Online sales present an opportunity to invest

The e-commerce market has surged, following the demand for products and services increases online accelerated by the global pandemic.

We’re taking a look at companies with e-commerce businesses delivering strong growth, especially for listed companies.

Takealot Group

Naspers Limited (JSE:NPN)

Comprised of Takealot.com, Mr D Food, and Superbalist, Takealot Group is amongst the leading e-commerce companies in South Africa. Owned by Naspers, the group has been making strides in the e-commerce market.

Expanding its portfolio, Naspers announced in June 2021 that it had $14.6 billion; these are funds that came as a result of the Tencent stake reduction to 28.9%, which according to Basil Sgourdos, Naspers chief financial officer, provides the group with "financial flexibility to invest in new opportunities to sustain the strong growth and returns in the group’s e-commerce portfolio." 

One of the acquisitions that followed was valued at $2.6 billion; the group acquired Delivery Hero, which according to the company, "continues to demonstrate global leadership in the nascent and fast-growing food delivery opportunity," he added.

Moving into 2021

As Takealot continues to deliver robust growth, the Gross Merchandising Value (GMV) (in Rand terms) for Takealot, Superbalist and Mr D foods increased by 44%, 47% and 78%, respectively during the groups six months, which ended on 30 September 2021 – the group generated $407 million Gross Merchandise Value during the period. 

Despite the trading loss, revenue grew during the period. Naspers further added that: "This is an improvement of 67%, driven by higher gross margins at Takealot.com's general e-commerce platform and Superbalist, which improved trading profit margins by one percentage point and nine percentage points respectively. 

"Over the past six months, the group posted a solid performance. Group revenue, measured on an economic interest basis, grew 32% (29%) to US$17.2bn. Our e-commerce segment revenue accelerated 60% (52%) to US$4.6bn, after strong momentum in the prior year."

 

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Kogan Group

Kogan.com Limited (AUS:KGN)

Kogan.com Limited is an Australian listed retailer that offers services and products through its diversified portfolio. The group is divided into various segments that enable the company to leverage online market growth. According to the group:

"Online retail is in its infancy in Australia. The Kogan Group's market share has continually grown in a market that continues to rapidly increase in size."

Latest financials.

The group reported an increase in gross sales from $772 million to $1.1 billion, surpassing $1 billion in sales for the first time. Revenue for the period was $780 from $497 million in the previous competitive period. Sales and payment for the period increased by 52.7% and 61%, respectively.

While exclusive and third party brands contributed significantly to the groups' profit, Kogan Marketplace was one business that outperformed 2021 expectations, contributing 11.5% to the overall group's gross profit.

"The continued growth of Kogan Marketplace demonstrates the scalability of the platform and the strong customer and seller engagement achieved to date, while also indicating the size of the opportunity as the Kogan Marketplace expands its offering and makes it easier for sellers to list products on Kogan.com.

"The pipeline for new sellers remains strong and continues to grow. Kogan Marketplace also successfully launched in New Zealand in June 2021." the company said.

This was followed by Mighty Ape, a leading retailer in New Zealand which contributes 9.8%. According to Mighty Apes results for the seven months ending 30 June 2021, revenue and gross profit for the period were at $80 million and $19.9 million, respectively.

 

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Roundup

As the market continues to become more profitable, various analysts see an upside in online sales in 2022 and beyond. This may benefit investors, creating value in the long term; With the different operations from a company’s portfolio having the ability to present opportunities to buy the dip, along with dilution as the businesses continue to expand and raise capital.

 

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Sources – EasyResearch, Naspers Limited, Kogan.com Limited, ASX, JSE Sens, MyBroadband, BusinessTech.

Follow Cay-Low Mbedzi

@caylow_SA

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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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