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Supply chain strife makes life harder for e-commerce companies

Online-only retailers have seen their share prices collapse from their pandemic peak.
Supply chain strife makes life harder for e-commerce companies

In 2020, many investors believed that government-ordered lockdowns would provide the conditions for the ascent of the e-commerce industry. Traditional brick and mortar retailers had witnessed market share being eaten away long before Covid-19, but this was supposed to be the final nail in the coffin.

Between April and September last year, online grocery retailer Ocado (OCDO) saw its share price increase 83 per cent. AO World (AO), which delivers appliances and electrical equipment to customers' doors, jumped 230 per cent and the value of online fashion business ASOS (ASC) almost quadrupled. Recent events demonstrate that this optimism now seems misplaced.

Supply chain storm

All three companies are now caught in the eye of a supply chain storm, which has led to a swathe of profit warnings. In ASOS’s full-year results, it forecast pre-tax profits for 2022 to be between £110m and £140m. This is around a 30 per cent drop from the £177m earned in the year to 31 August. Its active customer numbers grew by 13 per cent, but increased cost pressures and higher returns (as people buy and send back more formalwear) means profits will dip.

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