Source: Citic Securities Research
Author: Jiang Ya, Yang Qingpu, Xu Yingbo, Liao Yuan, Dan Zhuling
Dubbed 618 grand promotion in 2024 has come to an end, and Citic Securities expects that the e-commerce large cap GMV during this period is expected to achieve low double-digit growth (+12% or so), continuing the positive trend since the beginning of the year and May. Structurally, it is judged that the growth center of content e-commerce platforms has moved downward, and the growth rate of shelf e-commerce platforms has rebounded under active investment. Platform-wise, Citic Securities judges that the core platform GMV growth rate during 618 is ranked as follows: TikTok > PDD Holdings > Tmall > JD.com.
Authors: Jiang Ya, Yang Qingpu, Xu Yingbo, Liao Yuan, Shan Zhuling.
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Data Overview: Shelf growth rate has rebounded, TikTok and PDD Holdings growth rate is leading.
Combining the growth rate of express delivery volume and our estimation of each platform, we expect that the e-commerce large cap GMV during this 618 grand promotion will show a low double-digit year-on-year growth (+12% or so).
In terms of platforms, we expect the GMV during this 618 grand promotion to be: 1) TikTok to grow at a rate of +20%~+30%, 2) PDD Holdings to grow at a rate of +20%~+30%, 3) Tmall to grow at a rate of +10%~+15%, and 4) JD.com to grow at a rate of +5~+10%.
TikTok still has traffic advantage, but it is expected that the growth center will move significantly downward from the same period in 2023 (+60%~+70% year-on-year); PDD Holdings, with its low price perception and rich supply, is expected to continue its excess growth; Tmall's growth is expected to rebound, continuing its outstanding performance since 24Q1; JD.com's growth is expected to be stable.
Review of gameplay: Pre-sale system canceled, activity cycle is different for each platform.
In terms of rhythm, all platforms in this 618 grand promotion canceled the pre-sale system, but the performance of the activity cycle is significantly different:
1) JD.com, TikTok, and Xiaohongshu removed the pre-sale period based on the schedule of 2023, and the rhythm is more compact.
2) Taotian, Kuaishou, PDD Holdings, and Vipshop added preheating period and other activities, and the entire activity lasted for more than one month.
In terms of discount intensity, the discount intensity of this 618 grand promotion is basically the same, and the mainstream promotion method is still reaching a certain threshold to obtain a discount (for example, spending 300 yuan and receiving a 50 yuan discount). Tmall and TikTok both retained the single-item discount method of the official reduction, reducing the calculation link and optimizing the user experience.
In terms of user services, Tmall and TikTok both made shipping insurance a mandatory service for promotional products, and JD.com further upgraded services such as shipping insurance for large goods.
Category Structure: Mandatory is better than optional, and the household appliances and furniture categories are outstanding.
The 618 grand promotion continued the trend of mandatory being better than optional. According to Star Map data, the GMV growth rate of washing, care and cleaning products, which have relatively rigid demands, increased by +4.9% year-on-year, while that of grain, oil and seasoning, which have relatively strong optional attributes, increased by +4.8% year-on-year. However, the GMV growth rate of beauty and skin care, with strong optional attributes, decreased by -13.0%, and that of perfume and makeup decreased by -14.2%. Both categories have shown a trend of domestic substitution. In addition, the household appliances and furniture categories performed relatively well under the promotion of subsidies for replacing old items and services.
Content ecology: Traditional super heads fade out, and the status of store broadcasting is upgraded.
During the 618 period in 2024, the sales of super heads on major platforms have generally declined, while new super heads have emerged rapidly, and the trend of old and new heads replacing each other is significant. Against the background of the peak of the traffic dividend of content e-commerce, the importance of private domain traffic has increased, and the willingness of merchants to broadcast by themselves has increased. The GMV of self-broadcast by merchants on Xiaohongshu and Taotian during 618 has both performed well.
Risk factors
Risk of stricter regulation of internet platforms; Risk of recovery of consumer sentiment falling short of expectations; Risk of industry competition intensifying beyond expectations; Risk of stricter regulation on Chinese concept stocks and e-commerce in overseas markets.
Investment advice
Since 2024, the domestic e-commerce market has further continued the high-intensity competition trend, among which Alibaba and JD.com have invested more in growth with greater determination, PDD Holdings has improved its competitiveness in multiple dimensions, such as white-label and brand, and TikTok has vigorously expanded its shelf field. The competition among head companies is intense and each has its own strengths.
With more active price competition and optimized services on online platforms, the consumer's online shopping behavior may further penetrate, and the online rate is expected to experience a phased acceleration in 2024, with the annual physical e-commerce online retail sales growth rate or in the high single digits.
In this context, we believe that the overall attractiveness of the e-commerce sector may increase, although the competition is still fierce, the head platforms are expected to share the growth dividends of the scale.
Editor/Jeffy