ASX retail shares beware: Aldi e-commerce is coming

Retail shares on the ASX need to watch out: Aldi is planning to launch an e-commerce offering and this could be a worry.

Tristan Harrison

Author Bio Tristan Harrison has a decade of experience as an ASX share investment writer and was previously a business, tax and audit accountant for seven years. Tristan has contributed to The Motley Fool since October 2016. He has an advanced diploma from the Association of Accounting Technicians and is currently enrolled in the Chartered Institute Management Accountant (CIMA) program. Tristan's goal is to help Australians learn about great ASX shares that can help grow their portfolio, wealth and dividends over the long-term. Areas of Expertise ASX dividend shares and passive income strategies ASX growth shares and ETFs Business and company financial analysis Franking credits and personal tax topics Personal finance Education Advanced diploma from the Association of Accounting Technicians Enrolled in the Chartered Institute Management Accountant (CIMA) program Social Media X/Twitter Favorite Investment Quote "Live within your income and save so that you can invest." — Charlie Munger

Published March 24, 2021 8:20 am AEDT

There will be many retail ASX shares taking note that Aldi is planning to start online sales with an e-commerce offering of its special buys and alcohol items in the future.

News Corporation (ASX: NWS) reported that Aldi could decide to do online groceries at a later point, but the international supermarket business is planning to become more online-focused.

The Aldi CEO Tom Daunt was quoted by News Corp, he said:

We are likely to start with something more exciting like wine or Special Buys online before we would entertain a full grocery offer.

Two miniature shopping trollies filled with coins representing retail ASX growth shares — Image source: Getty Images

What kind of things are sold as Aldi's special buys?

Well, almost anything can be sold in the special buy section, apart from fresh food, over the course of the year.

Toys, bed sheets, towels, shoes, tools, appliances, country-specific foods, furniture, some devices, books, stationery, clothes, cutlery, TVs, Easter items, Christmas items and so on are just some of the categories.

When you think about it, many of the product categories I just mentioned could challenge a whole heap of different ASX retailers such as: Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Accent Group Ltd (ASX: AX1), Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Temple & Webster Group Ltd (ASX: TPW), Wesfarmers Ltd (ASX: WES), JB Hi-Fi Limited (ASX: JBH), Kogan.com Ltd (ASX: KGN) and Reject Shop Ltd (ASX: TRS).

However, just because Aldi starts selling something online doesn't mean it's going to completely disrupt that category.

One big question will be how long those specific special buy items are sold online for. If they're only sold for a week or two – like the in-store experience – then it won't be providing year-round online competition to the ASX retail shares. However, if Aldi permanently sells some products online then that would be a different problem for ASX retail shares to deal with.

How important is e-commerce?

Many of the ASX retail shares are reporting very large online sales growth numbers right now, which is what is driving profit much higher during these strange COVID-19 times.

In the recent reporting season, Woolworths saw e-commerce sales rise 77.9% to $2.9 billion, Coles consumer online sales rose 61%, Accent's online sales grew 110% to $108.1 million, Adairs online sales went up 95.2%, Wesfarmers online sales more than doubled (excluding Catch) to more than $2 billion and JB Hi-Fi online sales rose 161.7% to $678.8 million. You can see why Aldi wants in on this online action.

Aldi's moves will be interesting to watch in the coming years. News Corp said that Aldi now has a supermarket market share of 12.4%, according to data from Roy Morgan.

Despite the online move, Aldi continues to expand its network with 20 new stores planned this year in Australia.

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