There are several leading e-commerce ASX shares that are available for Aussie investors to consider.
Businesses in the e-commerce space are exposed to tailwinds where more shopping is being done online rather than in-store. This is being accelerated by the impacts of COVID-19.
Some businesses are looking to capitalise on those trends significantly:
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster wants to become the largest retailer (online and offline) for furniture and homewares in its home market. It’s investing heavily into the business to grow the business and its online market position.
COVID-19 may have accelerated the growth, but the company continues to grow revenue rapidly. FY21 revenue increased by 85% to $326.3 million. FY22 has seen that growth continue, with year on year revenue growth of 49% for the period of 1 July 2021 to 27 August 2021.
Part of the e-commerce ASX share’s revenue growth came from revenue per active customer increasing by 12% year on year due to customers repeat buying more often and spending more when they do. Plus, the number of active customers surged 62% to 778,000.
Temple & Webster believes it has a large total addressable market. In Australia in 2020 it thinks the total market was worth around $16 billion, with online being between $1.1 billion to $1.4 billion of that.
Management point to its negative working capital to show that growth is good for operating leverage. Around 74% of sales are drop-shipped with no inventory risk, according to Temple & Webster.
Temple & Webster plans to maintain an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of between 2% to 4% whilst heavily investing to drive “above market” growth.
Kogan.com Ltd (ASX: KGN)
Kogan is an e-commerce ASX share that has both Kogan.com and Mighty Ape as strong divisions in their respective markets of Australia and New Zealand.
The business can offer customers a wide array of products on its website like TVs, cars, phones, clothes, sports goods and so on. It also offers extra services like insurance, superannuation, energy, mobile plans and home internet.
Variable demand and excessive inventory has caused big impacts on Kogan over the last nine months. FY21 gross profit went up 61% to $203.7 million, but net profit fell 86.8% because of one-off inventory, logistics and Mighty Ape acquisition costs.
However, the business is starting to see a return of growth again. The first 18 days of August 2021 showed a “strong acceleration” above July 2021’s performance, with gross sales 24.5% above July and gross profit 25% above July.
In FY22, Kogan expects to deliver strong growth in Kogan First memberships, ongoing growth in exclusive brands, further enhancement and development of Kogan marketplace and the benefits from the full integration of the Mighty Ape business.
The e-commerce ASX share is also thinking about implementing logistics projects that would not require significant capital spending and can be supported by the company’s balance sheet.
According to Commsec, the Kogan share price is valued at 26x FY23’s estimated earnings.