The near-instantaneous gratification of online retail has evolved from amenity to necessity for many shoppers. Even though a slowing job market, high interest rates and tight credit have weighed on wallets, consumers still prize products and services that save them time or make their lives easier, according to results of a recent Morgan Stanley Research AlphaWise survey.
In fact, 77% of U.S. consumers surveyed cited convenience—in terms of comfort, speed, accessibility and availability—as a key factor when making purchasing decisions.
“Consumers are willing up pay up to 5% more, on average, for convenience and they will in many cases choose one product or service over another if it is more convenient,” says Michelle Weaver, Morgan Stanley’s U.S. Thematic Strategist. “We believe companies selling products or services to simplify consumers’ lives or make the purchasing process itself easier will see the most benefit from the convenience premium.”
Shipping and return policies are the make-or-break features for the overwhelming majority of online shoppers: 90% of survey respondents said free shipping was very or somewhat important, while 84% said the same of fast shipping and 81% for return policy. “These numbers exemplify the way high tech and high-speed delivery have helped shift the center of gravity of the shopping experience away from the store and to wherever the shopper wants it to be,” says Morgan Stanley’s U.S. internet analyst Brian Nowak.
However, online retailers are not the only companies that have to take the convenience premium into account. Here’s how the convenience theme, which appears more pronounced among younger and affluent consumers, could also affect delivery services, consumer staples, entertainment and restaurants.
E-commerce Has More Room to Grow
The Internet has revolutionized the shopping lives of consumers everywhere and has had an equal impact on the companies that helped disrupt long-standing offline markets such as retail, food and transport. “As a subsector, e-commerce has continually grown on the back of increasing convenience by offering an ever-expanding assortment of products and services with shrinking delivery times,” says Nowak.
The pandemic played a key role in shifting more spending online, and it appears that the buying habits that sprung out of shelter-in-place orders have stuck, with more room to grow. “There remains a real opportunity for improvement among the least penetrated categories. These include grocery, where free-shipping thresholds tend to be higher, and household and personal care, where companies could see expansion if they shorten two-day shipping standards,” Nowak says.
About a quarter of all retail spending has come from e-commerce over the past decade, expanding 145 basis points each year over that time. This growth in share has primarily flowed to top e-commerce players, which should continue to benefit from convenience enhancements.
Racing for the Last Mile
Speedy shipping and curbside pickup may be a boon for shoppers, but the demand for same and next-day shipping has weighed on legacy parcel carriers, which have been forced to retool complex long-haul infrastructure built over years to now serve shorter, less profitable, routes.
“Retailers have moved inventory closer to end-customers and competition for the last mile has been heating up,” says Ravi Shanker, who covers freight transportation and airlines for Morgan Stanley. “This part of the delivery chain is most efficiently covered by ground and easier to start up and run. That means major package delivery companies are feeling pressure from small regional carriers, the U.S. Postal Service and even retailers themselves.”
Indeed, the leading players have indicated heighted “aggressiveness” in the market as well as lower “value for dollar” for ground business in a recent Morgan Stanley Research survey. Shanker says large retailers that can regionalize their fulfillment networks and reduce shipping costs may see margin expansion, but investors should also keep an eye on developments in autonomous trucking, as commercialization in that area could significantly disrupt the supply chain.
Convenience Boosts Appeal for Everyday Items
No one likes running out of toothpaste, coffee or their favorite lipstick, and convenience has shown to be a key differentiator with time-stretched consumers to make sure they are stocked up on essential everyday items. E-commerce represented 17% of U.S. staples purchases in 2023, rising from 4% a decade earlier. Within the category, beauty purchases made up 31% of 2023 sales, household and personal care 18%, food 9% and beverages 7%.
“Beauty comes with both high price points and brand equity, which has carried through to higher e-commerce activity,” says Dara Mohsenian, Morgan Stanley’s beverages and household products analyst. “Leading brands saw online sales double from pre-COVID levels, and innovations such as recommendations and new products informed by customer data and artificial intelligence could help increase share.”
Mohsenian adds that investors should also look for companies that are adding convenience directly though their products, such as the laundry detergent pod, which resulted in a whole new category when it was created in 2012.
Customers Queue for Digital Tickets
The smartphone changed the way people listen to music and the past 15 years have also brought a major shift in digital ticketing for live events. Consumers have increasingly turned to online platforms to circumvent the traditional box office—and long lines—and secure admission to concerts and sporting events, even if it means paying an additional service fee.
“This is a testament to the value consumers put on the convenience of not having to go to a venue or wait in a physical line,” says Morgan Stanley equity analyst Cameron Mansson-Perrone. “We have seen digital tickets help support sustained high-single- to double-digit growth in North American media and entertainment ticketing revenue. The magnitude of that expansion is likely to be sustained over the next four years.” He adds that as consumers spend more time on social media and engaging with services like music streaming, there’s more of a chance they will discover events and follow through to making a purchase, which also helps bolster growth prospects.
Restaurants Serve Up More Tech
Food delivery may be the original, and perhaps one of the simplest, concepts of convenience. Diners pay more to have a meal delivered to their front door, but the tremendous ease often outweighs the platform fees, tips and other markups.
“Convenience and time continue to be valuable commodities, so restaurants should keep taking share from the cheaper but less convenient food-at-home category,” says Brian Harbour, Morgan Stanley’s restaurants and food distributors analyst. “That said, many restaurants have outpriced inflation since 2019, and there is active debate about whether the convenience factor is worth the cost today, given traffic challenges have returned in some parts of the industry, and growth trends are mixed.”
Restaurants at all levels of service will have to rely on technology to help keep costs in check while meeting customer expectations for convenience and quality. Modern standbys like mobile pay, kiosk ordering and even the drive-thru window could evolve with AI-enabled enhancements. For instance, increased digital interactions may bring predictive or more personalized offerings, while AI could also help manage inventory and labor. “Automation could transform the food-prep and delivery process, and companies that lead innovation in these areas should be rewarded, given the stickiness of the convenience premium in food delivery,” says Harbour.
For deeper insights and analysis, ask your Morgan Stanley Representative or Financial Advisor for the full report, “Convenience is a Compelling Product,” (June 6, 2025).
