Financial Services Association, May 16 (Reporter Xu Cihao). On May 15, EST, Dada Group, which undertakes JD's instant retail business after the US stock market, released its financial report for the first quarter of 2024.

According to financial reports, Dada Group's total net revenue for the first quarter was 2,452 billion yuan, down 3.3% from 2,535 million yuan in the same period last year; net loss was 328 million yuan, while net loss for the same period last year was 350.4 million yuan, narrowing the year-on-year loss. However, not calculated in accordance with US GAAP, Dada Group's net loss for the first quarter was 194.8 million yuan, while net loss for the same period last year that did not comply with US GAAP was 182 million yuan, an increase in losses over the previous year.

Furthermore, in the face of increasingly fierce competition on the instant retail circuit, the instant retail brands JD Time Delivery and JD Home Delivery businesses that Dada originally undertook were further integrated into the JD ecosystem and integrated into “JD Express Delivery”. Before today's market, Dada dropped more than 7% at one point.

Dada Express's net revenue increased 56.7% year over year

Specifically, in the first quarter of this year, Dada Express's net revenue was 1,173.2 million yuan, compared to 748.8 million yuan in the same period last year. Dada Express's net revenue for the first quarter increased 56.7% year over year. In response, Dada explained in the financial report that it was mainly due to an increase in the number of orders for express delivery services provided to chain merchants in the city.

In addition, net revenue from JD to Home was 1,278.5 billion yuan, compared to 1,786.6 billion yuan in the same period last year, down 28.4% from the previous year. “Revenue from fulfillment services declined mainly due to the decline in revenue from online advertising and marketing services and the full launch of the free shipping program for orders over 59 yuan (starting February 2024, the free shipping order threshold was further lowered to 29 yuan).” Dada said in the earnings report.

Dada Group has not reversed its losses, but its losses have narrowed. According to financial reports, Dada Group's net loss for the first quarter was 328 million yuan, compared with a net loss of 350.4 million yuan for the same period last year. Losses have improved, but Dada has been in the midst of losses since its listing.

In addition to continuing losses, Dada also faced other challenges.

On May 15, EST, Dada Group's stock price rose 0.08 US dollars to close at 2.01 US dollars in regular NASDAQ trading, an increase of 4.15%, with a total market value of 532 million US dollars. However, in subsequent after-hours trading up to 4:30 a.m. EST on the 16th (16:30 Beijing time on the 16th), Dada Group's stock price fell 14 US dollars to 1.87 US dollars, a decrease of 6.97%. Over the past 52 weeks, Dada Group's highest price was $6.94 and the lowest price was $1.36.

However, Dada Group's board of directors has approved the launch of a share repurchase program to try to boost stock prices. According to the plan, Dada will provide up to $40 million in American Depositary Shares from its current cash balance during the two-year period ending March 2026. Financial reports show that as of April 30, 2024, Dada has repurchased approximately $8.4 million in American Depositary Shares (ADS) under this repurchase plan.

Immediate retail competition is fierce, and Dada is further “Jingdongization”

According to the “2023 White Paper on Instant Retail Development Trends”, instant retail is a new blue ocean for online and offline markets. It is estimated that by 2030, the size of the instant retail market will increase to 3.6 trillion yuan, equivalent to 6% of the total retail sales of social consumer goods during the same period. With the trillion-dollar market size and high growth rate, no one wants to miss out on the dividends.

According to Meituan's financial report, in 2023, Meituan's instant delivery orders reached 21.89 billion, an increase of 23.9% over the previous year. The number of orders placed by Meituan Flash Sale increased by more than 40% year on year. The frequency of purchases and spending by users continued to increase, and the number of active merchants each year also increased by nearly 30% year over year. Earlier, according to Meituan's disclosure, its flash sales scale will exceed 200 billion in 2023 and 400 billion in 2026. As can be seen, Meituan Flash Shopping has gradually developed and achieved good growth.

Furthermore, in October of last year, the Douyin Express service received an independent portal. In January of this year, the Douyin E-commerce Rules Center issued 11 rule revision/addition notices. Of these, 6 are all related to “instant retail,” increasing efforts to protect users' consumer experience. Douyin intends to promote the standardization of the instant retail business.

Faced with this competitive situation, the Dada Group has become the key for JD to lay out an instant retail circuit.

In September of last year, JD launched the “Double 10 Billion Brand Plan” for brands, announcing that it will help over 10 brands break 1 billion in sales by 2024. At the same time, it was clearly stated that 2024 will focus on the three major directions of all categories, hourly delivery, and platformization. On October 18 of last year, JD's three-kilometer model of instant retail was officially released. At the conference, JD retail management emphasized that “instant retail is a win-win battle for JD retail.”

The so-called three-kilometer model of JD's instant retail is dominated by the JD open platform. It focuses on the three elements of immediate demand, local supply chain integration, and immediate delivery, and provides the three core capabilities of digitalization, local supply chain integration, and instant delivery to achieve an efficient closed loop of “consumer orders, store delivery, and product delivery within an hour” model within 3-5 kilometers. In this closed loop, Dada Group plays a key supporting role in the “instant delivery” - product delivery within hours. JD Home Delivery and Dada Express link supermarket convenience with various actors such as physical merchants, brands, riders, and consumers.

Today (16th), JD integrated the instant retail business into JD Express. Its core purpose is also to further cultivate the racetrack and build a consumer mentality.

Zhuang Shuai, founder of Bailian Consulting, told the Financial Federation reporter that Dada, on the one hand, did it early and had a first-mover advantage. On the other hand, relying on the JD Mall, instant retail and e-commerce platforms can be highly coordinated to meet the needs of users at different levels. For example, the demand for timeliness is immediate retail, and the demand for price and product abundance is e-commerce.

According to Dada's financial report, in the first quarter, GMV from the JD app domain increased by more than 30% year on year. Among them, GMV from the fast delivery channel increased by more than 200% year on year; the average number of monthly ordering users and order volume of the JD app site both achieved a year-on-year increase of more than 70%, which is more than 50 percentage points faster than in the fourth quarter of last year. In the past April, the year-on-year growth rate of the number of users and order volume further accelerated to more than 100%. At the same time, user stickiness has also increased. In March, the monthly repurchase rate of users of the JD App site increased by more than 30% year-on-year.

“Even though the logistics industry or delivery industry is more competitive, there is still a lot of market space.” Express logistics expert Zhao Xiaomin told the Financial Federation reporter that the upgrade of hourly delivery to second delivery is Dada's further “Jingdongization”. For JD, whether Dada can accelerate growth as much as possible, increase market share and growth space, and bring greater convenience to consumers is the key to future competition.