Is Temple & Webster a buy, hold or sell?


Temple & Webster (ASX:TPW), founded in 2011, has emerged as a prominent player in the Australian e-commerce landscape.

This innovative company specialises in offering a wide range of furniture and homewares.

Over the years, Temple & Webster has solidified its position as one of the country's most popular online destinations for furniture and home decor.

temple and webster shares november 2023

Why Temple & Webster has thrived

Let's delve into why this company has thrived in the fiercely competitive e-commerce market.

E-commerce focus

One of Temple & Webster's primary success factors is its unwavering commitment to the digital space.

This approach has proven to be a driving force behind the company's accomplishments. Temple & Webster brings the convenience of furniture and homewares shopping directly to customers' homes, fostering a loyal online following.

A diverse product range

What sets the company apart is its extensive product catalogue.

From furniture and decor to lighting and rugs, its offerings span a broad spectrum of styles and budgets. This inclusivity has made them a go-to destination for a wide-ranging customer base.

Competitive pricing

Temple & Webster frequently roll out competitive pricing strategies and promotions, making it an enticing choice for budget-conscious shoppers.

Its affordability is a key attraction for customers looking for value without compromising on quality.

Customer-centric approach

Temple & Webster prioritises customer satisfaction and service. It provides valuable content and guides to aid customers in their decision-making process, fostering trust and loyalty.

Its user-friendly website ensures a seamless shopping experience.

Marketing and branding

The company has invested significantly in marketing and branding efforts, building a strong online presence, and garnering recognition in the Australian market. This recognition has contributed to its success in a competitive industry.

Efficient logistics and delivery

Temple & Webster has optimised its logistics and delivery services, ensuring products reach customers promptly and in pristine condition. This efficient supply chain is crucial in maintaining customer satisfaction.

Is Temple & Webster a buy?

While recommending a retail stock during a consumer slowdown might seem unconventional, Temple & Webster stands out as more than just a retailer.

It's a rapidly growing business with structural growth drivers and a leading position in its industry, poised to capture a significant share of the market. Here's why it's a compelling investment:

Online migration

The shift to online shopping for homewares and furniture is still in its early stages in Australia, with an 18% penetration rate as of FY23 (lagging behind the US/UK at 25-30%).

As this migration accelerates, Temple & Webster stands to gain from meaningful scale benefits, including brand equity, better and more cost-effective supply chains, AI/tech capabilities, fixed cost leverage, and opportunities in adjacent markets.

Marketing spend

Temple & Webster has recently announced a substantial marketing initiative. This strategic move follows a decade of organic growth, with limited brand advertising offline.

Drawing inspiration from the playbook of its US peer, Wayfair, which successfully launched TV advertising in 2013/14, Temple & Webster is poised to increase brand awareness and market share.

Analysts suggest that if this investment mirrors Wayfair's success, Temple & Webster could potentially double its market share in the next 3-4 years, with sales reaching $1.1 billion, surpassing most analyst expectations by 40%.

Outlook for Temple & Webster shares

Temple & Webster is not just a profitable and highly successful online retailer; it's a growth story in the making. With substantial marketing investments on the horizon, the company is expected to outperform its operations and exceed analyst expectations.

Recent share price weakness, attributed to concerns over rising interest rates and impacting many high-growth companies, may, in fact, present an excellent buying opportunity. When the tide turns, Temple & Webster is poised to seize market opportunities and shine as a market leader.

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Jun Bei Liu is the portfolio manager of Tribeca's Alpha Plus Fund. Since taking over sole responsibility for managing the fund, she has doubled AUM to over $1 billion. She started as at Tribeca an equity analyst and spent several years as a portfolio manager before taking over the Alpha Plus Fund in 2019. Jun Bei is fluent in Chinese, and learned English as a teenager upon leaving China and emigrating to Australia at 16. She has a Bachelor of Commerce from the University of NSW, is a graduate member of the Australian Institute of Company Directors, and a Chartered Financial Analyst. She serves on the advisory committee for Australian Student Asset Management and is also a volunteer for Raise Foundation Board.