2 exciting e-commerce ASX shares growing rapidly

The 2 e-commerce ASX shares in this article are growing rapidly and are planning to invest heavily for more growth.

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There are a few e-commerce ASX shares out there that are generating a lot of revenue growth and want to grow even more.

Both of the businesses that are in this article say they want to invest to capture more market share and then generate higher margins down the line.

In a few years, these two businesses plan to be much bigger:

Redbubble Ltd (ASX: RBL)

The Redbubble share price is down over 21% to $4.32 today. That was after revealing its FY21 third quarter update and a new strategy.

It said that in the third quarter its marketplace revenue rose 54% to $103.4 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) rising $8.5 million to $2.2 million. Earnings before interest and tax (EBIT) jumped 91% to a loss of $0.9 million.

Management have decided on a strategy to invest heavily, whilst still making a modest profit, to grow the business faster. This is going to lead to lower EBITDA margins in the next couple of years.

The e-commerce ASX share wants to enhance the customer experience by investing in an improved digital and physical experience, whilst also focusing on loyalty and repeat purchases.

Another aim is to continue to grow in core markets. This will be achieved with consistent and selective additions of new physical products, as well as improvements to third party fulfilment and logistics networks.

The other area of focus will be amplifying growth by growing customer numbers. This will be achieved through brand marketing to increase awareness and trial. Redbubble also plans to expand into new geographies.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is another e-commerce ASX share that’s growing rapidly. The furniture retail and e-commerce business is seeing rapid growth too.

The business saw 112% growth of third quarter revenue, with active customers going up to 750,000. It also saw April 2021 revenue growth of more than 20% – management noted that the comparative month (April 2020) was the fastest growing month last year due to the nationwide lockdowns implemented during March 2020.

One of the things that Temple & Webster highlighted was that the customers that have signed up during COVID-19 continue to perform better for the business than the customers that have been around longer.

Management are expecting that the online penetration in Australia is expected to continue to increase significantly.

The e-commerce ASX share is also planning to invest heavily for future growth. Higher spending on marketing will be one initiative. Strengthening its customer experience through enhanced technology, data, personalisation and the delivery experience. It’s going to invest in 3D and artificial intelligence capabilities which will make the customer shopping journey easier.

Temple & Webster plans to further differentiate its product range through new category additions, private label expansion, new product development and launching exclusive ranges with its key drop ship suppliers. Management also want to grow business to business sales and operational teams to capitalise on returning demand in the commercial sector.

During this scale up phase, Temple & Webster is focused on revenue growth and market share. This means that EBITDA margins will remain low. Over the longer-term it expects higher levels of profitability than have been previously seen due to greater scale benefits.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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