The Redbubble (ASX: RBL) share price was among the best performing ASX e-commerce shares of 2020 on the back of booming online sales.
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The e-commerce sector in Australia and New Zealand went from strength to strength in 2020.
According to the Salesforce Holiday Insights Hub and 2020 Holiday Predictions report, as reported by CMO, e-commerce sales increases in the region were the highest in the world, surging by 108% and 107% respectively in the second and third quarters of 2020.
The report reinforces the narrative that the coronavirus pandemic is continuing to impact shopping habits, with shoppers increasingly turning to online retailers. On that note, let’s take a closer look at the Redbubble Ltd (ASX: RBL) share price, one of the best performing ASX e-commerce shares of 2020.
Redbubble share price outperforms in 2020
Redbubble shares were among the top performing ASX shares of 2020, gaining nearly 400%.
Redbubble provides independent artists a platform to sell their creations and has enjoyed strong consumer demand for its unique and customised products. The company’s business model is powered by its loyal and growing artist community. New artists contribute to Redbubble’s marketplace growth, while more established artists provide sustained revenue for the platform.
Changing retail landscape
During its October 2020 annual general meeting, Redbubble highlighted several long-term retail trends that have emerged amidst COVID-19. The company quoted a number of consulting reports and publications including:
- Forbes, which said that after this crisis consumers will be more discerning with discretionary purchasing and will seek meaningful purchases, particularly made-to-order.
- McKinsey, which highlighted the out-of-date sourcing model of the fashion industry which is characterised by long lead times, large order sizes and relatively low flexibility. It said that a transformation was needed, particularly in making sourcing more demand-driven and more sustainable on social and environmental dimensions.
- Which PLM, which sees on-demand manufacturing as a possible solution to overstocking risks as well as facilitating reductions in inventory costs and lead times.
According to Redbubble, it is in a strong position to leverage these trends by meeting consumer desire for customisation, delivering products created by independent artists and providing a large product range manufactured on-demand.
Accelerating revenue growth
Redbubble’s revenue accelerated through the second half of FY20. Its revenue for the month of July surged 132% on the prior corresponding period. The company’s growing scale and global footprint has translated into a 141% year-on-year increase in operating earnings before interest, tax, depreciation and amortisation (EBITDA) from $6.3 million in FY19 to $15.3 million in FY20. The company expects further profitable growth and recent macro shifts in online activity to accelerate its growth momentum.
The Redbubble share price has started 2021 with a boom, jumping by almost 8% today so far. It will be interesting to see whether the above mentioned trends continue to benefit the company in 2021 and how this is reflected in the Redbubble share price.
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.