Goldman Sachs·2025-05-20 05:38Investment Rating - The report maintains a positive outlook on the eCommerce sector, with a recommendation for a dual-pronged stock picking approach focusing on domestic policy beneficiaries and defensive games [2][12]. Core Insights - April online retail growth was healthy at +6% year-over-year (yoy), consistent with the first quarter of 2025, despite softer overall retail sales [2][8]. - Anticipation of strong online retail growth in May due to the front-loading of the 618 shopping festival sales, which began mid-May [2][9]. - Positive outlook for the second quarter from eCommerce platforms like Alibaba and JD, with estimated revenue growth of +10% yoy for Alibaba and +14% yoy for JD in June [2][12]. - Resumption of direct air-shipment SKUs on the Temu US platform following the reduction of US trade tariffs on China [2][11]. Summary by Sections Online Retail Performance - April online retail goods GMV grew by +6% yoy, driven by strong performance in the consumption trade-in category [8][33]. - Overall retail sales growth was +5.1% yoy in April, below expectations, with notable growth in appliances at +39% yoy and communication devices at +20% yoy [8][32]. 618 Shopping Festival Insights - Key observations from the 618 shopping festival include extended sales periods, simplified discount structures, and collaboration with content platforms [9][12]. - Major platforms initiated sales earlier than the previous year, indicating a strategic shift to enhance consumer engagement [9]. eCommerce Platform Performance - Both Alibaba and JD reported strong first-quarter results, with Alibaba's CMR and Taobao-Tmall Group EBITA growth exceeding expectations [12][36]. - JD's management lifted its full-year growth targets, indicating confidence in its operational leverage and food delivery initiatives [12][36]. Mobile App Engagement - Total time spent on China's top mobile apps grew by +6% yoy in April, with eCommerce and gaming categories showing positive trends [2][13]. - JD's engagement growth was particularly strong, attributed to its aggressive food delivery initiatives [13][14]. Cross-Border eCommerce Trends - Temu has gradually resumed its full-entrusted direct air shipment model for select SKUs on its US site, following tariff reductions [11][12]. - The report anticipates further shifts in Temu's business model towards local warehouses for US and European markets [11][12].