Ecommerce Investing in Australia

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$62.3 billion shopping online in 2021.

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.

According to a recent report by Statista, the ecommerce market is projected to grow at a compound annual growth rate (CAGR) of 14.09 percent until 2027, when it’ll reach an estimated market volume of AU$113.84 billion.

How to invest in Australia's ecommerce space?

As ecommerce continues to gain ground in Australia, many 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.

What are the biggest ASX-listed ecommerce stocks?

Where should investors start when it comes to ecommerce investing in Australia? One place to begin is with the larger players in the industry. Read on for a look at some of the biggest ecommerce technology stocks on the market. Market cap data was obtained from TradingView's stock screener on January 27, 2023.

1. Temple & Webster

Market cap: AU$693.43 million

Online furniture and homeware retailer Temple & Webster (ASX:TPW) reported that its 2022 fiscal year brought record revenues, profits and customer numbers. Its full-year revenues rose 31 percent year-on-year to hit AU$426.3 million, while the company's active customers jumped 21 percent over the same period to clock in at 940,000.

2. Kogan.com

Market cap: AU$478.49

Kogan.com (ASX:KGN) describes itself as an ecommerce company with a growing portfolio of retail and service businesses. Results for its 2022 fiscal year highlight record-breaking gross sales of AU$1.18 billion. Revenue reached AU$718.5 million during that time.

3. Adore Beauty Group

Market cap: AU$104.48 million

As one of Australia’s biggest online beauty retailers, Adore Beauty Group (ASX:ABY) strives to be the main destination for digital consumers looking for personal care products. In its 2022 fiscal year, the company reported AU$200 million in revenue, a year-over-year increase of 11 percent, while its active customers increased 31 percent to 872,000.

Adore Beauty's vision is to help women feel more confident and fabulous every day by delivering an empowering and engaging beauty shopping experience personalised to their needs.

Adore Beauty's aspiration is to transform the beauty shopping experience and drive online penetration to own the beauty category in Australia and New Zealand, and be the pre-eminent online destination for a broad selection of premium beauty, wellness and personal care products across skin, hair, makeup, accessories and close adjacencies.

4. Maggie Beer Holdings

Market cap: AU$77.54 million

Maggie Beer Holdings (ASX:MBH) 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 2022 fiscal year show that its net sales rose 22.1 percent year-on-year to reach AU$75.3 million.

5. Booktopia Group

Market cap: AU$35.71 million

Booktopia Group (ASX:BKG) is the largest online-only book retailer in Australia. It uses a technology-based approach to its distribution operations. In 2022, the company reported revenues of AU$240.8 million, up 7.5 percent from the year prior.

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?

According to a 2022 report by Technavio, the global ecommerce market is predicted to grow at a CAGR of 27.15 percent until 2027, a total increase of US$12,951.56 billion. 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.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Matthew Flood, hold no direct investment interest in any company mentioned in this article.

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Matthew Flood

Matthew Flood is a writer and editor from Montreal, Canada. He's been writing professionally for four years on a wide array of topics ranging from investments and real estate to cookware and home improvement. Matt also enjoys creative writing and has written two novels and a novella.

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