STOCK WATCH: ASX-Listed E-Com Index Continues to Disappoint

October was not a great month for the ASX-Listed E-Commerce Index, but there was a feeling that November sales events and pre-holiday spend might lead to a shift in investor sentiment. As at close of the ASX on 9 November, that’s not something we’ve seen (yet). In the last fortnight, the ASX200 was flat, shedding just 0.1%, while the E-Com Index shed 6.8%.

So which companies contributed to this underperformance? Perhaps surprisingly, Temple & Webster shed 12.7%, Redbubble’s share price value lost 8.9%, Kogan’s share price dropped 11.6% and Booktopia shed 10.4%. While we’ve seen some swings with Redbubble and Kogan, Booktopia has been fairly steady throughout the year and Temple & Webster has been an investor favourite in recent times. So, what’s going on?

Kogan has yet to reach $10 this month, closing at $9.04 and far from the $19.81 it recorded a year ago. Temple & Webster on the other hand, while having a disappointing fortnight, has actually shown year-on-year growth, closing at $9.93 this time in 2020 and opening at $10.99 this morning. So, not all is as it seems. It’s not a straight decline from peak pandemic times until now.

Source: Power Retail ASX-Listed E-Com Index based on ASX reporting

We know that the last two years has seen a massive surge in e-commerce growth. Brick and mortar or multichannel retailers that hadn’t necessarily prioritised the digital space realised very quickly that a new strategy was needed. We’ve seen consumers head online like never before and stay there, despite the easing of restrictions. There are a lot of factors at play, not all lockdown related, but we know that the future for e-com is glaringly bright. We will not return to pre-COVID times; too much has changed. In all likelihood, this is the direction we were heading anyway, we’ve just had 5+ years of growth supercharged into a far shorter timeframe. Given that, it’s interesting that investors aren’t necessarily valuing e-commerce companies in the way that would be expected. Some of this may be related to the easing of restrictions, with physical stores opening, vaccination rates on the rise and borders reopening. But with the November line-up of online sales events and early Christmas spend, it’s interesting that the e-com boom isn’t being reflected in the ASX-Listed E-Com Index.

So, who are the e-commerce winners this week? Adore closed at $4.84 on Tuesday, not quite the $5.20 we saw last week, but still a 3.6% uptick in the last fortnight. While Cettire’s massive growth compared to this time three months ago was mainly thought to be a stabilisation after its sudden plunge and trading halt in June, it has still managed 18% growth over the last fortnight, closing at $4 on Tuesday— a high we haven’t yet seen from the company.

BikeExchange has been hovering around the $0.17 to $0.18 mark all month, and while this brings its share price to +2.9% over the last fortnight, it is far from the $0.22 we were seeing three months ago (-20.5%). MyDeal also experienced a small 2.5% boost, opening at $0.82 today. Unlike BikeExchange, this is a massive improvement on the $0.67 we were seeing from the marketplace back in August (+26.2%).

Growth strategy will no doubt be a huge focus for e-commerce companies listed on the ASX heading into the new year. In the shorter term, will they be buoyed by holiday sales? Will seasonal spend and online sales events in November lead to investor confidence in the coming weeks? And what will consumer spending habits and the long-term shift to online mean for 2022 and beyond? The next few weeks will be interesting as we see how the (Christmas) cards fall.

Figures are current as at close of ASX on 9 November 2021. This is analysis only and not intended as investment advice.

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