Global E-Commerce: Steady Growth As We Enter The AI Era

Research evidence excerpt

Global E-Commerce: Steady Growth As We Enter The AI Era

sts, in particular. We are monitoring

closely the movement of JD.com to compete more aggressively in Europe (Joybuy launch,

Ceconomy acquisition). Within our coverage we continue to prefer names that have accelerating

and profitable growth, FCF and earnings momentum, and clean balance sheets. We are OW

Auto1, our preferred name within EU e-commerce coverage. We are OW Zalando, and EW

Allegro and HelloFresh. We are UW ASOS.

China E-Commerce: China ecommerce sales surged at the beginning of this year (+10% in Jan &

Feb) but decelerated sequentially into March and April, with April online physical goods sales

moderating to ~flat yoy, reflecting cautious consumption due to lapping subsidies for big-ticket

appliances. We see ecommerce softness persisting into 2Q given high base and pricing pressure,

but expect a gradual recovery into 2H. At the company level, BABA CMR (ex-contra) rose 8% yoy,

broadly in line with industry trend, while continued narrowing food delivery loss (guided to be

profitable by FY29) suggests a clear path to profitability longer term. JD retail saw modest

growth in 1Q at 2.8% yoy with ongoing pressure in electronics & appliances (-8.4% yoy) due to

high base and rising memory prices. However, 2Q could be the last quarter for the negative

growth cycle for electronics, and we expect a DD growth rate may resume as early as 3Q. PDD

online marketing (as a proxy for domestic) further decelerated to 2.5% in 1Q amid take rate

pressure and merchant support initiatives, and we estimate growth to slow further in 2Q. While

Temu GMV reaccelerated in 1Q, the business is likely to remain loss-making in the near to

medium term. Along with PDD’s RMB 100bn investment over the next three years in private label