Clearwater’s Ecommex Index Update – Q1 2014

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After a very strong 2013 our Ecommex index – which measures how pure e-commerce consumer businesses worldwide are performing – suffered a dip compared to the performance of more general retailers on the UK FTSE 350 and US S&P indices in the first quarter of 2014.

That said, the FTSE 350 index has had a storming start to the year as renewed economic and consumer confidence takes hold in the UK economy. Our index more closely mirrored the performance of the S&P which is unsurprising given that Ecommex is still weighted quite strongly towards the US, where lots of e-commerce businesses are listed.

Amazon is a giant of the e-commerce space and investor sentiment towards the company has a strong influence on our index. Its shares have been hit this year by concerns in some quarters over whether its huge investments to diversify the brand and consolidate fragmented market segments are paying off. However the company did report that it made almost $20bn in revenue during the first quarter of 2014 – up nearly 23%, beating expectations.

Amazon recently launched its first Fire TV set-top box and is moving into original programming via its Prime Instant Video service, an evolution of its 2011 acquisition of LoveFilm, to take advantage of these maturing areas of the market.

The move into programming echoes that of online movie group Netflix. The company has announced that it has generated more than $1bn in quarterly streaming revenues for the first time, while it will be increasing monthly subscription costs to fund more investment in original content. It recently reported a 72% rise in subscribers to 48m.

E-commerce site Overstock.com has had a strong start to 2014. The company, which made headlines earlier this year when it said it could start accepting the digital currency bitcoin, announced a 9% increase in net revenue to $341m in the first quarter. Another strong performer in the period was Systemax, which sells personal computers and computer components and supplies through a system of branded e-commerce websites and retail stores.

However, shares in Asos were hit when the UK online retailer reported lower than expected margins and increased losses in China. The fashion website still reported retail sales growth of 26% but this was below market forecasts. Over the past year, the company has experienced rapid growth in its core European and US markets and its shares continue to trade on a very high price-to-earnings multiple which makes the company vulnerable to share sell-offs.

Clearwater's Ecommex Index Update - Q1 2014