ZTO Express (ZTO), Vipshop (VIPS): Returns Drive Parcel Growth

On 18 and 25 August 2026, Chinese express carrier ZTO Express (ZTO) and online discount retailer Vipshop Holdings (VIPS) each used their fiscal 2026 second-quarter earnings calls to describe the same development from opposite ends of the chain: e-commerce return parcels are growing fast. ZTO reported roughly 9.8 million return parcels a day, up about 80% year over year [1], while Vipshop attributed the quarter's margin decline directly to its return rate [2].

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What a return parcel is and who pays for it

When an item sells online, a courier delivers it once. When the buyer returns it, the courier collects it again and carries it back to the warehouse. That second leg is the return, or reverse, parcel. It generates no new sales revenue, requires an extra trip, and obliges the warehouse to re-inspect the goods and put them back on the shelf.

For the retailer that cost lands in fulfilment expense — the warehousing, sorting and delivery spending required to get goods to buyers — and when revenue is not growing, that ratio cannot be compressed. For the courier, the same parcel arrives as contracted business signed by a platform or merchant and settled at key-account prices, above what a loose e-commerce parcel pays. A return parcel is collected one at a time from the buyer's door and cannot be consolidated at a depot the way an outbound parcel can, so carriers price and manage it as a separate product class.

The part that changed is platform competition. Free returns and door-to-door collection became standard tools for holding on to high-frequency members, and the members who spend the most are concentrated in apparel, the category with the highest return rate. That pushes the return rate up year after year, and the pressure falls at once on apparel e-commerce sellers and on the carriers that handle their parcels.

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Parcel volume and price at the carrier, expense ratio and margin at the retailer

ZTO's average daily retail parcel volume exceeded 11.7 million in the second quarter, of which about 9.8 million a day were return parcels, up roughly 80% year over year, against industry-wide parcel volume growth of 4.2% [1]. The company said reverse-parcel pricing has fallen from the past as competition continues, but that per-parcel profit is still higher than on standardised e-commerce parcels. Average selling price for core express rose 19 cents, or 15.5%, of which 17 cents came from a higher key-account volume mix that the company said includes higher-value reverse logistics, and only 2 cents from a higher average rate per parcel [1].

At Vipshop, fulfilment expenses were RMB 2.14 billion, rising to 8.7% of net revenues from 8.2%, and operating margin fell to 6.2% from 6.6% [2]. The investor relations head explained the margin decline as fulfilment expenses losing operating leverage as return rates keep rising, and CEO Eric Shen said the main reason is the return rate, and that it will continue to rise every year [2]. In the same quarter Vipshop's active SVIP members grew 8% year over year and accounted for 54% of online spending [2] — the cohort that returns the most.

Whether a return parcel is profitable for the carrier has a precondition. A Morgan Stanley note dated 22 April 2026 said YTO Express (600233.SH) cut some loss-making reverse parcels in March 2026, and that YTO's first-quarter average selling price fell 1.5% year over year against Yunda's 9.8% increase because of that cut [3].

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How the two sets of accounts change once growth shifts to returns

Growth for the couriers is shifting from platform orders to platform returns. Whoever signs the return contract gets a higher-priced but more cost-intensive block of volume, while a carrier without contracted volume and network density loses money on the same parcel, which is what YTO's decision marks out. On the retailer's side the return rate becomes a burden that does not dilute as sales grow, so when revenue stalls it presses directly on operating margin, and free returns remain a condition of keeping high-frequency members, so it cannot be withdrawn quickly.

S.F. Holding (002352.SZ) has been allocating more of the last-mile fulfilment of e-commerce return parcels to SF Intra-City and excludes returns from its own time-definite revenue growth target [4], an indication that returns are already being organised as a distinct line of business. How much further the chain runs downstream is not well evidenced: JD.com, PDD Holdings and Alibaba made no reference to return rates on their fiscal 2026 second-quarter calls. Two figures are worth following — whether Vipshop's fulfilment expense as a share of net revenues keeps climbing, and whether ZTO's daily retail parcel volume and key-account mix keep contributing to average selling price.

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Companies exposed to this change:

• YTO Express (600233.SH): A franchise-model express carrier facing the same reverse-parcel pricing environment as ZTO, which chose in March 2026 to cut loss-making return parcels — the practical reference point for whether the price covers the cost.
• S.F. Holding (002352.SZ): A direct-operation carrier focused on time-definite delivery that handles return-parcel last mile separately and excludes returns from its time-definite growth target, so changes in return volume alter its business mix and cost allocation.
• SF Intra-City (09699.HK): An intra-city on-demand delivery operator that takes the return-parcel last mile routed to it by S.F. Holding, so part of its order volume follows the return rate rather than new e-commerce orders.

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Sources

[1] Drillr · ZTO Express (ZTO) · 2026-08-18 · FY2026 second-quarter earnings call

"In the second quarter, average daily retail parcel volume exceeded 11.7 million. of which return parcels averaged approximately 9.8 million each day, increased approximately 80% year over year. Although the price of reverse logistic parcels has declined from the past as market competition continues, we expect per parcel profitability in this business to continue to improve supported by economies of scale and refined cost control. At present, reverse logistic parcels still generate higher per parcel profit than standardized e-commerce parcels, effectively lifting the company's overall per parcel profitability."

[2] Drillr · Vipshop Holdings (VIPS) · 2026-08-25 · FY2026 second-quarter earnings call

[3] Morgan Stanley · YTO Express (600233.SH) 1Q26 note · 2026-04-22 · broker research report

[4] Goldman Sachs · S.F. Holding (002352.SZ) 4Q25 note · 2026-03-31 · broker research report

This is only meant to surface industry changes and companies you may have overlooked - it is not a stock recommendation.