The total e-commerce volume in the US in 2024Q2 was 282.3 billion US dollars (+6.6% year over year), and the penetration rate reached 19.6% (+1.8ppts year over year), with food and beverage, groceries, electronics and home appliances, and non-store retailers +8.0%/12.7%/7.9%/7.2% year over year.
The Zhitong Finance App learned that CITIC Securities released a research report saying that the US economy is closesoft landingConsumption is still resilient, and overall improvements in logistics efficiency have accelerated the penetration of time-efficient and cost-effective categories, and will continue to drive the growth of e-commerce in the US. Leading platforms are still in an advantageous competitive position based on a strong logistics system and user mentality. Medium- and long-tail platforms with weak supply chain capabilities and unclear differentiation, and traditional offline retailers are under greater pressure, and market concentration is on the rise. Furthermore, the dilution effect after growth, optimization of fulfillment models, increased share of advertising subscription revenue, development of automation technology, and AI applications are all expected to accelerate the release of e-commerce platform profits. The bank is optimistic about the 2024 holiday season and the performance of e-commerce in North America in 2025.
The main views of CITIC Securities are as follows:
E-commerce market: Driven by increased consumer resilience and penetration, e-commerce in North America is expected to maintain high single-digit growth in 2025.
Referring to recent US macro data, the probability of a soft landing in the North American economy continues to rise, and the consumer market is quite resilient. At the same time, in an environment of high inflation, consumer price sensitivity has increased, and e-commerce consumption with price advantages is more popular. According to the US Department of Commerce, the total amount of e-commerce in the US in 2024Q2 was 282.3 billion US dollars (+6.6% year over year), and the penetration rate reached 19.6% (+1.8ppts year over year). Among them, food and beverage, groceries, electronics and home appliances, and non-store retailers were +8.0%/12.7%/7.9%/7.2% year over year.
The bank determined that the rise in e-commerce penetration rate was due to large-scale infrastructure investment during the pandemic, improving local and cross-border logistics efficiency from 2023 to 2024, which led to an increase in e-commerce in time-sensitive categories such as fresh food and pharmaceuticals, as well as cost-effective categories such as groceries and electrical appliances. Changes in consumption habits under high inflation have also amplified this trend. The bank expects e-commerce retail sales CAGR to reach 6.7% from 2024 to 2030 with a steady increase in user penetration rate, rising single-user order volume, and stabilizing AOV, and retail sales will reach 1.65 trillion US dollars in 2030, corresponding e-commerce penetration rate of 25.6%. The bank is optimistic about the 2024 US holiday season (November-December). Under price sensitivity, concentrated release of consumer demand and increased platform promotion are expected to exceed expectations. The bank expects the year-on-year growth rate of e-commerce retail sales in the US to reach 7.5% to 9.5% during the holiday season.
Competitive landscape: Leading companies rely on optimization of performance capabilities to continuously increase market share.
According to relevant media, the total share of the top ten e-commerce retailers in the US increased from 48.1% to 64.3% in 2017-2023. The bank has observed a clear divergence in growth since 2023. The top 5 e-commerce retailers (including Shopify) have significantly outperformed the market. Most of them have fallen behind in the middle, and the end has gradually cleared up. The main reason for the bank's judgment is that rapidly growing time-sensitive categories place higher demands on the timeliness, carrying capacity, and cost control of the platform. The cost performance market is facing the impact of emerging cross-border platforms, compounded by price increases from third-party logistics service providers, and participants with weak supply chain capabilities and unclear differentiation are gradually being eliminated.
Currently, the overall competitive pressure of e-commerce in the US is manageable, and competition penetrates more into segments such as low-cost e-commerce. Among them: 1) the basic market and competitive barriers of leading platforms are still stable; 2) Emerging cross-border e-commerce platforms are expected to become important participants through low price characteristics, but it is difficult to directly impact the share of leading platforms due to issues such as logistics capacity, traffic costs, and tariff policies; 3) medium- and long-tail platforms and traditional retailers are facing more macroeconomic and competitive pressure.
Profitability: Logistics cost optimization and technological development help release profits.
There is a lot of room for improvement in the operating profit margin of e-commerce platforms in the US. The main reasons include: 1) revenue growth dilutes fixed costs; 2) upgrading logistics delivery methods such as regionalization reduces the cost of fulfilling individual packages; 3) the rapid growth of low marginal cost businesses such as membership and subscription services; 4) the application of technology such as robots and autonomous driving has increased the level of automation; and 5) the application of AI technology reduces operating expenses for platforms and merchants. The bank is optimistic about the profit release potential of leading e-commerce platforms against the backdrop of rising e-commerce boom and increasing concentration.
Follow-up outlook: Continue to be optimistic about leading e-commerce companies with improved macroeconomic resilience and efficiency.
As the probability of a soft landing in the North American economy increases, consumer consumption continues to be highly resilient, driving the continued growth of leading company GMV. At the efficiency level, thanks to improved logistics fulfillment efficiency, first-tier e-commerce companies also have the initiative to adjust product prices, and drive an increase in overall profit margins through high-margin businesses such as membership systems and advertising. Although the market is concerned about risks such as inflation caused by factors such as tariffs, the bank is still optimistic about the potential excess earnings of leading companies, considering the better balance and liability levels, potential tax declines, and cost control capabilities of leading companies.
Investment Strategy:
Currently, the North American economy and consumption are still resilient. Increased logistics efficiency is driving the e-commerce penetration rate to continue to rise. The overall e-commerce market in the US is still in a boom cycle, and the performance of leading e-commerce platforms under the trend of increasing market concentration and accelerated profit release is more worth looking forward to. The bank is optimistic about the growth potential of leading e-commerce platforms. In the short term, the 2024 holiday season performance is expected to exceed expectations, or catalyze further upward stock prices; there is plenty of room for improvement in medium- to long-term US e-commerce penetration, market concentration, and platform profit margins.
Risk factors: the risk that inflation data will rise again; the risk of business pressure due to changes in tariff policies; the risk that the US economy will fall into recession; the risk that e-commerce companies will increase capital expenditure again; the risk that policies and regulations against tech giants will continue to be tightened; the risk that AI+ e-commerce integration will not progress as expected.
