2 leading e-commerce ASX shares that could be buys in September 2021

Temple & Webster is one ASX e-commerce ASX share worth watching.

| More on:
online shopping payment amazon

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are several leading e-commerce ASX shares that are available for Aussie investors to consider.

Businesses in the e-commerce space are exposed to tailwinds where more shopping is being done online rather than in-store. This is being accelerated by the impacts of COVID-19.

Some businesses are looking to capitalise on those trends significantly:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster wants to become the largest retailer (online and offline) for furniture and homewares in its home market. It's investing heavily into the business to grow the business and its online market position.

COVID-19 may have accelerated the growth, but the company continues to grow revenue rapidly. FY21 revenue increased by 85% to $326.3 million. FY22 has seen that growth continue, with year on year revenue growth of 49% for the period of 1 July 2021 to 27 August 2021.

Part of the e-commerce ASX share's revenue growth came from revenue per active customer increasing by 12% year on year due to customers repeat buying more often and spending more when they do. Plus, the number of active customers surged 62% to 778,000.

Temple & Webster believes it has a large total addressable market. In Australia in 2020 it thinks the total market was worth around $16 billion, with online being between $1.1 billion to $1.4 billion of that.

Management point to its negative working capital to show that growth is good for operating leverage. Around 74% of sales are drop-shipped with no inventory risk, according to Temple & Webster.

Temple & Webster plans to maintain an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of between 2% to 4% whilst heavily investing to drive "above market" growth.

Kogan.com Ltd (ASX: KGN)

Kogan is an e-commerce ASX share that has both Kogan.com and Mighty Ape as strong divisions in their respective markets of Australia and New Zealand.

The business can offer customers a wide array of products on its website like TVs, cars, phones, clothes, sports goods and so on. It also offers extra services like insurance, superannuation, energy, mobile plans and home internet.

Variable demand and excessive inventory has caused big impacts on Kogan over the last nine months. FY21 gross profit went up 61% to $203.7 million, but net profit fell 86.8% because of one-off inventory, logistics and Mighty Ape acquisition costs.

However, the business is starting to see a return of growth again. The first 18 days of August 2021 showed a "strong acceleration" above July 2021's performance, with gross sales 24.5% above July and gross profit 25% above July.

In FY22, Kogan expects to deliver strong growth in Kogan First memberships, ongoing growth in exclusive brands, further enhancement and development of Kogan marketplace and the benefits from the full integration of the Mighty Ape business.

The e-commerce ASX share is also thinking about implementing logistics projects that would not require significant capital spending and can be supported by the company's balance sheet.

According to Commsec, the Kogan share price is valued at 26x FY23's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

group of traders cheering at stock market
Technology Shares

Codan shares near an all time high. Can they go higher?

Is there more room for growth for this ASX 200 company? 

Read more »

Kid putting a coin in a piggy bank.
Technology Shares

Why I think this ASX small-cap stock is a bargain at $4.41

This tech business has a lot going for it.

Read more »

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »