JD.com makes another move in instant retail

Author | Liu Baodan

Editor | Huang Yu

The battle between new and old forces in e-commerce is in full swing, and as a traditional e-commerce giant, JD.com is on the road to counterattack, with every move by Liu Qiangdong being closely watched.

On September 18th, Dada announced that JD.com had completed the purchase of 87.4813 million ordinary shares and 1.875 million ADS (American Depositary Shares) held by Walmart's subsidiary in Dada Group. After the acquisition, JD.com's stake in Dada increased to 63.2%.

Following the announcement last month of the transfer of all JD.com shares, Walmart has also started to clear its holdings in Dada, which is also part of the JD.com ecosystem. Prior to this transfer, Walmart was an important shareholder of Dada. According to data from Tonghuashun iFinD, as of March 31, 2024, JD.com and Walmart held 562.2432 million shares and 94.9813 million shares of Dada, respectively, with stakes of 53.10% and 9.00% respectively.

With this acquisition completed, JD.com will become the sole significant controlling shareholder of Dada. As the "leading stock in instant retail", Dada's core business is instant delivery and instant retail. JD.com's increased stake this time also means that the company will increase its investment and layout in the instant retail business.

Regarding this increase in stake, internal sources at JD.com stated that this move demonstrates JD.com's long-term confidence in Dada's stable development, reflects optimism and recognition of Dada's future prospects, emphasizes the importance of Dada's position within the JD.com ecosystem, and expresses expectations for further deepening the strategic partnership between the two parties.

In fact, the history of Dada's development is a history of JD.com's investment in instant retail.

Dada Group was established in 2014, with initial investors including Sequoia China, DST Global, Hillhouse Capital, and Kunlun Wanwei. Two years later, JD Daojia merged with Dada to form Dada Group; in 2018, Dada completed a $500 million financing round, with investments from JD.com and Walmart.

In 2020, Dada went public on the Nasdaq, becoming the "leading stock in instant retail". According to Dada's disclosures, JD.com held 47.90% of the shares at that time; in 2021, JD.com increased its stake in Dada, holding over 50% of the shares and becoming the controlling shareholder for the first time; up until this latest increase, JD.com's investment in Dada has continued to increase.

Behind the capital investment is the rapid development of JD.com's instant retail business.

In 2015, JD Daojia officially launched, providing consumers with delivery services for groceries, fresh produce, pharmaceuticals, and more. Subsequently, Dada successively formed strategic partnerships with Walmart, CR Vanguard, and others, focusing on offline physical stores.

After becoming the controlling shareholder, JD.com's instant retail business has seen accelerated development. In 2021, JD Daojia began developing across all categories, steadily expanding into electronics, beauty, pets, clothing, and more. That same year, JD.com and Dada jointly launched the instant retail brand "Hourly Purchase".

In 2023, JD.com held a press conference on the three-kilometer model for instant retail and announced the "Five-Year Action Plan" for the future. At the conference, the then JD.com Retail CEO Xin Lijun stated that instant retail is an important part of JD.com's provision of a "more fast, good, and economical" consumer experience, as well as a crucial element in responding to external challenges and achieving stable growth At the beginning of the year, JD Retail Group set three major directions for 2024, namely the "three must-win battles". In addition to content ecology and open ecology, instant retail remains a top priority. In May, JD Daojia and JD Instant Delivery were upgraded to "JD Instant Delivery", with the fastest delivery time of 9 minutes.

Currently, the e-commerce industry is undergoing a major reshuffle, with industry competition continuing to intensify on the low-price dimension. As a key player, JD urgently needs to find a new breakthrough, with instant retail becoming one of JD's most valued tracks.

According to the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, in the "Instant Retail Industry Development Report (2023)", the annual average growth rate of the instant retail industry has exceeded 50% since 2018. The institute predicts that by 2026, the annual growth rate of instant retail may still reach 47.1%, far exceeding the overall growth rate of e-commerce.

However, for JD to successfully seize a victory in the instant retail track, it currently faces challenges in terms of profit models and industry competition.

According to the financial report, in the Q2 quarter of the 2024 fiscal year, Dada achieved a revenue of 2.35 billion RMB, showing a year-on-year decline. Among them, JD Instant Delivery business revenue was 910 million RMB, a significant decrease of 43.6% year-on-year, while Dada Instant Delivery business revenue was 1.44 billion RMB, a year-on-year growth of 46.6%. Overall, Dada's net profit in the second quarter was approximately -286 million RMB.

In terms of competition, instant retail has become a battleground for all. This year, Meituan, Taobao, Douyin, and others have increased their investment efforts. Taking Meituan as an example, as of the second quarter of this year, its self-operated instant retail business Little Elephant Supermarket has opened over 680 front warehouses, with the vast majority located in first-tier cities.

It can be confirmed that with JD's continuous advancement of its instant retail strategy, the instant retail track may usher in a new round of changes.

Whether the era belonging to JD can return remains to be verified over time, but the instant retail represented by Dada will be a huge opportunity, as JD's new copy has been opened