creating a car-centric payments and commerce ecosystem for its users. He would know — before taking the reins at Vroom, he was Priceline’s CEO. Last week, Vroom announced that it intends to buy an automotive finance platform as a way to further integrate credit as part of the online buying experience.
In September, J.P. Morgan announced that it would take a 75% stake in VW’s payments business, with the goal of creating an end-to-end payments and commerce experience inside the car. The CEO of JPM’s Merchant Services Max Neukirchen told me that although commerce inside the cockpit was the first priority, using the car’s operating system to enable an end-to-end experience — from financing the car to scheduling and paying for insurance, maintenance and other car-centric services — is on the roadmap, so to speak.
The Connected Economy Telltales in 2019
In 2019, there were already strong signals from consumers — who were already living in a digital world — that they wanted to have even more of their digital activities simplified and streamlined. And there were the beginnings of a subtle shift in their mindset, from connected devices as fun gadgets to enablers of connected experiences for specific use cases.
Based on research that we had been conducting since 2015, we observed that consumers were already using their connected devices to “multi-task” commerce. More of them were shopping on their phones while riding the subway to work (when we did such things), ordering takeout and adding groceries to the shopping lists using voice assistants while cleaning up after dinner, and buying on their iPads while watching TV or sitting on the sidelines at a kid’s sporting event.
Even before working from home became the de-rigueur workforce reality, we observed that consumers were already doing more work from home — and using connected devices and apps to shift how and when they were doing basic things, like shopping for groceries. Then, we observed that a third of the people who ordered groceries online were doing it during the week — leaving their weekends free to do other things.
At the same time, smartphones were becoming ubiquitous and mobile internet access was becoming pervasive around the world, accelerating the move away from cash to digital everywhere — but especially in emerging economies.
There were big investments being made by innovators and traditional players in modernizing the payments infrastructure needed to power new levels of digital engagement within and across the once-separate silos — such as banking and payments and shopping — that have become the basis for forming new connected ecosystems.
There were breakthroughs in enabling technologies including 5G, AI/ML and the cloud to power new connected economy use cases, and seamless and secure movement between devices and channels.
There was also plenty of evidence that payments and new payment modalities would become the connective tissue for how the connected economy would be monetized, scale and drive value.
The 2021 Connected Consumer
PYMNTS is all in on the connected economy. We have put plenty of muscle into it, trademarked the term and created a patent-pending Index tracking 100 thoroughly researched, listed companies that we believe represent the connected economy’s future.
In the two years since I unveiled the vision, PYMNTS has already conducted more than 40 original studies and captured tens of millions of data points that methodically benchmark the evolution of consumers living inside the connected economy, and how merchants and the payments ecosystem are responding. Our global studies are just the beginning of our journey to capture these insights, in real time. The goal is to share these insights with executives across each of our 10 pillars who want to best understand how they fit — before it’s too late.
What we know so far is that consumers are already highly connected to about three of the nine pillars (besides payments). Ninety percent of consumers who use connected devices to shop also use them to buy food at grocery stores or restaurants, and also to book travel. Consumers who connect digitally to those activities are also more likely to make appointments online with their healthcare providers.
We know that the average consumer would like to have five of those nine pillars connected into a single ecosystem. Shopping, eating, travel, having fun and communicating with family and friends are the pillars that most consumers would like to see assembled into a single digital point of access. It’s also where consumers expect payments to be an embedded part of that experience.
For the typical consumer, this new way of being digitally connected is about making transactions more efficient and convenient, saving them time and money. Two-thirds of consumers who like the idea of connected economy ecosystems see value in them for another, more practical reason: They don’t like having their personal information stored in so many different places across the web. They view a single ecosystem as more secure, more private and more within their control.
Banking and healthcare are the two pillars where consumers just want a more efficient, single ecosystem (with the exception of highly connected consumers, who are more open to this being integrated into other ecosystems). Sensitivities over access to confidential financial and health-related data, stored in the cloud and commingled with other activities, appear to be large and legitimate barriers to consumer interest — but also represent an opportunity for innovators to create more robust and efficient be-well and banking ecosystems, and to be more thoughtful about how they design their connected economy futures.
Of course, the pandemic poured fertilizer on the connected economy and helped those green shoots to emerge more quickly and grow a bit faster. But it was clear — before anyone heard about Wuhan, COVID or the benefits of social distancing — that the seeds of the connected economy were already planted and would soon sprout.
I’m confident that this will be an exciting decade, tracking the spread of the connected economy and the disruptive innovations it will create. In fact, there’s so much headroom for innovation that we’ll see this happening not just through 2030, but also for many decades after that.
It’s just amazing to have a ringside seat to it all — and to be at the forefront of examining how innovators all over the world change how we shop, eat, bank, have fun, travel, live, work, connect, be well and, of course, pay.
See also: Welcome to the Connected Economy