Is this why the Temple & Webster share price surged over 6% today?

Shares in the online homewares retailer soared today. What's going on?

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Key points

  • The Temple & Webster share price soared more than 6% today
  • Australia Post just released its e-commerce report
  • The CEO of Australia Post expects e-commerce sales to double over the next five years

The Temple & Webster Group Ltd (ASX: TPW) share price went up by more than 6% on Tuesday to $7.05 a share. But what might have sent the business higher today?

Temple & Webster is one of the fast-growing e-commerce ASX shares. In the company's recent FY22 half-year result, it reported revenue of $235.4 million, which was a 218% increase compared to the first half of FY20.

Investors may have been responding to a new report finding e-commerce sales are expected to keep growing strongly. The forecast comes from one organisation that is close to the online shopping boom.

Australia Post's e-commerce report

In its 2022 e-commerce industry report, Australia Post said that it is enabling small and medium businesses to pivot to online shopping with its 4,300-strong post office network.

The delivery business says that there are now 9.2 million Australian households shopping online.

"It's evident the pandemic has changed the way we shop, and new habits formed over the past two years are now firmly ingrained," the report said.

Australia Post suggests that retailers need to offer a great end-to-end customer experience, saying it's paramount to growing and maintaining a loyal customer base.

Certainly, Temple & Webster says that it wants to offer customers a strong proposition. It aims to do this by being a trusted brand, offering a large range of quality products and a great user experience to attract customers, grow its conversion rate, and increase customer satisfaction. Its active customers grew 34% to 906,000 in HY22 and revenue per active customer grew 10%.

Australia Post also suggested that retailers need to know every detail of their products and provide thorough information, supported by images, video, or even virtual reality.

Temple & Webster has been investing in data and technology. It has a 3D/augmented reality offering to complement existing 2D imagery on its product pages. The company is currently testing a number of augmented reality cases using 3D images. Its goal is to have the largest 3D catalogue of furniture and homewares in Australia. This could impact the Temple & Webster share price over the longer-term.

Australia Post also made the following comments about where it expects e-commerce spending to go:

Looking ahead, we expect online shopping to continue to grow much faster than physical retail. It's clear Australians have grown to love the ease and convenience of buying online and are likely to continue doing so regularly throughout 2022.

Australia Post also cited a survey where 93% of respondents said that they'll maintain or increase their online shopping activity in 2022.

E-commerce sales to double?

According to reporting by the Australian Financial Review, Australia Post's CEO expects online shopping revenues to double over the next five years compared to the $62.3 billion it earned last year.

Australia Post CEO Paul Graham said:

81% of all households shopp[ing] online is an amazing statistic but still shows we are not as penetrated as Europe or the United Kingdom, so there is still upside to go.

We are still lagging global trends in terms of the total online spend and the purchasing frequency. If you take South Korea, 53% of shoppers are buying at least weekly, which is more than double Australia's figure of 25%, so there is still significant growth to come for the Australian market.

Temple & Webster share price snapshot

Despite today's jump, the Temple & Webster share price is still down 35% in 2022.

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 and has recommended Temple & Webster Group 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.

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