The Yield: ASX E-Commerce Performance

Welcome to the first in our weekly series of Power Retail’s ASX-listed e-commerce business overviews. In this series we will look at the top performing e-commerce companies on the Australian Securities Exchange. Is share price matching up with performance? What does this say about the strength of online retail in the current economic environment?

Last month we reported that e-commerce ASX shares had been struggling, with Kogan, Redbubble and other retailers that listed on the ASX last year all experiencing slight dips. While the COVID-19 tailwind accelerated e-commerce growth, the question has always been whether there are parameters surrounding this velocity. At what point will the the pandemic-related speed of growth begin to slow?

The answer, it seemed, was this last quarter. We saw share prices dip with the announcements of previous quarter results for many ASX-listed e-commerce companies. By mid-May, Adore Beauty’s share price had dropped to $3.37 (from $5.05 on 8 April 2021). Similarly, Kogan dropped from $13.52 in mid-April to $8.91 on 21 May 2021. Is this a sign of the bubble bursting or just a temporary lag after a COVID-19 related high? For Adore and Kogan, it seems to be more of the latter. As at 8 June 2021, the share prices of each have climbed steadily in the right direction. In the last fortnight, Adore Beauty’s share price has grown 19.90% and in the last week, Kogan has grown by 0.80% (which seems minuscule, but in the context of a 19.70% drop over 60 days, is clearly a step in the right direction).

ADORE BEAUTY GROUP LIMITED

KOGAN.COM LTD

The e-comm bubble-bursting narrative (or the threat of it) is one that has been playing out the media since the pandemic started. Yet looking at the strength of companies such as Booktopia and Temple & Webster, this narrative certainly doesn’t apply. In fact, the opposite is true. Far from reactive market peaks and troughs we’ve seen over the last few months, Temple & Webster and Booktopia have been floating along nicely (to keep the bubble metaphor going). We’ve seen steady growth in both companies, with Booktopia’s share price increasing by 7.90% in the last 60 days, and Temple & Webster growing by 9.30% in the same period. With the average growth of the ASX 200 at 5.30% since 8 April 2021, there’s clearly no indication that e-commerce shares aren’t pulling their weight when it comes to overall industry growth. The Bike Exchange share price tells a similar story, with 8.70% growth over the last 60 days (starting at $0.23 and finishing up on $0.25 after a few dips to $0.20 mid-May). Was that a ‘pop’ of the bubble bursting? Nope.

BOOKTOPIA GROUP LIMITED

Yet despite these strong gains, it’s not good news across the board. MyDeal’s share price was $0.91 at this time in April and is now $0.62 (down 31.90% over 60 days). Redbubble similarly experienced a 39% drop in share price from April to June, from $5.57 on 8 April 2021 and now at just $3.40.

Gains/Losses	60 Days	30 Days	14 Days	7 Days
Adore Beauty	-8.10%	12.30%	19.90%	10.70%
Bike Exchange	8.70%	4.20%	2.00%	0.00%
Booktopia	7.90%	1.20%	5.30%	2.80%
Kogan	-19.70%	-8.40%	-2.50%	0.80%
MyDeal	-31.90%	-17.30%	6.00%	-8.80%
Red Bubble	-39.00%	-13.40%	-4.50%	1.50%
Temple & Webster	9.30%	5.40%	11.90%	10.40%
Average	-12%	-1%	5%	5%
ASX 200	5.30%	2.81%	3.35%	1.68%

Source: original share price figures directly from ASX  

The May dip in share price coincided with a general dip in e-commerce revenue, with investors being spooked by softening demand. According to Power Retail: Switched On data, year-on-year, e-commerce revenue experienced a loss of 9.25% last month, dipping from $4B in May 2020 to $3.73B in May 2021. This represents the first month since the pandemic started that we did not experience e-commerce growth. While this could be seen as a sign of things to come, what it actually pointed to was an unseasonably enormous spike in revenue in May 2020 that wasn’t maintainable. Yet month-on-month, we see a different story. We still experienced growth from April to May 2021, and indeed June is forecast for further growth (not just month-on-month, but indeed year-on-year as well).

What this shows is that the e-commerce sector is still growing, and the opportunities are still enormous. Online retailers are getting more strategic about retention to capitalise on the 2020 boom. We will continue to see this play out and the success of these strategies is something that’s being watched closely. Some ASX-listed e-commerce companies are now trading below their 2020 share price (reinforcing the position of the naysayers who claimed the online surge was reactive only and unmaintainable) while the performance of others (Booktopia, Temple & Webster et. al.) is reflective of the general stability that we’ve seen so far throughout 2021. It’s slower growth, and lacking the enormous spikes of peaks of pandemic times, but if that was the bubble bursting, it’s more of a slow exhale than a dramatic combustion.

Figures are current as at close of ASX on 8 June 2021. This is analysis only and not intended as investment advice.