STOCK WATCH: E-Com’s Shine Fades As Lockdowns Lift

There may be a light at the end of the tunnel for borders opening, travel returning and restrictions easing, but what does this mean for e-commerce? As the light of the new-normal looms, is e-com losing its shine? This week’s ASX performance would seem to imply that it is.

In the last 30 days, the ASX200 has grown 1.3%, while the collective E-Com Index has shed 4.3%. Even the steady performers have failed to lift the Index over this period, with Temple & Webster down 4.8% in the last month, Adore down 6.4%, Cettire down 7.9%  and Booktopia shedding 7.7%. Redbubble and Kogan also recorded share price decreases in last 30 days (-3.5% and -1.9% respectively). The only companies showing growth in this time are MyDeal (11.1%) and BikeExchange at 3% (which is perhaps a surprise after its relatively unimpressive performance in the last month).

As we approach the new ‘new normal’, is investor confidence in e-com sliding? The last two years have seen a surge in the online space, with completely new demographics becoming loyal shoppers. What started as lockdown related spend became a complete behavioural change as we saw shoppers remain online and repeat purchasing, even when stores reopened. But have recent postal delays and the announcement of travel restrictions lifting caused the digital space to lose its edge? Or has the growth of e-com just naturally plateaued?

The signs have been there for a few weeks, with the Kogan share price hovering around the $10 mark and failing to reach the +$13 we saw earlier in the year. There were also expectations that Booktopia stock would see a boost after shares came out of escrow in September, but we haven’t yet seen that eventuate. Even Cettire’s enormous growth (63% over 90 days) is largely due to recovering from its steep dive which saw a trading halt in June.

Source:Source: Australian Listed E-Com Index based on ASX Reporting

There were some hyped floats in 2020 and arguably some overvalued companies that have seen a natural levelling out of share price, but overall, this doesn’t account for the dismal performance we have seen on the ASX in recent times. What we have seen is exceptional acquisition and growth strategies in the last year that hasn’t necessarily translated to exceptional growth on the ASX. Consumer spend online may not have been reactive and purely lockdown related, but has investor sentiment been reactive to lockdowns (and now the easing of restrictions)?

The November/December quarter is forecast to be the biggest online shopping period on record and consumer confidence is high. With online sales events looming and Christmas spend ready to soar, are recent results merely a blip in ASX performance, or is it a sign of things to come?

Figures are current as at close of ASX on 26 October 2021. This is analysis only and not intended as investment advice.

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