July online retail GMV growth slows to 3%; improving Meituan food-delivery unit economics supports earnings recovery

Overview

This report tracks the latest operating data for China's e-commerce, instant retail, and express-delivery industries, and previews earnings for Alibaba, Meituan, and PDD. Online retail goods GMV grew 3% year over year in July, while overall retail-sales growth slowed to 0.6%, indicating that consumption growth remains weak; however, more rational food-delivery and instant-retail subsidies and improving unit economics create conditions for profit recovery at transaction platforms for the remainder of 2026.

Core views

Near-term industry demand is slowing, and Goldman Sachs lowers its 2026 online GMV growth forecast from 5% to 4%. At the company level, improving Meituan food-delivery unit economics and stable margins in its in-store, hotel and travel business are expected to drive a substantial sequential improvement in Core Local Commerce profit. Goldman Sachs also believes Alibaba's further pivot toward AI and cloud businesses, together with regulatory investigations that promote more rational competition, could stabilize food-delivery and instant-retail market shares and improve platform profitability. Sector preferences, in order, are cloud and data centers, gaming and entertainment, e-commerce and travel, and AI models.

Analysis framework

The report combines national retail data, industry weekly express-delivery parcel-volume tracking, platform operating metrics, analyst forecasts, and comparisons with Visible Alpha consensus, and assesses platform competition and profit inflection points through segment profitability and unit economics.

Methodology notes

• Industry TrackingOnline GMV and Express-Delivery Parcel-Volume Tracking

  E-commerce demand and fulfillment trends are assessed through online goods GMV, parcel volume, average order value, and category growth.

  Parcel volume grew 4% year over year in July and approximately 3% in the first 16 days of August, helping validate the pace of online consumption and order growth.

• Earnings ForecastingUnit Economics Model

  Food-delivery and instant-retail profitability is assessed using per-order unit economics, subsidies, and segment margins.

  Goldman Sachs estimates that Meituan food-delivery unit economics improved from negative RMB1.0 per order in the first quarter to RMB0.4 in the second quarter, with further sequential improvement expected.

• Valuation methodsSOTP Segment Valuation

  A target price is derived by valuing different business segments and summing them.

  Meituan's target price is based on a 12-month SOTP valuation using 2026 estimates.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Meituan（03690.HK）

  Core covered company

  Strengths

  Improving food-delivery unit economics, an inflection point in Core Local Commerce profit, and relatively stable margins in the in-store, hotel and travel business.

  Weaknesses

  It still needs to address food-delivery and instant-retail competition and overseas-business investment.

  Comparison

  Goldman Sachs expects its second-quarter Core Local Commerce EBIT to be RMB5.8 billion, more optimistic than market consensus of RMB3.2 billion.

  Risks

  Intensifying competition, rising labor costs, food-safety and regulatory risks, and Keeta investment exceeding expectations.

• Alibaba（BABA/9988.HK）

  Comparable in e-commerce and instant retail

  Strengths

  Cloud business and AI computing-power demand could drive revenue and margin upside.

  Weaknesses

  There is pressure from core-commerce monetization, instant-retail investment, and funding arrangements for AI capital expenditure.

  Comparison

  Goldman Sachs expects its second-quarter food-delivery EBIT loss to narrow to RMB10.4 billion from a RMB17.8 billion loss in the first quarter.

  Risks

  GMV growth below expectations, competitive and macro pressures, and slower cloud-revenue growth.

• JD.com（JD/9618.HK）

  Comparable in e-commerce and instant retail

  Strengths

  Retail revenue is expected to improve in the second half of 2026, margin outlook is stable, and food-delivery losses continue to narrow.

  Weaknesses

  It needs continued investment in price competitiveness, user experience, and the third-party ecosystem.

  Comparison

  Goldman Sachs lists JD as a key investment idea in e-commerce.

  Risks

  Intensifying e-commerce and food-delivery competition, slowing GMV, and retail-margin volatility.

• PDD Holdings（PDD）

  Comparable in e-commerce and Temu

  Strengths

  Temu U.S. GMV continues to grow, while first-party brand investment could provide a long-term growth driver.

  Weaknesses

  Domestic platform GMV and order-volume growth are weak, and Temu merchant numbers declined sequentially.

  Comparison

  Goldman Sachs expects PDD's domestic core-platform GMV/order volume to grow YoY by +3%/-3%, respectively.

  Risks

  Overseas geopolitical pressure, intensifying competition, reinvestment eroding margins, and insufficient segment disclosure.

Key data

• July online retail goods GMV growthYoY +3%YoY +4% in June; growth slowed.
• July overall retail sales growthYoY +0.6%Below Goldman Sachs and market consensus expectations of YoY +1.5%.
• 2026 industry online GMV forecastYoY +4%Previously forecast at YoY +5%.
• 2026 industry express-delivery parcel-volume forecastYoY +5%Forecast unchanged.
• Meituan second-quarter Core Local Commerce EBIT forecastRMB5.8 billionMarket consensus is RMB3.2 billion; first quarter was RMB-2.0 billion.
• Meituan second-quarter food-delivery unit economics forecastRMB0.4 per orderFirst quarter was RMB-1.0 per order.
• Meituan target priceHK$123Goldman Sachs maintains a Buy rating and a 12-month SOTP target price.
• Temu U.S. July GMV growthYoY +21%Based on Bloomberg Second Measure tracking.

Impact & implications

Slower macro retail and online GMV growth imply continued pressure on e-commerce platform revenue growth, but more rational competition and normalized subsidies could make profit elasticity in food delivery and instant retail exceed revenue elasticity. For Meituan, food-delivery unit economics, Core Local Commerce EBIT, in-store business margins, and the scale of Keeta investment are key variables for valuation and earnings forecasts.

Risks

• Further slowing in Chinese consumption and online GMV growth.
• Food-delivery and instant-retail competition and subsidy intensity exceeding expectations, resulting in weaker-than-expected profit improvement.
• Rising investment in AI, cloud, and overseas businesses, reducing core margins.
• Increasing regulatory, food-safety, labor-cost, and geopolitical risks.
• Temu overseas growth, merchant supply, or profitability weaker than expected.

What to watch

• Cloud-business growth, AI capital expenditure, and instant-retail unit economics after Alibaba reports earnings on August 20.
• Food-delivery unit economics, Core Local Commerce EBIT, in-store, hotel and travel margins, and Keeta progress in Meituan's late-August earnings.
• Domestic GMV, order volume, Temu profitability outlook, and fresh-food strategy in PDD earnings.
• Whether August express-delivery parcel-volume growth can stabilize and changes in the gap between online GMV and parcel-volume growth.
• Food-delivery industry regulatory investigations, subsidy policies, and market-share changes.