JD.com-owned Dada Group Delivers Strong Q1 Results Boosted by Demand in Lower-Tier Markets
Chinese on-demand delivery and retail platform Dada Group on Tuesday reported a 52% jump in first quarter revenue from a year earlier, as the company tries to expand its network to the country’s lower-tier cities and rural areas.
Dada achieved total net revenue of 1.7 billion yuan ($265.92 million) in the quarter ending on March 31, beating market expectations. The company saw the number of active consumers for the 12 months through March hit 46.1 million, as compared with 27.6 million in the same period of 2020.
Founded in 2014, the startup has gained a foothold in the last mile delivery sector through Dada Now, one of China’s largest crowd-sourced courier platforms which connects motorbike delivery workers with merchants in thousands of Chinese cities.
In 2016, Chinese e-commerce giant JD.com merged its online-to-offline unit, JD Daojia, with Dada, forming Dada-JD Daojia (JDDJ), an online grocery and delivery firm. Earlier this year, JD.com invested $800 million in Dada, after which JD.com raised its stake in the Shanghai-based company to 51%.
Dada Now’s net revenue surged 51% year-on-year to 900 million yuan ($140.81 million) in the first quarter, mainly driven by an increase in order volume from logistics companies and chain merchants. The on-demand delivery platform currently provides services for logistics companies and merchants in more than 2,700 Chinese cities, districts and counties.
Net revenues generated from JDDJ rose by 53.3% to 778.3 million yuan ($121.81 million) from 507.7 million ($79.46 million) in the first quarter of 2020. Due to a growth in the number of active consumers and average order size, the online grocer’s gross merchandise value topped 28.1 billion yuan ($4.4 billion) over the past 12 months through March, an increase of 79% year-on-year.
As of March 31, JDDJ has covered more than 1,500 cities, districts and counties across China, which “further unleashed the consumption potential in lower-tier markets”, the grocery platform said.
Total consumption made by Chinese residents in third- and fourth-tier cities and rural areas, which reached $3.3 trillion in 2017, is expected to reach $8.4 trillion in 2030, according to a Morgan Stanley study.
JDDJ is also stepping up its efforts to establish partnerships with traditional brick-and-mortar supermarket chains, such as Walmart, Yonghui Superstores and China Resources Vanguard. The company has so far sealed deals with 75 of the top 100 supermarket brands in China. It has recently focused its attention on the country’s less developed areas. On Monday, JDDJ announced it signed contracts with Youhao Supermarket in Xinjiang and Dongfangbaijia Supermarket in the northwestern province of Gansu.
In April, JDDJ concluded a deal with Tencent-backed online grocery startup MissFresh, which allows consumers to buy products from nearby MissFresh retail stores on JD.com’s app and have them delivered within an hour.
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Beck Chen, Chief Financial Officer of Dada, noted in a statement that the company expects its revenue to grow 72% to 78% in the second quarter. “We are excited with JDDJ’s strong growth momentum, and are confident that the year-over-year growth rate of JDDJ’s revenue will be over 80% in Q2 and will further accelerate in the second half of 2021,” he said.
Last June, Dada launched a $320 million initial public offering on Nasdaq. The Walmart-invested company saw the price of its stock climb 1.3% to $25.74 per share on Monday. On the same day, Dada announced it will repurchase $150 million of its stock during a 12-month period.