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

Temple & Webster is one of the e-commerce ASX shares that's growing quickly.

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There are a few e-commerce ASX shares that are growing very quickly that may be worth considering in November 2021.

At the moment, some of these companies are investing heavily to achieve high rates of long-term growth. However, the underlying profitability could be quite high. Cutting out the large network of physical retail stores (and all the associated costs of running shops) could be really helpful.

That's why these two ASX e-commerce ASX shares could be interesting ideas:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is already a leading online retailer of furniture and homewares. But the company is nowhere near done, it wants to become the largest player in the whole industry, both online and offline.

It's growing very quickly. In FY21, revenue rose 85% year on year to $326.3 million. In the period of 1 July 2021 to 27 August 2021, revenue had increased another 49%.

The business said that it's experiencing four different tailwinds at the moment. There's the ongoing adoption of online shopping due to structural and demographic shifts. Next, these trends are being accelerated because of COVID-19. There is the benefit of an increase in discretionary income due to travel restrictions. Finally, there has been strong housing market growth.

This e-commerce ASX share is focused on strengthening its customer proposition, built around having the biggest and best range of furniture and homewares, combined with a "great" customer service experience.

It's investing heavily in marketing to win new customers and grow its brand awareness. But the 12-month marketing return was "healthy" at 2.3x. This is helping increase the value of each customer. In FY21, revenue per active customer rose 12% year on year due to customers repeat buying more often and spending more when they do.

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is another e-commerce ASX share that is growing very quickly. It says that it sells around 10,800 products from approximately 260 brands.

It's now a business that offers an integrated content, marketing and retail platform.

Just like Temple & Webster, Adore Beauty is growing rapidly. In FY21, its revenue grew 48% to $179.3 million. Then, in the first quarter of FY22, revenue grew by another 25% to $63.8 million.

Its customer numbers continue to climb. Active customers increased by 24% to 874,000 in the FY22 first quarter and there was returning customer growth of 63% year on year. Management believe that returning customers provide a strong foundation for future growth. Those returning customers become more valuable each year as they spend on the platform, increasing both their basket size and order frequency over time.

There are a number of areas that Adore Beauty is working on including scaling its mobile app, building owned marketing channels and community, and expanding its loyalty program.

Adore Beauty says that it continues to benefit from the ongoing structural shift to online, which has been accelerated by the recent COVID-19 lockdowns.

The e-commerce ASX share wants to grow and cement its online market leadership, whilst also expanding its range of products. Connecting with potential consumers is a large part of the strategy, which is why the company was pleased that its Beauty IQ podcast surpassed three million downloads.

Another way that Adore Beauty plans to grow scale and profit margins is by launching a private label brand, which is on track to be launched in the third quarter of FY22.

The business believes it's in a large and growing $11 billion market.

It's currently rated as a buy by the broker UBS, with a price target of $6 with expected continuing growth in FY22.

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 Temple & Webster Group Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and 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.

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