E-commerce stocks emerges as pandemic winner

Stocks focused on online retail were the winners in the pandemic with select stocks in this area returning more than 300% in 2020, according to FE Analytics.

This was divided between online retail firms and buy now, pay later providers to facilitate online transactions. There was a clear move among consumers towards online shopping as shopping centres closed and people hurried to buy equipment which would allow them to work and educate children from home during COVID-19 lockdowns.

The top-performing retail stock of 2020, according to data from FE Analytics from 1 January to 31 December, was e-commerce site Redbubble which returned 388% compared to returns of 1.4% for the ASX 200.

This was followed by online retailer Temple and Webster which returned 306% and Kogan which returned 155%.

There were no funds in the Australian Core Strategies universe which held Redbubble or Temple and Webster but Kogan was held by OC Dynamic Equity and OC Premium Small Companies.

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There were smaller, but nonetheless positive, gains for retail stocks such as JB Hi-Fi, which returned 34%, Harvey Norman and Wesfarmers which both returned 27%.

Meanwhile, buy now, pay later providers continued their upward surge with Afterpay, Zip and Sezzle all seeing strong returns during the year as consumers moved to online spending. The sector came under scrutiny from the Australian Securities and Investments Commission in November after its late fee charges but share prices were largely unaffected.

Afterpay, which was the market leader, returned 308% while smaller players Sezzle and Zip Co returned 195% and 49% respectively.