LTGG presents
SWIPES, CLICKS
& ORDERS
“Don't count the people you reach; reach the people who count.”
David Ogilvy, advertising guru
Your capital is at risk. Past performance is not a guide to future returns. The data in this series is based on a representative portfolio. As such, stock examples may not be held in every client portfolio, and performance, holding dates and returns may differ.
A history of opportunity
Commerce and advertising stocks have played a central role in the Long Term Global Growth portfolio over the past couple of decades. But Baillie Gifford has been navigating sweeping changes in these domains for over a century.
In the aftermath of World War II, consumption was driven by patriotism and pride in economic revitalisation as much as personal preference. In the US, the first enclosed, climate-controlled shopping mall opened in 1956. On the back of a burgeoning auto culture, others quickly followed. As malls and supermarkets proliferated, they changed where people shopped and revolutionised how products were marketed.
By the 1980s, shopping malls had become hubs for socialising as well as shopping, accounting for more than 60 per cent of all retail trade.
The end of the 20th century marked the pinnacle of mall culture but also ushered in the seeds of its disruption. Nascent online commerce business models built on the foundational infrastructure of the dot-com era gathered speed.
Online ‘click and order’ based business models enjoyed two key advantages over traditional bricks and mortar retail. Firstly, inventory turned over more quickly, and growth required far less capital since scale was possible without the burden of physical real estate. The resulting flywheel provided consumers with lower prices and greater choice.
"The Bezos sell anything to anybody, anywhere, anytime vision may be the correct way to think about the stock given the rate of technological change. This is a pleasantly scalable business once the initial tech spend has been put in place."
The ways we've unlocked the opportunity
We saw the disruptive potential of the internet on these industries when we first took a holding in Amazon in 2004.
Complexity scientist Brian Arthur posits that digital businesses often don’t follow the diminishing returns of traditional industries; instead, they grow stronger as they expand. Amazon exemplified this concept. When we first purchased Amazon, it had a market capitalisation of around $20bn and primarily sold books, DVDs and magazine subscriptions. Many stock market analysts baulked at the stock’s optically high near-term earnings multiple, citing comparisons with the high street book retailers of the day.
But as Amazon attracted more customers, it also drew in more sellers. A broadening product range generated more data and more cash flow, which were stubbornly reinvested in delivery and computing infrastructure to reinforce its competitive advantage and further drive down costs.
Through ongoing interactions with Jeff Bezos throughout this period, we observed a degree of vision, long-termism and a willingness to defy short-term doubters that was unmatched by other peers such as eBay, which was sold from the portfolio after a relatively short tenure.
Over the subsequent two decades, the Amazon holding has been characterised by some wild drawdowns and often intense periods of market doubt, but it’s ultimately been vindicated with a return of well over 10,000 per cent.
Our ringside seat
The holding in Amazon gave us a ringside seat to observe the rapidly evolving advertising industry.
Our sale of the media and advertising business Omnicom in 2008 was predicated on a belief that the internet was rendering traditional advertising middlemen obsolete. On the flip side, our purchases of Google in the same year and Chinese search engine Baidu a year later were based on the observation that their online search capabilities improved with scale. User engagement gave rise to a virtuous circle, providing advertisers with significant improvements in their engagement bang for their advertising buck. With less than one-tenth of advertising dollars online at the time, we surmised that the online share could surge in the decade ahead.
From clicks to swipes and the rise of social
Our holding of Apple in 2009 gave us another interesting portal into evolving advertising and commerce models.
Two years after its introduction, the iPhone was proving to be a massive hit – and that paved the way for the rapid adoption of touchscreen smartphones more broadly.
We bought Facebook for the portfolio in 2012 with a market capitalisation of just over $100bn. But the shares roughly halved shortly afterwards, amid market fears that touchscreen smartphones were limiting the advertising load, introducing a risk to their growth. Our decision to hold on was vindicated in the years after as the tempo of Facebook's product innovation accelerated. Its move to native, identity-based ad targeting, combined with a more data-driven approach, enabled advertisers to buy outcomes rather than impressions.
Throughout this period, we watched as Amazon successfully nailed the shift from click to swipe-based commerce, exploiting the smartphone interface to dramatically reduce the level of friction around purchases. This further turbo-charged the value of merchandise sold on its platform with a circa tenfold increase over the decade following the advent of the iPhone.
Meanwhile, looking east...
At the same time, China was nurturing its own set of ecommerce giants. In 2014, we took a holding in Alibaba at the company’s IPO. We already knew the business well because we’d held it privately elsewhere at Baillie Gifford.
Alibaba was processing around $250bn of Gross Merchandise Value at the time, but five years later, we were seeing over $38bn from their Singles Day shopping festival alone, thanks to 200,000 participating brands, 1 million new product launches and 1.3 billion delivery orders.
Tencent was also growing at quite a clip. The sixfold increase in their topline since our purchase for the LTGG portfolio in 2009 had been achieved not only through impressive advertising-based monetisation of their gaming ecosystem but also from its emergence as a commerce ecosystem.
Things move fast in China, though, and five years later, we were turning our attention to another brace of emergent opportunities.
Meituan had pioneered a super-app that married a vast marketplace of local merchants with its own on-demand logistics network to deliver food, travel tickets and all manner of other local services. Meanwhile, Pinduoduo’s online marketplace was built on the concept of mobile social-commerce. The concept of “team purchases” or group buying had proved short-lived in the West, but lent itself perfectly to China’s lower-tier cities, where users recruited friends to unlock lower prices.
The Pinduoduo app layered on games to drive daily engagement. An asset-light model meant no need for the company to hold inventory or run its own delivery network, and the platform leaned into a consumer-to-manufacturer model to aggregate demand and inform factory production. When we first looked at the company in mid-2018, it had just over 300 million Annual Active Users. Five years later, that number had more than tripled and, rebranded as PDD, the company was proving to be a significant thorn in the side of Alibaba - one of several factors that led us to sell the latter stock from the portfolio in 2024.
The opportunities looking forward
It is now three decades since Amazon sold its first book online, but we remain in the foothills of the commerce opportunity with new models emerging all the time.
Regional patterns are shaped by local infrastructure and cultural preferences. This observation underpins our enthusiasm for SEA and MercadoLibre, leading ecommerce companies in Southeast Asia and Latin America. Online retail penetration in these regions lags global leaders, but digital marketplaces are now growing rapidly, catalysed by innovative online financial ecosystems and improving logistics infrastructure.
The advertising technology landscape is also undergoing a seismic shift. Opportunities revolve around the AI-powered advertisement optimisation platforms built by companies such as AppLovin. Its reinforcement learning algorithms process trillions of daily requests to determine which online ads to place in front of whom and when.
Our longstanding holdings in leading music and video streaming platforms are increasingly leveraging these innovative advertising models rather than trying to build their own products, and we are closely following the opportunity associated with hyper-personalised product placement in short-form video, longer-form film and audio content.
As Shopify continues to democratise online commerce with its powerful operating system, we are also enthused by the prospects for Symbotic, whose robotics capabilities underpin the ability to fulfil massive order volumes at scale.
Commerce is a powerful, underestimated form of expression. We use it to cast a vote with every product we buy.
Tobias Lütke, Shopify CEO
Our role as long-term investors is to back the innovators that shape the future by offering consumers new features before they know they want them – and long before the market prices in their potential.
Exploring different questions
We continue to explore questions that receive less attention than they should from most market participants:
Does Agentic AI democratise discoverability, leading people to route around online commerce aggregators?
If it is possible to build a commerce website in a few minutes with voice prompts, does the commerce playing field get levelled and the value shift?
How do advances in robotics and autonomy change the structure of logistics networks?
How do climatic shifts influence commerce distribution models?
Disclaimers
Annual performance to 31 March each year (net %)
| Investment type | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Baillie Gifford Long Term Global Growth Investment Fund B-ACC | -10.3 | -16.7 | 26.9 | 5.9 | -2.3 |
| MSCI ACWI Index* | 12.8 | -0.9 | 21.1 | 5.3 | 18.0 |
| IA Global Sector | 8.4 | -2.7 | 16.7 | -0.3 | 13.4 |
Past performance is not a guide to future returns
The Long Term Global Growth Investment Fund aims to outperform (after deduction of costs) the MSCI ACWI Index, as stated in sterling, over rolling five-year periods. Prior to 1st July 2023, to outperform (after deduction of costs) the FTSE All-World index, as stated in Sterling, over rolling five-year periods. The manager believes this is an appropriate target given the investment policy of the Fund and the approach taken by the manager when investing. In addition, the manager believes an appropriate performance comparison for this Fund is the Investment Association Global Sector.
There is no guarantee that this objective will be achieved over any time period and actual investment returns may differ from this objective, particularly over shorter time periods.
Important Information
This communication was produced and approved in May 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
This communication does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs.
A Key Information Document is available at bailliegifford.com.
Investment markets can go down as well as up and market conditions can change rapidly. The value of an investment in the Fund, and any income from it, can fall as well as rise and investors may not get back the amount invested.
The specific risks associated with the Fund include:
- Custody of assets, particularly in emerging markets, involves a risk of loss if a custodian becomes insolvent or breaches duties of care.
- The Fund invests in emerging markets, which includes China, where difficulties with market volatility, political and economic instability including the risk of market shutdown, trading, liquidity, settlement, corporate governance, regulation, legislation and taxation could arise, resulting in a negative impact on the value of your investment.
- The Fund's concentrated portfolio relative to similar funds may result in large movements in the share price in the short term.
- The Fund has exposure to foreign currencies and changes in the rates of exchange will cause the value of any investment, and income from it, to fall as well as rise and you may not get back the amount invested.
- The Fund's share price can be volatile due to movements in the prices of the underlying holdings and the basis on which the Fund is priced.
Further details of the risks associated with investing in the Fund can be found in the Key Investor Information Document or the Prospectus, copies of which are available at bailliegifford.com.