Ecommerce investing in Australia is heating up, and there are many ways to get involved. Here's a look at major stocks and market niches.
Ecommerce is thriving — not just in Australia, but also globally.
Known formally as electronic commerce, ecommerce refers to the buying and selling of goods and services via the internet. This mode of doing business is the norm today, but it hasn't always been so commonplace — ecommerce has grown alongside the rise of the internet, and it's taken savvy companies along with it.
Australia itself is home to a number of ecommerce powerhouses, and it's not hard to see why. According to the Australia Post, Aussies spent a whopping and record-setting AU$50.46 billion shopping online in 2020.
Ecommerce has boomed lately in part due to the COVID-19 pandemic — extended lockdowns have led to increased online shopping, and the trend has continued even as more brick-and-mortar stores get back to business.
Notably, Australia and New Zealand experienced major ecommerce growth last year. A retail insights report released by cloud-based software provider Salesforce (NYSE:CRM) shows that their ecommerce growth was the highest across the world for two consecutive quarters, coming in at 108 percent in Q2 2020 and 107 percent in Q3 2020.
Investing in Australia's ecommerce space
As ecommerce continues to gain ground in Australia, investors are looking for ways to get involved in this thriving industry. There are a number of avenues, but ecommerce stocks can broadly be broken down into four categories:
- Direct sellers — a physical store that operates online.
- Marketplace — a platform that connects buyers and sellers, sometimes also a direct seller.
- Software providers — cloud-based software that facilitates ecommerce through marketing or customer service.
- Logistics — helps provide structure to facilitate ecommerce, such as delivery or warehousing.
It's worth noting that some market watchers see the Australian ecommerce landscape as crowded.
Fisher Funds, a specialist investment manager, notes that it can be difficult to identify ecommerce leaders in the country because so many traditional retailers have also built successful online businesses. It also notes that the rise of Amazon (NASDAQ:AMZN) has made it tough for other online retailers to thrive.
"Guaranteed growth in a category does not guarantee positive investment returns from buying shares in companies in that category," cautions the New Zealand-based firm.
Major ASX-listed ecommerce stocks
So where should investors start when it comes to ecommerce investing in Australia? One place to begin is with the larger players in the industry. Here's a look at some of the biggest ecommerce technology stocks on the market.
1. Temple & Webster (ASX:TPW)
Market cap: AU$1.56 billion
This online furniture and homeware retailer reported that its 2021 fiscal year brought record revenue, profit and customer numbers. Its full-year revenue rose 85 percent year-on-year to hit $326.3 million, while the company's active customers jumped 62 percent over the same period to clock in at 778,000.
2. Kogan.com (ASX:KGN)
Market cap: AU$1.16 billion
Kogan.com describes itself as an ecommerce company with a growing portfolio of retail and service businesses. Results for its 2021 fiscal year highlight record-breaking gross sales of $1.18 billion, up 52.7 percent from the previous year. Revenue rose 56.8 percent to hit $780.7 million during that time.
3. MyDeal.com.au (ASX:MYD)
Market cap: AU$190.24 million
MyDeal.com.au is an online retail marketplace that focuses on homeware, furniture, household appliances and technology. Listed on October 22, 2020, it had a strong debut when it hit the market.
In its 2021 fiscal year results, the company reported revenue of $38.3 million, an increase of 150 percent year-on-year, and 894,225 active customers, up 83 percent in that same time.
4. Maggie Beer Holdings (ASX:MBH)
Market cap: AU$149.24 million
Maggie Beer Holdings represents four premium brands focused on gifting, food and beverages: Maggie Beer Products, Paris Creek Farms, Saint David Dairy and Hampers & Gifts Australia. Results for the company's 2021 fiscal year show that its net profit rose 18.8 percent year-on-year to reach $52.9 million; it also completed the acquisition of Hampers & Gifts Australia during the period.
5. Cashrewards (ASX:CRW)
Market cap: AU$68.97 million
Cashrewards is a cashback loyalty program that connects brands with buyers. The company completed its initial public offering toward the end of 2020, and in its 2021 fiscal year results it highlights the acquisition of 331,390 new members, up 64 percent year-on-year; it now has 1.1 million members. Reported revenue came to $22.1 million.
Other ASX-listed ecommerce ideas
As mentioned, there are also choices for those who want to get outside the box in terms of ecommerce investing in Australia. Businesses that facilitate ecommerce logistics can also be a good choice — examples include companies like Brickworks (ASX:BKW), which builds high-tech warehouses for Amazon and Coles Group (ASX:COL).
What's the outlook for ecommerce in Australia?
In its Australian Retail Outlook 2021 report, KPMG declares 2021 the year of retailing, stating, "The pressure on retailers to remain relevant in the eyes of the consumer has never been stronger."
The rapid pivot to online buying and selling during COVID-19 caught some retailers by surprise, but many of them have since harnessed their ecommerce capabilities and begun to thrive. Experts expect growing trends such as click-and-collect, same-day delivery and digital payments to continue, bringing further opportunities for investors.
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Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.