ASX pure ecommerce plays and retailers that focus on home furnishings have been the unexpected beneficiary of COVID-19 lockdowns in 2020 – and the subsequent transition towards logging in from home.

That retail segment experienced a massive surge, as consumers shifted to online shopping to replace going on physical trips to traditional retail stores. In the process, ecommerce heavyweights on the ASX have made record sales.

Pure play Kogan (ASX:KGN), for example, saw its share price surge by more than 150 per cent in 2020. In the second half of the year ending 31 December 2020, the company reported a 174 per cent increase in profit before tax to $35 million.

Another ecommerce play Redbubble (ASX:RDB) did even better, with its share price more than quadrupling over the course of 2020. A strong second half saw the company report a 141 per cent increase in EBITDA to $15.3 million, which curiously enough, was predominantly made on the back of strong sales of face masks.

Here we take a look at some of the retailers on the ASX:

Code Company Price %Yr MktCap
HT8 Harris Technology Gl 0.15 1567 $ 38,249,322.15
RBL Redbubble Limited 6.72 522 $ 1,816,220,540.79
FUN Funtastic Limited 0.11 450 $ 101,517,360.72
KGN Kogan.Com Ltd 17.52 240 $ 1,826,643,346.56
TPW Temple & Webster Ltd 10.92 182 $ 1,339,436,559.36
NTD National Tyre&Wheel 1.07 168 $ 121,630,685.04
ADH Adairs Limited 4.09 90 $ 664,472,904.75
BBN Baby Bunting Grp Ltd 5.88 76 $ 734,168,826.00
SSG Shaver Shop Grp Ltd 1.12 70 $ 146,846,243.16
BLX Beacon Lighting Grp 1.8 69 $ 390,812,460.50
BRG Breville Group Ltd 30.85 63 $ 4,259,925,050.64
NCK Nick Scali Limited 11.36 57 $ 886,140,000.00
SHM Shriro Holdings Ltd 0.98 34 $ 88,431,375.00
AX1 Accent Group Ltd 2.35 33 $ 1,273,386,780.25
MTO Motorcycle Hldg 2.5 31 $ 154,266,775.00
CCX City Chic Collective 4.21 30 $ 946,665,805.32
TRA Turners Automotive 2.9 29 $ 248,108,659.00
JBH JB Hi-Fi Limited 52.21 27 $ 5,869,391,475.48
SUL Super Ret Rep Ltd 11.77 26 $ 2,585,713,425.00
WES Wesfarmers Limited 56.27 25 $ 63,086,871,064.88
HVN Harvey Norman 5.59 24 $ 6,840,576,530.46
ASG Autosports Grp Ltd. 1.79 11 $ 349,740,000.00
CKF Collins Foods Ltd 9.78 10 $ 1,133,169,691.68
COL Coles Group 18.26 10 $ 24,384,234,842.88
MHJ Michael Hill Int 0.67 4 $ 252,187,447.20
LOV Lovisa Holdings Ltd 12.14 1 $ 1,237,935,121.92
UNI Universal Store 5.98 0 $ 439,175,016.00
DSK Dusk Group 2.59 0 $ 161,896,449.00
CTT Cettire 0.81 0 $ 287,834,856.10
ABY Adore Beauty 5.7 0 $ 517,684,733.50
BKG Booktopia Group 2.7 0 $ 364,002,142.35
MYD Mydeal.Com.Au 1.23 0 $ 323,534,132.50
ZBT Zebit Inc. 1.13 0 $ 102,472,917.23
WOW Woolworths Group Ltd 41.66 -1 $ 52,132,959,019.60
OLI Oliver'S Real Food 0.065 -10 $ 17,868,306.52
RFG Retail Food Group 0.079 -25 $ 163,247,330.25
MYR Myer Holdings Ltd 0.325 -26 $ 258,702,826.73
MOZ Mosaic Brands Ltd 1.06 -35 $ 101,979,391.15
AUK Aumake Limited 0.052 -40 $ 28,761,155.17
WEB Webjet Limited 5.2 -43 $ 1,739,082,942.99
KMD Kathmandu Hold Ltd 1.25 -43 $ 886,251,730.00
HLO Helloworld Travl Ltd 2.2 -46 $ 345,712,094.35
FLT Flight Centre Travel 15.26 -58 $ 2,988,075,030.00
MPH Mediland Pharm 0.047 -81 $14,669,899.00

But with the recent announcement of a vaccine rollout and the rotation towards cyclicals, the rain seems to have poured down on the parade, with investors now thinking further out about what a reopening could mean for pure play stocks.
 

Online shopping will never go away

The appeal of ecommerce stocks for investors seems to have started waning in December, soon after Pfizer announced its COVID-19 vaccine had proved to be 90 per cent effective in trials.

The rationale was that, with life going back to normal, people will be more inclined to ditch online shopping in favour of going back to the shops. But that reasoning might be a little short-sighted, since even before the pandemic, people were already shifting away from bricks-and-mortar to buying online.

According to BMO Capital Markets senior analyst, Simeon Siegel, and speaking to Barron: “While 2020 penetration levels are inflated, e-commerce growth isn’t going to stop; it predates the pandemic and will outlast the pandemic.”

According to him, companies that made quick bucks from just a stuck-at-home strategy will lose out, while those who have built a truly sound ecommerce business will benefit from the long term transition towards ecommerce.
 

Elephant in the room

Back home, two major headwinds – both short and long term – are moving directly into the flight path of the retail sector.

In the short term, the clock is ticking to 28 March – the day when the JobKeeper program goes away. JobKeeper has been one of the reasons that unemployment has so far been checked at around the 6 per cent level.

It’s expected that removing JobKeeper will hit Victoria hardest, with NSW next – as the two biggest State recipients. It would also mean job losses, which usually have a direct trickle down effect on the discretionary retail sector.

The second, and the more longer term hurdle for Aussie retailers, is the presence of a $1.5 trillion dollar elephant in the room – Amazon. The US behemoth has quietly surpassed the $1 billion revenue in just three short years since entering the Australian market.

The giant retailer could gradually eat into the Aussie retailers’ pie, which may also eventually jeopardise the market share of household grocery names like Coles (ASX:COL) and Woolworths (ASX:WOW).
 

3 ASX retail small caps to watch in 2021

So, is all lost on pure ecommerce plays? Not necessarily. It’s all about picking those with differentiated offerings and value proposition.

Here we take a look at three small caps which are riding on big sales momentum in 2020.

Zebit (ASX:ZBT)

Pure ecommerce play Zebit floated on the ASX last October, raising $35 million from investors at $1.58 per share.

The online platform stocks around 90,000 products, which also includes pay-by-instalment options for customers. This payment option is pitting it with the major BNPL players.

The company reported revenue of $US87.65 million, up 2.5 per cent, with gross profit of $US23m and an operating loss of $3.7 million.

The Zebit share price is up by 20 per cent in the last 12 months.

Booktopia Group Ltd (ASX: BKG)

Booktopia is the biggest online book retailer in Australia which listed on the ASX last December.

It posted a record full year revenue of $165.8 million, and followed that up with another strong first half of 2021 – shipping a record 4.2 million orders. As a result, first-half revenue increased by 51.1% to $112.6 million as a result. The company took swift action when the pandemic first struck, investing $20 million to increase its handling capacity at its Sydney distribution centre.

Through its IPO listing, Booktopia offered 10.9 million in new shares and 7.9 million in existing shares at $2.30 each. The share price is currently trading at $2.55.

Mydeal.com.au (ASX:MYD)

The online household goods retailer has reported strong figures in its half-year report. It included a 217 per cent jump in gross sales to $126.7 million, and an equally massive 205 per cent jump in active customers.

The company expects even better things in H2 FY21, after an increase of 190 per cent in sales was recorded in January. It’s also on track to launch its MyDeal app on Android and iPhone in the the second half.

The MyDeal share price has dropped by 45 per cent in the last 12 months.

 

Booktopia, Zebit and MyDeal share price charts: