On May 16th, DADA Group (Nasdaq: DADA) announced its Q1 2024 performance. The data shows that Dada's total net revenue in the first quarter was 2.4518 billion yuan, a year-on-year decrease of 3.3%, mainly affected by factors such as a decrease in revenue under the free shipping threshold and a decrease in promotional activities. The net revenue of Dada Express was 1.1732 billion yuan, a year-on-year increase of 56.7%, reaching the highest level in the past eight quarters. The overall net loss in the first quarter was 328 million yuan, a year-on-year decrease of 6.39%.
On the same day, Southern Metropolis Daily learned from JD Group that JD's instant retail business (integrating the original instant retail brands JD Houda and JD Home) has comprehensively upgraded and launched JD Instant Delivery, providing consumers with the fastest 9-minute delivery shopping experience. JD Instant Delivery currently covers more than 2300 counties, districts, and cities nationwide, with over 500000 cooperative stores. At present, the JD App homepage has gradually launched the second delivery zone, and the top double homepage entrance name, search result tags, etc. have been updated.
According to the financial report, in the first quarter, JD Home Delivery (also known as JD Instant Delivery) revenue was 1.279 billion yuan, a year-on-year decrease of 28.4%. Mainly due to a decrease in revenue from online advertising and marketing services, as well as a decrease in revenue from fulfillment services; And due to last August, with JD lowering the free shipping threshold for the first time, JD Home platform fully launched free shipping for orders above 59 yuan. Starting from February 2024, the free shipping threshold has been further lowered to 29 yuan, resulting in a decrease in revenue from fulfillment services.
"We are determined to fully embrace JD's customer-centric approach to building an ecosystem, and specifically invest in improving the customer experience, including launching a delivery fee reduction plan." Fu Bing, the interim president of Dada Group, introduced at the performance meeting that as of the end of March, the free shipping activity for orders over 29 yuan has covered nearly 80% of stores, improving the efficiency of attracting new customers and user stickiness. After the free shipping, the conversion rate of new customers has improved by 20%, the retention rate on the 7th has increased by more than 10%, and the repurchase rate of old customers has increased by nearly 30%.
Thanks to the above measures, the penetration rate of instant retail among JD users continues to increase. According to statistics, in the first quarter, the GMV from JD App's field increased by over 30% year-on-year, among which the GMV of the second delivery channel increased by over 200% year-on-year. During the same period, the monthly average number of users and order volume of JD App's field achieved a year-on-year growth of over 70%, accelerating by more than 50 percentage points compared to the fourth quarter of last year. The growth rate in April further increased to over 100% year-on-year. At the same time, user stickiness is also increasing - in March, the repeat purchase rate of JD App users in the following month increased by more than 30% year-on-year.
In order to enrich supply and increase the density of JD's instant delivery stores, the company continues to expand cooperation with high-quality merchants in categories such as alcoholic beverages, home appliances, fresh produce, and flowers. In the first quarter, the number of active JD's instant delivery stores in the JD App field increased by over 80% year-on-year. From the perspective of sub categories, the GMV of convenience stores on the platform has increased by more than 5 times year-on-year, while GMV of mobile phones, home appliances, alcoholic beverages, sports and outdoor products have all achieved varying degrees of doubling growth. As of the end of March, the proportion of high priced star rated products in the JD App market increased by more than 6 percentage points year-on-year.
In the first quarter, the net revenue of Dada Express was 1.1732 billion yuan, a year-on-year increase of 56.7%, reaching a new high in the past eight quarters. Southern Metropolitan Daily reporters have noticed that in response to the increasing demand for instant delivery, Dada Express has recently launched recruitment for summer knights in 2024, investing 50 million yuan in knights subsidies to attract more flexible employment workers. Throughout 2023, the number of active riders on Dada Express exceeded 1.2 million.
The total cost and expenses of Dada Group in the first quarter were 2.8175 billion yuan, a year-on-year decrease of 3.4%. According to the financial report, the operating and support costs were 1.84 billion yuan, an increase of 31.7%. The main reason is due to an increase in the order volume of urban delivery services provided to various chain merchants, leading to an increase in rider costs. In addition, sales and marketing expenses, general and administrative expenses, and research and development expenses have all decreased to varying degrees, mainly due to a decrease in platform promotional activities, a decrease in amortization of intangible assets generated by the acquisition of JD.com, and a decrease in research and development personnel costs.
Mao Jun, CFO of Dada Group, explained at the performance meeting, "As our channel focus shifts, we are collaborating with JD Group to optimize LBS advertising products. Currently, new products are gradually being launched to businesses and brands, and large-scale promotion still requires time. With product optimization, user growth, and other factors, we are confident in JD's long-term advertising potential."
In 2021, JD.com announced an increase of $800 million in its holdings in Dada Group, increasing its shareholding to 52%, and further deepening omnichannel cooperation between the two parties. Afterwards, JD Group and Dada Group jointly launched the "Nearby" channel, the real-time retail brand "Hougou", integrating the real-time retail capabilities of providing hourly delivery services for goods within the JD ecosystem. In the second quarter of 2023, Dada achieved its first overall profit under non GAAP accounting standards. In October 2023, JD Real Time Retail released the "Happiness Three Kilometers" model, which is led by JD's open platform and provides three core capabilities: digitalization, local supply chain integration, and instant delivery, achieving an efficient closed-loop model of "consumer ordering, store delivery, and hourly delivery of goods" within 3-5 kilometers.
"Starting from 2024, we have conducted a comprehensive business review and decided to further enhance customer experience (such as lowering the threshold for free shipping and reducing obstacles for users to place orders), focusing on high-quality development." Mao Jun mentioned that although business adjustments and investment in user experience may bring pressure to the company's overall revenue growth in the near future, core indicators including user growth have resumed growth momentum, and the revenue growth of Dada Express far exceeds that of the on-demand delivery industry. Despite investing in our core business, our non GAAP net profit margin remained relatively stable year-on-year this quarter.
Fu Bing stated at the performance meeting that in terms of consumer trends, consumers are more focused on cost-effectiveness, while their demand for portable items continues to grow. "On the one hand, we naturally occupy the advantage of portability and optimize the fulfillment experience, and on the other hand, we assist merchants in improving the competitiveness of product prices by optimizing the mentality of 'saving' through free shipping. The penetration rate of instant retail will continue to increase in the future. With the launch of new brands, we have also entered a new chapter of development, focusing on sustainable ecological construction.". We remain highly optimistic about the potential of on-demand retail and distribution industries.