Online profits drop as Covid recovery gathers steam

The end of the online shopping boom that began during the pandemic is starting to show signs of abating. As people who avoided lockdowns return to stores, the demand for physical goods is rising.
Popular online stores are having a hard time as the disruptions caused by the supply chain and the rising costs put a strain on their profits.
Online retailer Kogan.com saw its stock price fall on Friday after its profits declined in the first quarter of the year. The company’s large inventory also weighed on its bottom line.
Kogan.com said on Friday that the company’s business had slowed down in the March quarter noting they would look to cut down on costs to maintain its profitability.
Kogan was founded by Ruslan Kogan in his parents’ garage in Melbourne. He listed the company on the Australian Securities Exchange in 2016.
The company reported a loss of almost $1 million for the March quarter. Its e-commerce division had a loss of $3.5 million, while its New Zealand subsidiary, Mighty Ape, had a profit of almost $3 million. The company’s overall business made a loss before interest, tax, depreciation, and amortisation of around $800,000.
Kogan noted that its total inventory level was still at almost $200 million, which included about $170 million in warehouse space.
Despite the company’s efforts to increase its product offering, its profits have been negatively affected by the rising costs associated with global supply chains.
The number of people shopping online increased significantly due to the lockdowns in Melbourne and Sydney.
In response to the increasing number of customers shopping online, the company created an in-house delivery service to help address the delays caused by the industry’s logjams.
Online companies are also suffering from the rising costs associated with shipping. Amazon, which is one of the world’s largest online retailers, has been experiencing a decline in its share price. To save when you shop at Amazon.com use an Amazon promo code with your order.
The company’s sales growth during the March quarter was its weakest since 2001, with e-commerce sales declining by 3 percent.
The number of customers on the company’s platform grew by 3.6 percent in the March quarter compared with the same period a year earlier.

Retail landscape changing

During COVID-19, the demand for professional services has increased. Other services such as mental health and medical wellbeing have also seen a spike.
In addition to traditional counseling and psychology businesses, relaxation and meditative activities such as yoga classes and team building events have also emerged as part of the mental health and wellness space’s evolving mix.
Technology-based businesses that can adapt to various conditions are those that can handle lockdowns. Those that can’t rely on traditional methods are those that are service-based.
It’s important that businesses are organised with their appointments so that they can accommodate those who are seeking mental health services.
A number of trends have been emerging in the hospitality and food industry as a result of the shift towards quick service restaurants and the expansion of casual dining options.
Many bars in Melbourne are now experimenting with membership models that allow them to communicate directly with their customers and reduce costs.
Technology support services, online gaming companies, and app developers have all done well in a world where automation is increasing.
Injecting government incentives into the manufacturing process has been identified as one of the main factors that has led to the development of a new era of sustainable manufacturing.
A successful business can be built on the basis of its flexibility and scalability. This is the key to future proofing your organization.
Many businesses still see their online presence as a marketing tool that they can use to promote themselves in brick-and-mortar stores. COVID has shifted the emphasis away from the online shop front and towards the add-on experience.
Due to the rise of 24-hour online shopping, retailers have started offering a wider variety of products and services that cater to the needs of a wider customer base.
Stores such as gorman have traditionally had a strong online focus with a well designed and solid online store. You can save with a gorman promo code when you visit the gorman shop.

Hopes of a recovery in Australian Retail

Australia has experienced a couple of devasting months for the economy due to the Coronavirus however it could have been a lot worse if restrictions had not worked as well as they have. April was brutal for retail with a 17.9% drop however, there are early signs that a recovery is on the horizon.
The retail most affected by the Covid pandemic was bricks and mortar stores who had restrictions in trade during this time. However, online stores boomed during the pandemic with online retail rising to record levels.
One of the success stories is from Adairs online who reported that their online sales increased by 221 percent during the crisis where they had to close their stores for 5 weeks. Adairs stores have started reopening due restrictions being lifted however their online stores continue to perform well with Adairs discount code and offers being available.
Adairs is well known for their homewares and linen offerings and their online presence is quite mature. The performance of their website during these times has exceeded expectations and is driven by great products, good value and great service.
Other stores that have done well include Kogan who has benefited from the work from home workforce buying up on computer equipment, office furniture and other technology.

Retail sales tank in April

The Australian Bureau of Statistics has revealed, to no one’s surprise, that retail sales in April dropped off a cliff. In fact, retail sales dropped by 17.7 per cent for the month of April on the back of a 8.5% jump in March. This 17.7 per cent drop was the biggest on record just like the the 8.5 per cent increase in March which was also a record. In actual dollars, retail sales recorded a $5.32 billion drop in April compared to the retail figure in March.
One of the biggest and most concerning drops was the decrease in discretionary spending. There we massive drops in spending in cafes, takeaway and restaurants which recorded a 35.4 per cent drop. Also taking a big hit was clothing and footwear which dropped a larger 53.6 per cent.
These poor figures are what is spurring the government into trying to get the economy going again as quick as possible. The drop in April represents a 2.1 per cent drop in GDP and has triggered Australia’s first recession for many years.
Most stats have recorded big drops however Victoria was the hardest hit with a drop of 21.1 per cent. There was however, one bright spot with online retailing increasing in April. Online stores were able to thrive in this environment. Stores like Forever New with their mature online store have done well giving customers a Forever New discount code when you they shop online. Forever New sales have attracted customers to their website.

Consolidation in the online shopping sector

It has been a busy year for acquisitions and mergers in the online retail space with some big names taking some defensive positions in the online retail market. The first move was made by Gerry Harvey who made a surprise purchase of Seconds World from administration.

Following this acquisition, Wesfarmers made a huge announcement of its own advising the share market that they purchased The Catch Group owners of Catch of The Day, now known as just “Catch”. Catch of the day is a marketplace where sellers can offload their inventory into an online store which attracts thousands of visitors a day. This acquisition will see Gerry Harvey’s 2nds World go directly up against Catch Of The Day in online retail.

The Catch Group was purchase by Wesfarmers for a massive $230 million. They have strong faith in the business including its high achieving management team and excellent online platform. The investment in this business is expected to improve the online capabilities of Wesfamers and Kmart.
Catch of the Day has been a hugely successful online platform and since launching in 2006, has grown exponentially. In 2018 the business’s revenue rose by over 40 percent to $262 million.
For a great deal for your purchase at Catch, use a Catch of the day coupon for your purchase.