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.