CITIC SEC E-commerce 618 Review:Industry Mild Growth Focus on Ecological Changes

CITIC SEC released a research report stating that in 2026, the domestic e-commerce sector will face pressure from a high base, but overall it is manageable. The online penetration rate continues to increase, and the industry is entering a mature stage of tapping into existing potential and improving efficiency. Looking at individual platforms, content e-commerce and PDD Holdings Inc. Sponsored ADR Class A (PDD.US) continue to experience excess growth, while Taotian and JD.com, Inc. Sponsored ADR Class A (09618) have stable growth rates, and monetization rates have entered a stable platform period. In terms of immediate retail, the trend of reducing subsidies for takeout has been established. It is recommended to pay attention to changes in the industry landscape during the contraction of low-unit price orders and the progress of leading platforms in establishing self-operated front warehouses. Key points from CITIC SEC: Market review: Consumer market is lackluster, e-commerce trend is positive. According to the National Bureau of Statistics, in May 2026, total retail sales of consumer goods decreased by 0.6% year-on-year (compared to +0.2% in April), with retail sales of goods decreasing by 0.7% year-on-year (compared to -0.1% in April). Under the pressure of a high base, the growth rate of the consumer market continues to be affected. During the same period, the online retail sales of physical goods increased by +2.6% year-on-year (compared to +0.2% in April), leading retail sales growth by 3.3 percentage points. According to analysis of data from the Ministry of Transport compiled by Analysys, the volume of express parcels collected nationwide during the pre-sales period before the big promotion (three weeks before May 10) increased by only 0.6% year-on-year compared to the same period in 2025, while during the full promotion period (five weeks after May 11) it increased by 7.0% year-on-year compared to the same period in 2025. Considering the concentrated effect of the large promotion, it is estimated that e-commerce growth in June is expected to further improve compared to May, with the overall trend being positive. 618 Promotion: Platform performance differentiation, orderly competition in immediate retail. Data overview: It is expected that during the promotion period (May 13 to June 18), industry GMV growth will be in the mid-single digits, with growth under pressure due to a high base but still resilient. Looking at individual platforms, it is expected that Taotian will still face the diversion of content e-commerce in the fashion and beauty categories; JD.com, Inc. Sponsored ADR Class A has a high proportion of electric product categories; PDD Holdings Inc. Sponsored ADR Class A and Douyin still have excess growth. Recap of strategies: The promotion period is slightly shortened, highlighting user-friendliness and merchant-friendliness. During this promotion, the time periods of each platform are differentiated, with PDD Holdings Inc. Sponsored ADR Class A extended by 2 days but with a posterior period, Taotian and Vipshop Holdings Ltd Sponsored ADR shortened by almost a week, Douyin shortened by two days, JD.com, Inc. Sponsored ADR Class A and Kuaishou remaining unchanged. Overall, the period has been slightly shortened, reflecting the platforms' control over subsidies and a renewed focus on concentrated orders during the promotion. On the user side, as price competition has become standard in the industry, each platform continues to focus on improving user experience, simplifying full-reduction rules, and providing long-term price protection services. On the merchant side, Taotian's returns service has been fully upgraded, offering new merchants who have not used the returns service free orders for the first 5000 transactions within the first 7 days. For merchants who have already opened returns, the platform has introduced exclusive AI-assisted order retention service. This service uses AI risk assessment to retain users when they initiate a small return request, using the returns service to encourage buyers to choose small refunds and keep the products, helping merchants effectively reduce return and refund rates. Takeout / Immediate retail: Shift in platform strategies, subsidies maintained rationally. With regulatory guidance, competition in the takeout industry has reached a turning point much earlier than expected. During the Q1 2026 performance exchange meeting, both Meituan and Alibaba Group Holding Limited Sponsored ADR mentioned significant improvements in the UE dimensions of their takeout and immediate retail businesses, which were also reflected in their financial reports. This year's 618 promotion continues the trend of rational competition, with monitoring showing no overly aggressive subsidies for takeout since late May. Statistical data from Xingtu shows that sales growth in immediate retail during the 618 period reached triple digits, indicating a shift in industry competition towards immediate retail, but not in a disorderly, all-category manner. Instead, the focus is on specific categories and brands, emphasizing mental construction and category expansion. For example, Meituan's flash sale during this 618 promotion focuses heavily on liquor, jointly launching exclusive custom small bottles with nine top liquor brands like Kweichow Moutai and Wuliangye Yibin, setting a "liquor festival" on the 9th of each month to leverage the promotional mindset and promote the expansion of channel categories. Risk factors: Risks associated with stricter regulation of internet platforms; risks of consumer sentiment not rebounding as expected; risks of intensified industry competition exceeding expectations; risks associated with Chinese stocks and e-commerce going global facing regulatory challenges.