Temple & Webster has been rewarded for margin and cost base management, while Redbubble has been slaughtered for increased investment.
The bursting of the e-commerce sharemarket bubble has spilled over into a whipsaw ride for investors struggling to value online retailers as navigating one of the economy’s most dynamic sectors gets complex for investors.
Redbubble chief executive Michael Ilczynski. The online marketplace said it will invest in its brand and disappointed investors as shares sunk.Webster was rewarded for margin and cost base management, while Redbubble got slaughtered for increased investment. It also warned high upfront ad costs may create short-term wins, but don’t build long-term businesses as customers fail to return to a platform.Webster flagged its average customer acquisition cost increased 18.9 per cent from $59 as at June 30, 2021, to $69 as at June 30, 2022.
If Shopify is right, all this means e-commerce businesses should follow Redbubble’s lead to invest in old-fashioned brand building as much as paid customer acquisition. Whether the short-term share price pain turns into long-term gain is unknown as the customer acquisition costs, feeble margins, and intense competition mean many e-commerce businesses must run at a loss to grow.
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