Q3 2021 Dada Nexus Ltd Earnings Call
Good morning, ladies and gentlemen, thank you for staying high for Tata.
Speaker 1: Good morning, ladies and gentlemen. Thank you for standing by for DADA third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the management prepared remarks, there will be a question and answer session. As a reminder, today's conference is being recorded. I will now turn the meeting over to your host for today's call, Ms Caroline Doong, Head of Investor Relations for DADA. Please proceed, Ms Caroline.
Third quarter 2021 earnings conference call at this time, all participants are in listen only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference is being recorded I have no turn the meeting over to your host for today's call Ms. Caroline Dong paid off.
The relations for <unk>. Please.
Please proceed Caroline.
Thank you operator, Hello, everyone and thank you for joining us today, our third quarter H N V. 'twenty one earnings release was distributed earlier today and is available on our IR.
Speaker 2: Thank you, operator. Hello everyone and thank you for joining us today. Our third quarter 2021 earnings release was distributed earlier today and is available on our IR website at IR.m.data.cn as well as on Google News.
The life side.
I'm, not a doctor and as well as you know when you always worry services.
On the call today from data, we have Mr. Philip <unk>, Chairman and Chief Executive Officer, Mr. Chen Chief Financial Officer, and Mr. Jin Yan co founder and the Chief Technology Officer.
Speaker 2: On the call today from DADA, we have Mr. Philip Kwai, Chairman and the Chief Executive Officer, Mr. Jack Chen, Chief Financial Officer, and Mr. Jun Yang, Co-Founder and the Chief Technology Officer.
Mr. <unk> will talk about our operations and the company highlights followed by Mr. Chen who will discuss the financials and guidance. They will all be available to answer your questions. During the Q&A session that follows.
Speaker 2: Mr. Kuai will talk about our operations in the company highlights followed by Mr. Chen, who will discuss the financials and the guidance. They will all be available to answer your questions during the Q&A session that follows.
Speaker 2: Before we begin, I'd like to remind you that this conference call contains the looking statements as defining the Section 1021e of the Securities Exchange Act of 1934 and the US Private Securities Litigation Reform Act of 1995.
Before we begin I like to reminisce and remind you that this conference call contains forward looking statements as defined in the section intend to Y E of the Securities Exchange Act of 90 said before and in the U S parameters.
<unk> Litigation Reform Act of 90 94.
That Ain't 95.
These forward looking statements.
Speaker 2: This voting statement is upon measurement current expectations and current market and operating conditions and relate to events that involve known or unknown risks, circumstances, and other factors, all of which are difficult to predict and a manner of which are beyond the company's control.
Upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict any man hour voyage out beyond the company's control.
These risks may cause the company's actual results or performance.
Speaker 2: This risk may cause the company's actual results or performance to deform maturely.
Before materially.
Information regarding these and other risks uncertainties or other factors is included in the company's filings with the U S. SEC.
Speaker 2: Further information regarding these and other risks, uncertainties, or other factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any bulletin statements as a result of new information, to be transparent or otherwise, except as required under applicable law.
Pasadena.
I think that enables these days has a reserve.
So otherwise except as required under applicable law.
Speaker 2: Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB.
Please note that unless otherwise stated all figures mentioned during this conference call I RMB.
Speaker 2: It is now my pleasure to introduce our chairman and the chief executive officer, Mr. Quay, Philip Blisko Head.
It is now my pleasure to introduce our chairman and Chief Executive Officer, Mr. Yi Fleet Phillips. Please go ahead.
Thank you Caroline.
Speaker 3: Thank you, Caroline, and thank you all for joining us today. We're pleased to announce another strong quarter. I would like to highlight recent progresses and then provide updates on our two platforms. And that will go through our financial results in greater detail.
Thank you all for joining us today.
Pleased to announce another strong quarter I would like to highlight recent progress.
And provide updates on our two platforms.
I will go through our financial results in greater details.
So earlier this year.
Speaker 3: Earlier this year, the CPC Central Committee clarified China's strategic vision and the government's priorities in the 14th Five-Year Plan and long-range objectives through the year 2035. With this, it sets a goal of accelerating digital development and building digital China. According to statistics from China Academy of Information and Communication Technologies, China's digital economy
<unk> Central Committee clarified China's strategic ambition and governments her teeth in the 14th.
Our plans and our long range objectives for the year 25.
As Seth ago of accelerating digital development.
Digital China.
According to statistics from China Academy of information and communication technologies.
Digital economy.
Sure.
Speaker 3: 38.6% of total GDP in 2020.
Eight 6% of total GDP in 2020.
Well that number Lisa mom developing countries. There are still a notable gap with the 54, 3% average in developed countries.
Speaker 3: While that number leads among developing countries, there is still a notable gap with the 54.3% average in developed countries. The main engine to drive China's digital economy lies in industrial digitization.
Man engine to drive China's digital economy alive in industrial digitalization.
Which contributes 89% of the total digital economy.
Speaker 3: which contributes 80.9% of the total digital economy.
Speaker 3: First, industrial digitalization will build up the country's competitive edge of digital economy. It's a key theme that the Chinese government wants to promote.
First industrial digitalization will build up the country's competitive age of digital economy.
T seem the Chinese government wants to promote.
So that group is well positioned in the national trend of digital economy.
Speaker 3: So Dada Group is well positioned in the national trend of digital economic development. As a leading local on-demand delivery and retail company, we have always been committed to driving digital transformation in the retail industry.
Element.
Leading local.
Delivery in a retail company, we have always been committed to driving digital transformation in the region.
Our industry.
Speaker 3: Together with JD.com, we are further empowering traditional industry and driving the development of the real economy.
Together with JD com further empowering position the industry and driving the development of the real economy.
So this naturally leads to our strengthened strategic cooperation with JD.
Speaker 3: So this naturally leads to our strengthened strategic cooperation with JD.
In October.
Speaker 3: Datagroup and JD.com jointly launched ShelfNow, or Xiao Shi Gou, a unified brand for all on-demand retail services within the JD ecosystem.
So that group and did it all come jointly launched schuff now or shelf serco unified brands for our own demand the retail services within the JD ecosystem.
Through shop now users can access on demand services via multiple channels.
Speaker 3: Through ShopNow, users can access on-demand services via multiple channels on JD, including the nearby, fujing, tap, and all the entry points of Wujing Tianzhe program. ShopNow is.
Including the nearby 14 Pat.
And all the entry points offer within 10 to a program.
Turning now is powered by that group.
Leveraging our years of lbs oriented operational experience and accumulation of technology capabilities.
Speaker 3: Leveraging our years of LBS-oriented operational experience and accumulation of technological capabilities will fulfill all needs of local on-demand retail and delivery on JD.
For Q or needs of local on demand at retail and delivery of J D.
We both saw.
Speaker 3: We both strongly believe in the huge potential of on-demand retail in China.
All I believe English huge potential of on demand at retail in China.
With shop, now South Chicago, we will leverage our respective strengths to lead the development of this.
Speaker 3: With ShopNow, XiaoShiGo, we will leverage our respective strengths to lead the development of this quick-growing industry and bring win-win results for both groups.
Pre growing industry and operating results for both groups.
Pretty tough now will enrich both product suppliers and delivery options, providing consumers with a better shopping experience.
Speaker 3: For JD, ShopNow will enrich both product supplies and delivery options, providing consumers with a better shopping experience.
So the other group Chuck now will increase our penetration rates among jd's vast user base.
Speaker 3: For data group, SHAP-NOW will increase our penetration rates around JD's vast user base. This should become a stronger driver for our long-term development.
Should become a stronger drive stronger driver for our long term development.
Yeah.
Speaker 3: Before discussing the recent performance of our two platforms, I would like to provide some highlights of our Double 11 shopping festival.
Before discussing the recent performance of our two platforms I would like to provide some highlights of our double 11 shopping festival.
With over 150000 source.
Speaker 3: With over 150,000 stores on JDDJ participating in the event this year, JDDJ achieved record high in the peak day GMV and grew the total GMV during the 11 days, from November 1st to November 11th. The 11-day campaign by over 100% year over year.
D J participating in the event this year DDB Jay achieved record high in the peak day GSV and grew the total G. N V. During the 11 days from November one.
November 11th the 11 day campaign by over 100% year over year.
Now, let's move on to digitally Jay the leading local on demand retail platform in China.
Speaker 3: Now let's move on to JDDJ, the leading local on-demand retail platform in China.
The DJ continues to drive the Digitization of offline.
Speaker 3: JDBJ continues to drive the digitalization of offline retail in three ways. Empowering retailers at broader scale. Helping brands improve marketing efficiency.
In three ways.
Empower retailers add rather skull.
Helping brands improved marketing efficiencies.
And innovating in technology solutions.
First empowering retailers a broader scope.
Speaker 3: First, empowering retailers at broader scale.
So on one hand powder.
Speaker 3: On one hand, partnering with more retailers helps us enrich product offerings and bring better shopping experience to more consumers. The number of active users on GDDJ increased by 53% year-over-year to 57.1 million.
Partnering with more retailers helpers enrich product offerings and bring other shopping experience to more consumers.
<unk> of active users on <unk> increased by 53% year over year to $57 1 million.
Speaker 3: On the other hand, as we expand the merchants and category coverage, we're helping more offline retailers building digitalization capability.
On the other hand, as we expand the merchants and the category coverage, we're helping more offline retailers feeling digitalization capabilities.
So let me take you through of two different verticals and talk about some exciting recent developments.
Speaker 3: So let me take you through a few different verticals and talk about some exciting recent developments.
It's in the supermarket category, we continue to enhance our leading position.
Speaker 3: In the supermarket category, we continue to enhance our leading position.
We now have established partnerships with 82 of the top 100 suppliers are superb alcatel's <unk>.
Speaker 3: We now have established partnerships with 82 out of the top 100 supermarket chains in China.
Entitled.
And the Super merchant Dave.
Speaker 3: And the Super Merchant Day, the Super Merchant Day provides supermarkets with a great opportunity to engage with users on our platform. In the third quarter, during the eight Super Merchant Day sessions for local winner supermarkets, such as Jiajiayue and Bubugao, we can sell or increase by over 200% year over year.
The Super Merchandize provides supermarkets with a great opportunity to engage with users on our platform.
Third quarter during the eight supermodel Supervoting day sessions for local winner.
That's super buckets, such as <unk> and Google go.
Can south or increased by over 200% year over year.
The smartphone category, we continue to expand the partnerships with spreads this quarter, we establish direct partnerships with Samsung and other.
Speaker 3: In the smartphone category, we continue to expand partnerships with brands. This quarter, we established direct partnerships with Samsung and Honor.
Speaker 3: For Apple, we saw impressive results for new product launch. On September 24th, more than 900 authorized stores on the JDDJ platform started to sell the iPhone 13 series.
Four.
We saw impressive results for new product launch a September it's on the force more than 900 authorized stores on the <unk> platform started to sell the iPhone 13th tours.
Speaker 3: On launch day, sales on our platform were a remarkable seven times greater than the launch day of iPhone 12.
Our launch date.
<unk> on our platform or a remarkable seven times greater than the last day of iPhone Tau.
Yeah.
For small clients, we deepen collaboration with a leading.
Speaker 3: For small home appliance, we deepened collaboration with the leading retailer chains, such as Chongbai Shuangshe and Shundian.
Retailer channels such as.
But it's also and so did.
Speaker 3: To strengthen online-offline integration, our efforts paid off.
The strengthen online offline integration.
Our efforts paid off.
The JV in the third quarter increased by about 100% further over a quarter.
Speaker 3: as the GNV in the third quarter increased by about 100% quarter over quarter.
In our pharmacy pharmacy.
Speaker 3: In the pharmacy category, we launched a 24-hour free online medical consultation service to provide the user with real-time assistance. Meanwhile, 24-hour retail and delivery services are also available in more than 3,300 pharmacy stores on our platform to meet consumers' needs for medicine at any time.
The category, we launched a 24 hour free online medical consolidation.
Service to provide the user with real time assistance. Meanwhile, 24 hour retail and delivery services are also available in more than.
3000.
300.
Pharmacy stores on our platform to meet consumers' needs for medicine anytime.
Suddenly.
Speaker 3: Secondly, helping brands to improve marketing efficiency.
Helping brands to improve operating efficiency.
In the third quarter revenue from online marketing service on our <unk> platform grew by over 140% year over year, a significant acceleration from the 110% growth in the previous quarter.
Speaker 3: In the third quarter, revenue from online marketing service on our JDDJ platform grew by over 140% year-over-year, a significant acceleration from the 110% growth in the previous quarter.
And all of our marketing monetization rates jumped to 3% further demonstrating the D. J as the go to platform for brands to drive Hotel yourself.
Speaker 3: We now have strategic partnerships with more than 200 brands. We are committed to help brand partners improve marketing efficiency and engage with consumers effectively.
We now have strategic partnerships with more than 200 brands. We are committed to help brand partners improved marketing efficiency and engage with consumers effectively.
As part of this we recently introduced a new marketing program called Super New product.
Speaker 3: As part of this, we recently introduced a new marketing program called Super New Product Day.
For a product launch promotions.
Speaker 3: In August , Unilever launched a campaign under this new program. As a result, sales increased by 190% from the previous year.
The others in the liver launch a campaign under this new program as a result itself increased by 190% from the previous week.
And certainly we're innovating technology solutions.
Speaker 3: And thirdly, we're innovating technology solutions.
<unk> solutions.
Our hydro system continues to be popular among retailers.
Speaker 3: Our Haibo system continues to be popular among retailers. Recently, Haibo now reached the milestone of serving 5,000 retailer stores.
Hi, Bob.
Now reached the milestone of serving 5000 retailer stores.
They found a broad cooperation with retailers, we have a greater understanding of their pinpoints in O'toole operations and are able to innovate quickly for example in the third quarter to better supports merchants holiday, although promotions, we launched a new module all high board to manage.
Speaker 3: Based on the broad cooperation with retailers, we have a great understanding of their standpoint in O2O operations and are able to innovate quickly. For example, in the third quarter, to better support merchants' holiday bundle promotions, we launched a new module on HighVault to manage bundled products.
All those products.
This module provides a one stop solution to address the pinpoints in inventories and consolidation and expenses allocation.
Speaker 3: This module provides a one-stop solution to address the pain points in inventory synchronization and expenses allocation.
As a result.
Speaker 3: It could improve the processing efficiency for bundled products by as high as 20 times.
We improve the processing efficiency for bundled products.
At 10 three times.
Additionally, based on our capability to allocate expenses down to the SKU level.
Speaker 3: In addition, based on our capability to allocate expenses down to the SKU level, we launched a tool to enhance marketing efficiency.
Launch a tool to enhance marketing efficiency. So this tool integrates the subsidies from brand partners merchants and platforms into one single coupon. The three in one Cooper to improve the ROI of marketing dollars for brands and help merchants.
Speaker 3: This tool integrates the subsidies from brand partners, merchants, and platforms into one single coupon, a three-in-one coupon.
Speaker 3: to improve the ROI of marketing dollars for brands and help merchants to improve sales by expanding the number of products on promotion.
To improve yourself by expanding the number of products on promotion.
Speaker 3: For example, this tool enables ZhaJiaYue to create 3-in-1 coupons that cover around 2,000 SKUs across over 100 brands.
For example.
This tool enables.
To create three one coupons, let's cover around 2000 skus across over 100 brands.
In September the average daily itself during the weekend that offered three in one coupons were more than 10 times.
Speaker 3: In September , the average daily sales during the weekend that offered 3-in-1 coupons were more than 10 times than the sales.
Then the cells in normal weekends.
Our digitized in store picking service that I'm kicking.
Speaker 3: our digitized in-store picking service, the Dada Picking.
Speaker 3: Dada Youjie maintains strong growth momentum. In the third quarter, orders fulfilled by Dada Picking grew over 70% quarter over quarter.
Diluted.
<unk> strong growth momentum in the third quarter, others fulfilled by that are picking grew over 70% quarter over quarter.
Speaker 3: During the Double 11 shopping festival, order volume more than doubled compared with June 18 promotional period, effectively helping merchants to improve on-time fulfillment rates while saving costs.
During the double 11 shopping festival other volume more than doubled compared with June 18th promotional periods.
Factually, helping merchants improve online fulfillment rates, while selling cost.
I would like to move onto.
Speaker 3: I would like to move on to data now.
I don't know.
Our revenue from on demand delivery services to key accounts okay.
Speaker 3: Our revenue from on-demand delivery services to key accounts, or KA, the merchants increase more than 110% year-over-year.
Merchants increased more than 110% year over year.
Revenue from our supermarkets.
Speaker 3: Revenue from supermarkets, KA, increased by over 90% year-over-year.
Supermarket's Ta increased by over 90% year over year.
Speaker 3: In the third quarter, we added geo-fencing functions to our on-demand delivery service. Function enables merchants to accurately determine the delivery area for each store without additional investment.
In the third quarter, we added Geo fencing functions to our on demand delivery services.
<unk> enables merchants to.
Determining the delivery area for each store without additional investments.
Revenue from the.
Speaker 3: Revenue from restaurants, KK, increased by 150% year over year.
Restaurants.
Increased by 150% year over year.
Others from fast food chains, and the tea beverage has continued to increase significantly.
Speaker 3: Others from fast food chains and the tea beverage chains continue to increase significantly.
So moving to Smes the.
The number of SME merchants that completed the others that are now in the third quarter increased over 90% year over year.
Speaker 3: The number of SME merchants that completed orders on DataNow in the third quarter increased over 90% year-over-year. This was mainly driven by our refined, great-based operational strategy, and continued optimization of our perfuming capability.
This was mainly driven by our refined.
<unk> operational strategy and our continued.
Optimization of our fulfillment capabilities.
In September we officially announced the launch of our logistics, our software as a service, but that ought to pay the other smart delivery.
Speaker 3: In September , we officially announced the launch of our logistics SaaS software as a service, the Dada Zhipei, the Dada Smart Delivery.
So this product provides the third party delivery service providers and the merchants, who will who will deploy their own.
Speaker 3: So this product provides the third-party delivery service providers and merchants who deploy their own delivery fleets.
Livery fleets with.
Suite of digital tools to manage others, the fashion and the routing for Omnichannel on demands ceiling reorders.
Speaker 3: suite of digital tools to manage orders, dispatching, and routing for omni-channel on-demand delivery orders.
Our digital logistic platform has helped a lot in improving our operational efficiency in the last several years.
Speaker 3: Our digital logistic platform has helped a lot in improving our operation efficiency in the last seven years.
And now by opening up our technology in the form of a centralized source product.
Speaker 3: And now, by opening up our technology in the form of a centralized SaaS product, we hope to further enhance the service capability and efficiency for the whole on-demand delivery industry.
Hope to further enhance the service capability and efficiency for the whole all demand delivery industry.
And lastly last mile delivery, we saw strong growth in pickup services.
Speaker 3: And lastly, last mile delivery, we saw strong growth in pickup services.
With the number of pickup orders in the third quarter doubling from the previous quarter. This growth is built upon our enhance system integration with JD logistics and increased penetration in virus other types.
Speaker 3: with the number of pick-up orders in the third quarter doubling from the previous quarter. This growth is built upon our enhanced system integration with JD Logistics and increased penetration in various other types. Expect pick-up services to be another driver for our last mile business.
Pet pickup services to be another driver for our last mile business.
With that I will now pass the call over to <unk> Chen to go over our financials for the quarter Okay.
Speaker 3: With that, I will now pass the call over to Baicheng to go over our financials for the quarter.
Thank you.
Speaker 4: Thank you, Philip. Before we go over the numbers, just a few housekeeping items in advance. We believe year-over-year comparisons are the most useful way to judge our performance. Therefore, all percentage changes I'm going to give will be on year-over-year basis. And all numbers are in Ramingayee and less otherwise noted.
Before we go over the numbers just a few housekeeping items themed events, we believe year over year comparisons are the most useful way to judge our performance. Therefore percentage changes I'm going to give will be on year over year basis, and all numbers unless otherwise noted.
Total net revenues increased to $1 7 billion aligning the revenue recognition method of that in our last mile delivery services to a comparable basis pro forma revenue growth would have been 86% year over year.
Speaker 4: Total net revenues increased to $1.7 billion. Aligning the revenue recognition method of data now, last mile delivery services to a comparable net basis, performer revenue growth would have been 86% year over year, which represents an accelerated growth rate compared with 81% revenue growth in the last quarter.
Which represents an accelerated.
Gross rate compared with 81% revenue growth in the last quarter net revenues from debt and now were $614 million pro forma revenue growth rate was 19% year over year, mainly driven by increases in order volume of interested delivery services to chain machines.
Speaker 4: Net revenues from Della Now were $614 million. The performer revenue growth rate was 90% year-over-year, mainly driven by the increases in order volume of interest city delivery services to chain merchants.
Net revenues from JD DJ increased by 84% Q1 point 1 billion, mainly due to the increasing Jeremy which was driven by increases in the number of active consumers and the average order size increase in online.
Speaker 4: Net revenues from JDDJ increased by 84% to $1.1 billion, mainly due to the increase in GME, which was driven by increases in the number of active consumers and average order size. The increase in online marketing services revenues as a result of the increasing promotional activities launched by our brand owners also contributed to the revenue growth of JDDJ. Moving over to the
Mark team.
<unk> revenues as a result of the increasing promotional activities launched our brand owners also contributed to the revenue growth of J D D J.
Moving over to the expense side.
The operating and the supply chain costs were $1 2 billion. The rise was primarily due to an increasing <unk> cost as a result.
Speaker 4: The operation and the supporting costs were $1.2 billion. The rise was primarily due to an increase in rider costs as a result of increasing all the volume for intercity delivery services provided to various chain merchants on the Dada Now platform and the retailers on the JDDJ platform, and partially offset by the decrease of rider-related costs incurred by, in our opinion, this upgrade of last mile delivery services.
Creasing order volume for intra city delivery services provided to various K merchants on the data now platform and the retailers on the J D D J platform and partially offset by the decrease of rider related costs incurred by our opinions upgrade of last mile delivery services.
Speaker 4: Selling and marketing expenses were $780 million. Increase was primarily due to the growing absolute dollar amount of incentives to ADDJ consumers and an increase in personal cost in connection with the company's growing business.
Selling and marketing expenses were $780 million increase was primarily due to the growing absolute dollar amount of incentive to daily DJ consumers and an increase in personnel costs in connection with the Companys growing opinion says.
G&A expenses decreased to 19 9 million, primarily due to decrease the share based compensation expenses.
Speaker 4: G&A expenses decreased to $99 million, primarily due to decreased share-based compensation expenses.
R&D expenses rose to 148 million, mainly attributable to the increase in research and development personnel costs.
Speaker 4: R&D expenses rose to $148 million, mainly attributable to the increase in research and development personnel costs as the company continues to strengthen its technology capacity.
Company continues to strengthen its technology capabilities.
Speaker 4: The non-GAAP net loss attributable to ordinary shareholders of Dada was $480 million compared with $324 million in Q3 last year. The non-GAAP basic and diluted net loss per share was negative $0.48 compared with negative $0.36 in Q3 last year.
GAAP net loss attributable to ordinary shareholders of <unk> $418 million compared with $324 million in Q3 last year.
Non-GAAP basic and diluted net loss per share was negative <unk> 48.
Compared with negative <unk> 36 in Q3 last year.
So as of September 32020, where the company had 3 billion in cash cash equivalents restricted cash and short term investments.
Speaker 4: As of September 30, 2021, the company had $3 billion in cash equivalents, restricted cash and short-term investment.
And under the $150 million share repurchase program announced in June 2021.
Speaker 4: And under the $150 million share repurchase program announced in June 2021,
As of October October 31st we have repurchased approximately 131 million U S dollar of <unk>.
Speaker 4: As of October 31st, we have repurchased approximately US$131 million of ADSes.
For the fourth quarter of 2021, we expect total revenue to be between Q3 and in the $2 1 billion, representing a pro forma growth rate of 88% to 97% adjusting Q.
Speaker 4: For the fourth quarter of 2021, we expect total revenue to be between $2 billion and $2.1 billion, representing a pro forma growth rate of 88% to 97%, adjusting 20Q4 and the 21Q4s that are now last-mile revenue to a comparable net base.
Q4, and the <unk> I don't know last mile revenue to a comparable net basis.
In addition to the acceleration in revenue growth, we further expect that.
Pro forma net loss margin based on the comparable net basis.
Speaker 4: revenue to continue to experience significant year-over-year improvement in the fourth quarter of 2021.
Revenue should continue to experience significant year over year improvement in the fourth quarter of 2021.
This concludes our prepared remarks.
Speaker 4: And this concludes our prepared remarks. Now, operator, we are now ready to begin the Q&A session. Thank you.
Operator, we are now ready to begin the Q&A session. Thank you.
Thank you.
Speaker 1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, press star 1 on your telephone. To cancel a request, press the pound or highest price.
Ladies and gentlemen, we will now begin the question and answer session to ask a question press star one on your telephone to cancer, where a question press the pound key.
<unk>.
Your first question comes from Russell Gill of Goldman Sachs. Please ask a question.
Speaker 5: Your first question comes from Ronald Keong of Goldman Sachs. Please ask your question.
Hi, Ron you maybe on mute.
Hello, Hello can you hear me yes.
Yes go ahead.
Sorry about that.
Hello, Philip Philip on back and congratulations on the results of Q.
Speaker 6: I have two questions. Firstly is on the shop now function. How has that channel, how have we seen the traction with that with JD users clicking that nearby button? And is our fourth quarter revenue kind of acceleration that we guided, is that mainly contributed from this new channel? And how do we see that shop now function that will progress through say the next one year in driving additional growth for the company? Thank you.
Two questions Firstly is on the shelf now function.
How has that channel.
We've seen the traction with that with JD users clicking that nearby button and is our fourth quarter revenue kind of acceleration that we guided is that mainly contributed from this new channel and how do we see that Chuck malfunction.
That will progress through the next one one year in driving additional growth for the company.
And then we've seen the sales and marketing costs.
Speaker 6: And then, we've seen the sales and marketing costs come down as a percentage of revenue, which is encouraging. Could you just share how that subsidy rate trend has been going, and is that how a newer channel is driving efficiencies that is leading to a lower subsidy rate?
Come down as a percentage of revenue, which is encouraging can you just share how that subsidy rate trend has been going and is that the.
How our newer channels driving efficiencies that is leading to.
A lower subsidy rate. Thank you.
Okay, Hi, Ronald.
Speaker 3: OK. Hi, Ronald. So the shop now.
So the shelf now.
Certainly is a key.
Uh huh.
Growing very quickly and we expect it will become one of the key driver of our future growth and we're happy to see the traction has been very good.
Speaker 3: And so the shelf now includes not only the nearby, the Fujian channel, but also various entry points and collaboration.
So the shelf now includes not only the nearby the Fujian channel, but also virus entry points and collaborations for example, if you're a surgeon using the search engine onto a D. And then you click on the search results and purchase also.
Speaker 3: For example, if you are using the search engine on JD and you click on the search results and purchase, it's also considered as part of the ShopNow. So the contribution from the ShopNow will absolutely grow up for the foreseeable future. And both JD and Earth are very confident about the growth potential.
Consider as a part of the shop now.
The contribution from the shelf now.
Oh, absolutely growing up for the foreseeable future and both JD and Earth are very confident about the growth potential.
Speaker 3: And in October , we launched the unified brand of this xiao shi gou. So I think the consumers will be very happy with it.
And in October we.
Launch of the unified brand of this south should go so I think the consumers will be.
Building up the <unk>.
Speaker 3: building up the mentality around the on-demand retail on JD. I think over time, we will see the potential going up. And also, we have a joint agreement with JD Retail to grow the user penetration of ShopNow, Xiaochi Go.
<unk> around the on demand the retail on JD I think overtime, we will see the potential of going up and also we have a choice.
Agreements with JD retail to grow the user penetration of shops.
<unk> now so all should go.
Speaker 3: all the way to 50% of the user penetration. So I think that's the future we are looking at. At the same time, we're also very happy to see the subsidy level going down, partially thanks to the ShelfNow, the new channel and the new traffic. And at the same time, we are
All the way to 50% of the user penetration so I think that's the.
Future, we're looking at at the same time.
We are also very happy to see the subsidy level going down a path.
Actually since to the shelf now.
The new channel and new traffic.
At the same time, we are.
We are.
Speaker 3: We are improving our marketing efficiencies overall. That also helps to drive down the subsidy level. So we are quite confident about both growth and the profitability in the future.
Improving our marketing efficiencies overall that also helps to drive down the subsidy level. So we are.
Quite confidence about both growth and.
The profitability in the future.
Thank you.
Okay.
Thank you. Your next question comes from Andy.
Speaker 1: Thank you. Your next question comes from Eddie Liu of Bank of America. Please ask your question.
Eddie Leung of Bank of America. Please ask your question.
Good morning, guys I have a follow up question on <unk>.
Speaker 7: Good morning guys. I have a follow-up question on Ronald's question about subsidies and sales and marketing. Could you elaborate a bit on the unique economic trend?
Ron knows question about subsidy, even sales and marketing.
Elaborate a bit on the unit economics.
<unk>.
And.
Speaker 7: and whether it's still on track with our previous target in terms of the break-even point. And then related to that, could you also elaborate a bit on the competitive landscape in the overall grocery and fresh produce category? Because we have heard some potential reduction of subsidies in some of the other formats.
That is still on track with our Pvs.
In terms of the breakeven point.
And then related to that could you also elaborate a bit on the competitive landscape.
Overall, all grocer, we add fresh boat.
Category.
We have heard some potential reduction of subsidies in some of the other formats.
In this category. So just wondering how that might affect <unk>.
Sales and marketing and subsidy strategy going forward. Thank you.
Yeah.
So let me take the first question so.
Speaker 4: So, Eddie, let me take the first question. So, just like Philip said in Q3, just like we have communicated in the last quarter, so in the second half, we expected the consumer incentives given to JDBJ consumers will decrease significantly compared to the first half of this year. And actually...
Yes, just like fixed.
In Q3, just like we have communicated in their earnings call.
Last quarter. So in the second half, we expect we expected consumer incentives given to JD Vijay consumers will decrease.
Significantly compared to.
The first half of this year and actually.
In Q3, the incentive ratios.
Speaker 4: In Q3, the incentive ratio was decreased more than our expectation before. So in Q3, it was 5%.
Was decreased.
More than our expectation get bored so in Q3.
It was.
5%.
For the consensus for the consumer incentive versus six 2% in the.
Speaker 4: for the consumer incentive versus 6.2% in the first half of this year. So this is the main contributor to our greater improvement of our direct margin level. So in Q3, our direct margin was improved significantly to minus 0.6%.
First half of this year so.
This is the main contributor to our greater improvement of our direct margin level. So in Q3, our direct margin.
<unk> improved it significantly too.
Minus.
6%.
Speaker 4: which is thanks to the 120% BIFS improvement for the consumer incentive.
So which is thanks to like 120% EPS.
The improvement for the potential incentive.
Consumer incentives.
So actually this is <unk>.
Speaker 4: So partially, this is improved because of the contribution of those shop-to-go or shop-to-nob. And it is the other is like the tours implemented. Just Philip mentioned in the earlier script that, for example, we have created a three-in-one coupon to combine the platform money, merchant money, and also the brand owner's money together to improve the efficiency of the subsidies.
Improved because of the contribution of those shelf should go or shutting up and is it. The other is like the tour implemented.
<unk> mentioned in the script that for example, we have created at the street when coupon to combine the platform money merging money and also the brand owner's money together to improve the.
Efficiency of the.
Subsidies. So this also help us too.
Speaker 4: So this also helps us to improve a lot. And also, in our expectation for the fourth quarter, we believe the subsidy ratio should be no more than 5%, which will help us to further improve in the direct margin level in Q4.
Improve a lot and also.
Gene.
I mean, our expectation quarter.
Quarter, we believe the <unk> ratio.
It should be no more than 5%, which will help us.
It should help us to further improve in the direct margin level in Q4.
And in terms of the overall market landscape and the competitive landscape. So first of all.
Speaker 3: And in terms of the overall market landscape and the competitive landscape, so first of all, I think that we can all see that both retail and the economy are under general pressure. So most of the brands and the retailers are certainly under pressure.
I think as we can.
North Sea that.
Both retail and the economy or other general.
Pressure for most of the brands and retailers are certainly under pressure.
Speaker 3: But at the same time, people are all looking for growth. And all looking for channels can provide efficiency improvements. And ADDJ is certainly considered as the fastest growing channel for most of the brands, and also helping them to improve the efficiencies. That's why, while we're seeing this pressure, at the same time,
At the same time.
People are all looking for growth.
I was looking for channels can provide.
Efficiency improvements and.
DJ its certainly consider as the fastest growing.
Channel for most of the brands.
And also can helping them to improve the efficiencies that's why.
While we are seeing this pressure.
The same time.
Most of the brands, we have been working with right now are more than willing to allocate more marketing resources through our channel the <unk> channel. So at the same time.
Speaker 3: Most of the brands we have been working with are now more than willing to allocate more marketing resources through our channel, the GDGJ channel.
Speaker 3: So at the same time, we improve the ROI of such marketing dollars by the three-in-one coupons. So that's why we are not only getting more marketing resources from the brands, but also improving ROI.
We improved the IRI of search marketing.
The three in one coupons so.
So thats why we are not only getting more marketing resources from the brands, but also improving our right.
And.
Speaker 3: In terms of the competitive landscape, I think one of the key.
In terms of the competitive landscape I think one of the key.
<unk> player in the market or at least used to be the very key player in the market is the community grew by.
Speaker 3: player in the market, or at least used to be the very key player in the market, is the community group buying.
Speaker 3: But as you probably have seen, the regulations have recently tightened up on community group buying, and they certainly are now seeing some slowdown. And subsidies from the community group buying has certainly been reduced as well. And for us,
But as you probably have seen that the regulations.
Since rates have been up.
Community group buying and they suddenly and now seeing some slowdown in the.
Subsidies.
The community has certainly.
Reduce as well.
And first four.
All of the provinces provinces, that's buying our most active we're seeing the TMV, our 400% year over year growth in Q3, So again we.
Speaker 3: All of the provinces that's group buying are most active. We are seeing the GNV of 400% year-over-year growth in Q3. So again, we are able to grow despite the competition from the community group buying. I think looking forward.
Are able to grow despite the competition from the community group I think looking forward.
With the regulations as well as the economy.
Speaker 3: With the regulations as well as the economic pressure, we would envision that each player in the market will be more reasonable and rational instead of earning too much of subsidies. We're certainly happy to see that as we are getting to a more healthy competition environment. I think that's good for everybody.
Sure.
We would envision that.
Each player in the market will be more reasonable and rational instead of like.
Early and too much of a.
Subsidy.
We're certainly happy to see that as we are getting to a more healthy.
Physician environment I think that's good for everybody.
And.
At the same time, we are certainly strengthening our collaboration with J D.
Speaker 3: At the same time, we are certainly strengthening our collaboration with JD to achieve a win-win situation, so to both increase the scale and improve the efficiencies for both JD retail and JD DJ. So we are very confident about our competitive edge going forward.
To achieve.
Achieved <unk>.
We win situation right.
So to both increase the scale and improved efficiencies for both JD retail and digitally so we're very confident about our competitive age going forward.
That's very helpful. Thank you guys.
Your next question comes from Thomas Chong of Jefferies. Please ask your question.
Speaker 1: Your next question comes from Thomas Chung of Jefferies. Please ask a question.
Hi, Good morning, Thanks management for taking my questions.
Speaker 8: Hi, good morning. Thanks, management, for taking my questions. I have two questions. My first question is about our KA business under DataNav. The business growth momentum is very strong. I just want to get a sense about how we should envision the growth momentum as we enter into 2022, and also how we should think about
Two questions. My first question is about our <unk> business and that added up.
Business momentum as well.
It was strong.
Okay.
I wish it ambition the growth momentum as we enter into <unk>.
And also how we should think about.
The competition.
Speaker 8: of the competition in this segment, as well as the investment that we are going to be made in this K-A segment. And my second question is on JDDJ, can management comment about the category mix?
This settlement as well as the investment that we are going to be may indeed.
And my second question is on J D D J.
I can comment about.
We mix.
Speaker 8: in Q3 and also the average order value. On the other hand, with regard to our strong online marketing revenue growth, given that it is about 3% right now, how we should think about the takeaway for online marketing in future? Thank you.
And also.
The average order value.
On the other hand with regard to the our strong online marketing revenue given.
Given that it's about 3%.
Right now on how we should think about the takeaway.
Thank you.
Thank you.
Speaker 4: Thank you so much. So let me first elaborate on the questions and I will leave the competition.
Tommaso levied.
Firstly elaborate.
The.
<unk> and <unk>.
I will leave the competition.
Catching Fedex and so forth.
Speaker 4: question to Philip. So for the number thing, so first for JDDJ, our average order value in Q3 was 100 in the 90 form on the
The number of things so first for JD DJ hour.
Average order value in Q3 was.
100, and then in the night for RMB.
Yeah.
For the platform and.
Speaker 4: for the platform. And so going forward, we expect that this AOB will be further increased because we further diversify our platform categories mix. And also, even for the supermarket category still, it's very high. It's like 146.
So going forward, though we expect that this will be will be.
Further increase the cost we further diversify our.
<unk> platform categories mixture mix and also given for the.
Supermarket category still.
It's very high it's like 146.
Speaker 4: uh in q3 so we think that lv will further go up in the following quarters and in terms of the category mix
In Q3, so we think that there will be we are further go up.
In the following quarters and in terms of the category mix.
In Q3 two thirds.
Speaker 4: In Q3, two-thirds was coming from supermarket category, and 25% was coming from the 3C category, including smartphones, home appliances, and PC and a pad. So we also expect that the non-supermarket categories will contribute more and more gradually in the following quarters.
<unk> was coming from supermarket.
<unk> and <unk>, 5% was coming from.
The <unk> category, including.
Smartphones home and appliances and PC in the past.
No.
We also expect that non supermarket categories.
<unk> contribute more and more gradually in the following quarters.
Speaker 4: And in terms of the online marketing services, so 30% of the GME in Q3, and we expect that this.
And in terms of the online marketing services so 3%.
And of the JV in Q3, and we expect that this.
Speaker 4: monetization rate should be at least be maintained in the following quarters if we will, you know, still we will be prudently further monetized for the online marketing revenues. But I believe that for the following quarters.
Monetization rates should be.
No at least be maintained in the following quarters.
We will still we will be prudently further monetize for the online marketing revenue.
I believe that for the following quarters.
<unk>.
Sure.
Speaker 4: it should be no less than 3% for the next few quarters.
Less than 3%.
For the next few quarters.
<unk>.
And also for the key accounts are chain merging delivery services.
Speaker 4: And also for the key accounts, chain merchants, delivery services, or the data now businesses, it is growing by more than 110% in Q3. And we think
Now businesses.
Is growing by more than 100.
10% in Q3, and we think.
In Q4, it will be further macro.
Speaker 4: In Q4, it will be further grow by triple digit on a year-over-year basis, and
The triple digit.
Year over year basis.
<unk>.
Speaker 4: Uh, yeah, I will leave the competition a question to, uh,
Yes, I will leave the competition question too.
Thank you.
Yes, so regarding the K the delano, Okay business I would like to give more.
Speaker 3: Yeah, so regarding the K8, the data, OK, business, I would like to give more color and background.
Color and background, so first of ore.
Speaker 3: So first of all, one of the reasons why we can grow, continue to grow very fast, is we are building up a solid reputation among the key accounts players.
One of the reason why we can't grow continue to grow very fast.
<unk>.
We are building up a solid reputation among them.
Key accounts players first.
<unk>.
Speaker 3: In order to serve the KOL, you need to win the trust and you need to get people's confidence in you. So, as we are serving all the big names well for quarters after quarters, that's how we are now able to win the trust and build up a good reputation in the market.
The.
Other to serve the Kols you need to win the trust.
That's the People's competency. Thank you. So as we are serving like all the big names, where all four quarters. After quarters. So that's how we are now able to win the trust and a good.
Our reputation in the market.
And in addition to reputation we're also giving us a very solid capabilities and knowhow.
Speaker 3: And in addition to reputation, we're also building up a very solid capabilities and know-how.
There are few key segments of.
Speaker 3: There are a few key segments of KA we are now serving, including supermarkets, restaurants, and the pharmaceutical chain.
We are now serving including supermarkets.
Restaurants, and the pharmaceutical channels.
Speaker 3: Each segment requires very different know-how and capabilities. For example, like a supermarket, as you can imagine, it requires to handle very heavy and bulky packages. And also, from packaging to delivery. So the process is quite complex. So that's why leveraging our service of data picking.
Each segment require very different knowhow and capabilities for example, like a supermarket.
It requires.
Like the two handle very heavy and bulky packages and also from a packaging to.
Delivery.
So the process has been it's quite complex, so thats why leveraging our service up ticking.
Integrated.
Speaker 3: integrated with our data now delivery, so we are providing a lot of value-adds for the supermarkets. That's why most of the leading supermarket chains in China, like most of them, are
Integrated with our <unk>.
Our delivery so we are.
Providing a lot of value adds for the supermarket, that's why most of the leading supermarket chains in China.
Most of them are using our service.
And for restaurants is very different from.
Speaker 3: And for restaurants, it's very different from supermarkets, as you may imagine. So restaurants, the number of stores can be much more than the supermarkets. But at the per-store level, the orders are much fewer than supermarkets. So it requires very different order bundling and routing operations.
Supermarkets as you may imagine.
So restaurant the number of stores can be much more than that.
The supermarket, but at the per store level as the others are.
Fewer much fewer than supermarkets.
While there are different other bundling in our routing operations and for our pharmaceutical you need to be able to deliver around the clock 24 hours. It also requires different capabilities. So all of this we have been building such capabilities and knowhow and efficiencies over the years, that's how we.
Speaker 3: And for a pharmaceutical, you need to be able to deliver around the clock, 24 hours. It also requires very different capability.
Speaker 3: So all of this, we have been building such capabilities and know-how and efficiencies over the years. That's how we can win the customer.
And when the customers.
Speaker 3: And last but not least, LNL is a third-party delivery platform considered by all the KAs. So we are.
And last but not least I don't know.
The third party delivery platform consider by all the case so we are.
Very valuable as the.
Speaker 3: very valuable as an independence player. So unlike, for example, like Meituan or Alamy, which owns the order-taking platform, they're not considered as an independence. So most of the KA wants to use independent delivery services because they don't want to be too much.
Tenders player so on a like for example, like Macquarie.
<unk>.
Which owns the other taking platform.
Considers.
They are now considered as the independents. So most of the K wants to use independent delivery services, because they don't want to be.
Too much.
Speaker 3: um heightened to the other taking platforms. So all of this as I mentioned explains why we are able to continue to grow fast on data now and at the same time improving the profitability and we are very confident to carry it on for the next year or so.
Tightened to the other taking platforms.
All of this as I mentioned explains why we are able to continue to grow fast.
Sure.
And at the same time, improving the profitability and were very confident.
Carried on for the next year or so.
Okay got it thank you.
Okay.
Yeah.
Speaker 1: Your next question comes from Alicia Yap of Citigroup. Please ask your question.
Your next question comes from Alicia Yap of Citigroup. Please ask your question.
Hi, Good morning management, Thanks for taking my questions I have two questions first is.
Speaker 9: Hi, good morning, management. Thanks for taking my questions. I have two questions.
Speaker 9: First is, I think our management mentions about, you just launched this digital logistics task.
Management mentioned about you just launched this feature to our logistics costs.
Speaker 9: service, open to other players, so wondering if there's any revenue opportunity down the road from this service that you're licensing out. And then second is on the single-sales performance. I think management mentioned, you know, JDBJ achieved over 100 percent.
Open to other players so I'm wondering if there's any.
Can you detail some teeth.
Licensing.
And then second is on apartments.
I think management mentioned.
J D D D chief all 100%.
Jeff.
Speaker 9: growth, just if management could elaborate a little bit, the category performance during the single stays on the supermarket versus the non-supermarket. I would assume the 3C category probably contributed a much higher percentage during the single stays. So any colors on the category mixed during the single stays would be helpful. And then just related to that is the consumer behavior. I guess given
Management.
And later.
<unk> performance during the thing Thats safe on the supermarket versus the non supermarket.
Jim.
The category probably be controversial.
Much higher percentage Julien.
So any color on the category mix skewing to think the states will be helpful. And then just on.
Related to that is the consumer behavior I guess given the.
The macro slow.
Speaker 9: the macro slowdown, just not sure if you have experience or have seen any change of the consumer behavior during these single phase in terms of their demand and the category preference. Thank you.
Now just not sure if you have SB rainfalls have seen.
<unk> of the consumer behavior I'm doing this.
In terms of demand.
And this category preference. Thank you.
Speaker 4: Okay, so actually there's three questions. So Alicia, so let me take the first two questions that leave the Marco question to Philip.
Okay. So actually Swiss re question. So Richard So let me take the first two questions and if the macro concern too.
So.
Speaker 4: About the Dada Zhipei, the Dada is a Logistics SaaS product. It's a pure SaaS platform, which can be provided to all those third-party service merchants or those service providers. So up to now, it was implemented or used by 5,000 stores. So right now, it's
About the.
But that acts as a logistics hub product, it's a pure SaaS platform, which can be provided to all those third party.
Our service merging.
Those providers service providers, so up to.
Now it was implemented.
We used <unk> 5000.
By solid in our stores so right now.
And.
Speaker 4: and you know I think the revenue contribution to our like
I think the revenue contributing to our like 6 billion RMB revenue per year is still very.
Speaker 4: 6 billion RMB revenue per year is still very minimum, but it will further expand our service scope to be fulfilled by data. So we don't need to physically fulfill the orders by our data writers. We can even provide a software product to those merchants. So we are right now in close review about the development of the.
Minimum, but it will further expand our.
So its scope.
Two to be like a few of the ore.
Fueled by data so we don't need to call. If a few of the orders by our underwriters, we can even provide a software stack product.
Product to those merchants.
So we are right now in close like a review about.
Development of the largest SaaS paas SaaS product so.
Speaker 4: the Logitech SAS product. So I think.
Thank you.
Maybe it will be better to further talk about the revenue contribution and.
Speaker 4: maybe it will be better to further talk about the revenue contribution and
Like those expectation.
Speaker 4: like those expectations in the next few earnings calls. And also for the single-stake growth for the category mix,
In the next few earnings call.
And also.
For the <unk>.
<unk>.
<unk>.
The single.
Singles' day growth.
For the category mix.
Speaker 4: You're right, so 3CE product is growing faster than the supermarket categories. But generally right now, we think the supermarket categories for the double 11 campaign period is still growing very promising, and that's why our, like, the...
Youre right. So three C product is growing factors in.
Supermarket categories, but generally right now.
Thing and Sip market categories.
For the double 11 campaign period is still growing very promising and that's why our like the.
Revenue guidance for Q2 four is given.
Speaker 4: RAMU guidance for Q4 is given.
And also we believe that the GDP growth rate will be still very fast, which was mainly contributed by the revenues of supermarket category cost supermarket categories monetization, including the online marketing services is.
Speaker 4: And also, we believe that the GDP growth rate will be still very fast, which is mainly contributed by the revenues of the supermarket category, because the supermarket category's monetization, including the online marketing services, is...
Speaker 4: is more, much more than the 3C categories. So I don't actually, I don't, you know, I don't look at the detail like the mixed growth rate for the W11 campaign period, but I believe the overall W11 campaign period promotion
Is it more much more than.
So you see.
The categories, So I don't actually Idaho.
I don't look at the detailed mix growth rate for that upper limit campaign period.
The overall.
About 11 campaign period promotion.
Speaker 4: results should be very satisfied to
Results should be very satisfied.
Two.
Speaker 4: you know, all those merchants, for example, like for even for like Walmart. So Walmart, the annual campaign, usually annual campaign peak is their August 8th promotion day. But for the singles day, the singles day, like the November 11th, it's like still growing by 25% compared to their August 8th. And their
All of those merchants for example, like for even for like Walmart to Walmart The annual campaign, usually annual campaign Pks.
August eight promotion day, but for the singles day the single state.
November evidenced this slide is still growing by 25% compared to the August eight.
In there.
They are setting our supermarket category products.
Yeah.
Right and in terms of the.
Speaker 3: Right, and in terms of the consumer behavior and the market situation.
Consumer behavior in the market.
Situations.
Speaker 3: There's an interesting small accelerator, I would say, for the single-stay is that right before single-stay, the government encourages consumers to stock up a little bit at home. You might have seen in the news. So I think this also helps to boost the sales a little bit.
Sure.
Interesting small.
Sure.
The accelerator OSA for the singles day.
Driver for singles day, the government encourage consumers to stock up a little bit at home you might have seen in the news.
So I think this also helps to boost ourselves a little bit.
But overall I think if you look at the Big picture.
Speaker 3: But overall, I think if you look at the big picture, we're seeing two things happening.
We're seeing two things happen one.
Speaker 3: One thing is the consumers are now more and more used to on-demand retail.
The thing is the consumers are now more and more used to own demand to retail. So historically they may buy restaurant food.
Speaker 3: So historically, they may buy restaurant food and get delivered on demand. And now, a large number of consumers are now used to buy everything on demand. I think this is a very important trend we're actually seeing.
<unk> delivers on demand now.
A large number of consumers now use to buy like everything on demand I think this is a very important trends, we absolutely see it.
Speaker 3: At the same time, we also see, mostly from this year, that more and more vertical retailers are now willing, or more than willing, to work with SIRS and get
Hi will.
Also see.
Mostly from this year.
More of the more vertical.
Others are now willing or more than willing to work with us and get listed for example, like a smartphone consumer electronics and also like.
Speaker 3: For example, like a smartphone consumer electronics, and also like personal care cosmetics, and like a pad.
Personal care cosmetics.
And like our currency.
Speaker 3: or pet supplies, or liquids and alcohol. So all those kinds of vertical specialty stores.
Or like a pet supplies or like a liquid and alcohol. So all of those kinds of vertical specialty stores.
Speaker 3: They didn't work with like a online platform before. But especially this year, we're seeing a strong trend that the vertical retailers are now very much willing to work with us. And I think this.
Okay.
They use they didn't work with like us.
Alright platform before but especially this year, we're seeing a strong trend that the vertical retailers are now very much willing to work with <unk> and <unk>.
This creates a very good situation, while consumers are more used to on demand and retail and it gets delivered instead of going offline to visit the stores at the same times or the stores. The quality suppliers are now getting online. So we're happy to see this combination.
Speaker 3: creates a very good situation. While consumers are more used to on-demand retail and get delivered instead of going offline to visit stores, at the same time all the stores, the quality supplies are now getting online. So we're happy to see this combination.
Great. Thank you.
Your next question comes from Rishi <unk> of Credit Suisse. Please ask a question.
Speaker 1: Your next question comes from Ashley Xu of Credit Suisse. Please ask your question.
Thanks management for taking my question I actually wanted to follow up on our nearby entry point.
Speaker 9: Thanks, management, for taking my question. I actually want to follow up on our nearby entry point. Understand that it has been gradually rolling out and still under a test stage, but could management share more color on the recent progress and our plan or target by year end? At the same time, for those rolled out regions, what's the effectiveness we have seen in attracting more users?
I understand that it has been gradually rolling out still on their test stage.
Management share more color on the recent progress in our plan or target by year end.
At the same time for those regions.
Regions.
What's the effect, we have seen in attacking more users.
Speaker 10: And for our full-cube guidance, does that reflect any contribution from this new entry point? Thank you.
And for our <unk> guidance does that reflect any contribution from this new entry point. Thank you.
Yes, so give you.
Speaker 3: Yeah, so I'll give you some background and color about this Nearby. And perhaps Stepan will have anything to add. So first of all, the Nearby channel is now available for access. So in most of the Tier 1 and Tier 2 cities, and some of the lower tier cities.
Some background.
And the color about this nearby and perhaps that.
We will have anything to add so first of all the nearby.
Channel.
<unk> is now available for access.
So most of the tier one and tier two cities.
Some of the lower tier cities so.
Speaker 3: So we're happy to see that since June , when the nearby
Happy to see that since June.
One the nearby channel launch, we're happy to see.
Speaker 3: We're happy to see the technology and the engineering behind it. As you can imagine, there are a lot of engineering work behind the scenes, because literally we are transforming the JD app from a B2C app and now to a location-based app.
The technology.
The engineering behind it.
As you can imagine there are a lot of engineering work behind the scene.
Literally we are transforming the JD app from a b to C and now.
Location based App and there are a lot of technology needs to be done and we're looking very closely around the cost with the J D technology team to make that happen.
Speaker 3: And there are a lot of technology that needs to be done, and we're working very closely around the clock with the JD technology team to make that happen.
Speaker 3: So with that happening, we're happy to roll out the service to most of the Tier 1, Tier 2 cities. At the same time, we keep enriching the product supplies and the store supplies to the consumers and expanding our geographic coverage.
With that happening we are happy to rollout the service too.
Most of the tier one tier two cities at the same time, we are keep enriching the product supplies and the store supplies too.
The consumers and expanding our geographic coverage so.
Speaker 3: So like every week, we are seeing more retailers sign up and get listed on the nearby channels. So I think that's the fundamental, because you need to have quality supplies and broad coverage. At the same time.
Every week, we are seeing more retailers sign up and gas lift.
The nearby channels, So I think thats the fundamental because you need to have quality suppliers and the broader coverage at the same time.
Speaker 3: We're also happy to see the operation matrix around nearby channels has continued to improve.
Also happy to see.
Operation.
Thanks.
Nearby channels has continued to improve.
Ever since launch.
Speaker 3: everything's launched. So going forward, we plan to be focusing on the key cities, the top cities, to improving the mentality of consumers and to build up the shop now brands among.
So going forward, we plan to be focusing on the.
Our key cities the top cities too.
Improving the.
And how do the offer.
<unk> and to build up.
The shopping our brands Amar.
Sure.
Speaker 3: consumers and also to improve the penetration into the JD user base. At the same time, to improve the order conversion rates, conversion levels of this nearby channel. So I think this is certainly significant, very significant.
Consumers and also to improve the penetration into the JD user base.
Same time to improve the or the conversion.
Res commercial levels.
This nearby.
Step and steel just with like a six months, so far or five months. So far. So we are still seeing the channel as a very early stage and we have a very looking forward to growth and to expand it.
Speaker 3: step, and still, just with like six months so far, or five months so far, so we're still seeing this channel at a very early stage, and we're very looking forward to grow it and to expand it in the future.
In the future.
And also in the <unk> guidance.
Very prudent Ying.
Calculating the.
Speaker 4: calculating the business coming from the food chain tab, nearby tab in Q4. So.
The business is coming from the food team tab nearby tab.
In Q4 so.
Speaker 4: and more opinions of JD.
And more businesses.
D a.
Ecosystem should be coming from the traditional wooden kenzo meta search results in Q4, because it's a more mature you are mature.
Speaker 4: ecosystem shall be coming from the traditional, those Wujing Tianzuo, like the search results in Q4, because it's a more mature product. And for Fujin Tabs, still, I think, like Felix said, it takes a few times to just further improve for the product.
And therefore, avoiding tap Stuart I think luxury extended it takes a few.
Few times two to get a further.
No it's improved for the product in.
Speaker 4: Invest in all those merchants and build up the...
On listing this all those merchants and.
Build up the.
Consumer mind for nearby shopping.
Speaker 4: consumer mind for the nearby shopping.
Yeah.
Thank you.
Yeah.
Your next question comes from Rachel <unk> of UBS. Please ask your question.
Speaker 1: Your next question comes from Ray Shung of UBS. Please ask a question. Hi.
Hi, Good morning management. Thank you for taking my questions.
Speaker 11: First, I want to get an update on the geographical coverage extension. Could management share your latest update of JDCJ in terms of further expanding the geographical coverage this quarter? And also, do we have a target for the number of cities and counties we cover next year? If there is a GMV contribution from the lower-tier market that you can share, that would be appreciated.
First I want to get an update on the geographical coverage expansion.
Sure you are.
Latest update of J D. P. J in terms of further expanding.
Graphical coverage this quarter and also do we have a target for the number of cities and counties. We covered next year.
If there is any contribution from the lower tier market that you can share that would be appreciated.
Speaker 11: And second, I just want to follow up on the point that we mentioned as the non-supermarket categories continue to grow their GMB contribution. I was wondering could we get an update on the different commission level across different product categories and how will that makeshift affect the future trend of our commission level? Thank you.
And second.
I just wanted to follow up on the point.
That we mentioned as the non supermarket categories continue to grow their GMP contribution.
I was wondering could we get an update on the different commercial level across different product categories, and how will that mix shift affect the future trend of our commission level. Thank you.
Okay.
Speaker 3: OK, I will give you my view and see if I have anything to add. So first of all, in Q3, the GMV from our lower tier cities, from JDDJ, grew by about 100%.
Have you.
My view and see if that has anything to add so first of all in Q3, the <unk> from our lower tier cities on J D D J.
Peru balance.
About 100% and so far we have covers.
Speaker 3: And so far, we have covered over 1,700 cities and counties. And we'll continue to penetrate into the lower tier cities.
Over 107.
1700 cities and countries and we will continue to penetrate into the lower tier cities.
And.
Speaker 3: And for now, we'll be focusing on especially the category development and expansion in the existing cities, that the cities we have already opened.
For now we will be focusing on.
Especially the category development and expansion in the existing cities. The cities we have already opened.
So.
Speaker 3: So and that's about the geographic coverage and in terms of the.
And.
So that's about the geographic coverage and in terms of the.
In terms of the commissions.
Speaker 3: In terms of the commissions, I think.
Thank you.
Speaker 3: Different categories have a different commission rate. But if different categories, we are improving the commissions and improving the monetization.
Different categories have a.
Yes.
Difference commission rates us.
Different categories, we are improving.
The commissions and improving the monetization.
From each.
Speaker 3: from each category. So with our stronger collaboration with the brand, and also we are generating more value to the retailers. So that's why we can improve the emissions in different categories. That's independent from the mix of segments.
Category, so with our.
Stronger collaboration with the brands and also we are generating more value to the retailers.
So that's why we can.
We can improve the.
Emissions in different categories.
That's independent from the mix of.
Settlements and.
Yes.
Speaker 4: Yeah, I'll see if I can have anything to add. Yeah, so for supermarket categories, usually we have commissions, delivery fees, and also especially for FMCG products, we have marking dollars from.
Let's have anything to add.
Yes, so for supermarket categories usually.
We have commissions fees and also especially for.
FMC chip products, we have.
<unk>.
From.
Speaker 4: and those brand owners and but in the same time we are also given lots of subsidies to consumers because they are
And those.
Brand owners and in the same time.
We are also given lots of subsidies to consumers costly.
Sure.
Speaker 4: They should be more frequent to purchase FMCG products instead of other non-supermarket categories like 3C products, home appliances.
They should be more frequent purchase FMC jeep products instead of other non supermarket categories <unk> products for home appliances.
So.
For all of those other newer categories, including smartphones home appliances.
Speaker 4: For all of those other newer categories, including smartphones, home appliances, pet products, so their money attaching rate,
The paas products so there.
Manufacturing right.
It's lower than the soup market overall manufacturing right, but you don't need to give so much incentive to them. So this will.
Speaker 4: is lower than the supermarket overall money attaching rate, but you don't need to give so much incentive to them. So this will give us like the positive direct margin for each order generated for those non-supermarket categories.
Give us like the positivity around the margin for each order generated for those.
Non supermarket category products.
Speaker 4: So the contribution from those non-supermarket categories will also contribute to the overall margin improvement of the platform. But we still emphasize that the FMCG products is the most important category of the platform. So we still need to give some incentives to...
No.
The contribution from those non supermarket categories. We're also contribute to the overall.
<unk> improvement of the platform, but we still.
Emphasize that FMC products is the.
Most important the category of the platform. So we still need to give some incentive to.
No subsidies to consumers too.
Speaker 4: and subsidies to consumers to retain them. So that's why up to this moment, we still have a slightly negative direct margin for the platform because our investment in the FMCG and the supermarket categories.
To retain that and so that's why.
Up to this moment, we SBU had a slightly negative margin for the platform wide platform because ours.
Investment in the FMC G in the soup market categories.
So in the long run we believe that.
Speaker 4: So in the long run, we believe that we can still improve our overall money-cutting rate while significantly improving the direct margin level because we continue to improve our incentive ratio by decreasing the incentives given to FMCG and supermarket categories while we don't give so many incentives to other non-supermarket categories.
We can still improve our overall manufacturing rate.
Wow.
Efficiently improving.
The direct margin level cost.
Continue to improve our.
Incentive ratio by decrease the incentives given to F&B CGM supermarket categories, while we don't give so many incentives to other non supermarket categories. So I threw the mix contribution would leave that.
Speaker 4: So through the mixed contribution, we believe that our overall direct margin is on track to break even next year.
Our overall.
<unk> margin is.
Is on track to breakeven.
Next year.
For the whole year base.
Okay.
Thank you we still got time for one last question and our final question comes from Robyn deal of Taiwan. Please ask your question.
Speaker 1: Thank you. We've still got time for one last question and our final question comes from Robin Leong of Diver. Please ask your question.
Hi management. Thanks for taking my question actually is just a follow up question looking into 2022 on one hand.
Speaker 12: Hi, management. Thanks for taking my question. Actually, it's just a follow-up question. Looking into 2022, on one hand, I understand that we will realize some cost savings from user acquisition in the JD ecosystem. On the other hand, if user contribution starts to kick in, is it possible that JDDJ will step up its spending again if the ROI is strong and is further improving? Like what you mentioned, are we going to actually increase the subsidies in those FMCG categories? If management could share some of our strategy within the JD ecosystem, that would be great. Thank you.
I understand that we will realize some cost savings from user acquisition in the <unk> ecosystem on the other hand, if user contribution starts to kick in is it possible that J D. D. J will step up in spending again, if the strong and improving like what you mentioned are we going to.
Actually increase the subsidies in those like FMC ge's categories, if management could share some of our strategy within the JD ecosystem that would be great. Thank you.
Okay. So first of all our <unk>.
Speaker 3: Okay, so first of all, as you said, we are happy to see we're getting strong support from JD in terms of user acquisition. This can certainly help us to reduce the cost.
You said, we are happy to see.
We're getting strong support from <unk> in terms of user acquisition. This can certainly help us too.
We reduced the cost for user acquisition and still we are in the early stage of this.
Journal and.
Of this journey and we are.
Our goal is to reach the 50% of the penetration that we have.
Now as a single digits.
There's a long way to go and in terms of the subsidies.
I think overall the.
Trend and our goal is to improve the efficiencies.
And not to increase the subsidies.
Speaker 3: As we explained earlier, so we are getting more and more marketing dollars from the brands and also the resources from the retailers, so we are combining all these and improve the overall efficiency.
As we explained earlier so we are getting.
More and more marketing.
From our brands and also the.
Resources from the retailers. So we are combining all of these and improve the overall efficiencies instead of increasing them.
Speaker 3: instead of increasing them. And we're happy to see the ROI of our incentives has continued to grow. I think that's very important for all parties.
Happy to see the ROI of our <unk>.
Scientists has continued to grow I think that's very important for all parties and we will continue that way and and also for the general.
Speaker 3: And we'll continue that way. And also for the general competitive landscape, as we explained earlier, we're happy to see that most of the players are now more rational. And
Competitive landscape as we explained earlier, we're happy to see that.
Most of the players are now more irrational.
And.
Speaker 13: not burning too much of the subsidies as they used to be. So that's why, overall, I think we are optimistic about both growth and probability going forward. Thank you.
Not like.
Burning too much of the subsidies as they used to be so that's why overall I think we are.
Mr about both growth and profitability.
Profitability going forward.
Okay.
Great. Thanks.
I would now like to hand, the conference back to Caroline Please continue.
Thank you operator in closing on behalf does management team wed like to thank you for your participation on today's call. If you require any further information feel free to reach out to us directly. Thank you for joining US today. This concludes the call.
Speaker 2: Thank you, operator. In closing, on behalf of Stata's management team, we'd like to thank you for your participation on today's call. If you require any further information, feel free to reach out to us directly. Thank you for joining us today. This concludes the call.
This concludes today's conference call. Thank you for participating you may all disconnect.
Speaker 1: This concludes today's conference call. Thank you for participating. You may all disconnect.
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Speaker 5: 10. 10. The
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[music].
[music].
Good morning, ladies and gentlemen, thank you for staying high for Tata third quarter 2021 earnings conference call. At this time all participants are in listen only mode. After the management's prepared remarks, there will be a question and answer session as a reminder, today.
Speaker 1: Good morning, ladies and gentlemen. Thank you for staying by for DADA third quarter 2021 earnings conference call. At this time, all participants are in listen only mode. After the management prepared remarks, there will be a question and answer session. As a reminder, today's conference is being recorded. I will now turn the meeting over to your host for today's call, Ms. Caroline Doong, Head of Investor Relations for DADA. Please proceed, Caroline.
Congress has been very caught up now.
And I'll turn the meeting over to your host for today's call Ms. Caroline Dong <unk> head of Investor Relations for <unk>. Please.
Please proceed Caroline.
Thank you operator, Hello, everyone and thank you for joining us today, our third quarter 'twenty 'twenty. One earnings release was distributed earlier today and is available on our IR website, IR dot I'm, not a doctor and as well I don't know when he always worries of it does.
Speaker 2: Thank you, operator. Hello everyone and thank you for joining us today. Our third quarter 2021 earnings release was distributed earlier today and is available on our IR website at ir.mdata.cn as well as on Google News Service.
On the call today from data, we have Mr. Philip <unk>, Chairman and Chief Executive Officer, Mr. Dirk Chen Chief Financial Officer, and Mr. Jin Yan co founder and Chief Technology Officer.
Speaker 2: On the call today from Data, we have Mr. Philip Kwai, Chairman and the Chief Executive Officer, Mr. Jack Chen, Chief Financial Officer, and Mr. Jun Yang, Co-Founder and the Chief Technology Officer.
Mr. Clive will talk about our operations and company highlights followed by Mr. Chen who will discuss the financials and guidance.
Speaker 2: Mr. Kwai will talk about our operations and company highlights, followed by Mr. Chen, who will discuss the financials and guidance. They will all be available to answer your questions during the Q&A session that follows.
They will all be available to answer your questions during the Q&A session that follows.
Let me begin I like to remind that remind you that this conference call contains forward looking statements as defining the section intend to Y E of the Securities Exchange Act of 94, and the U S parameters.
Speaker 2: Before we begin, I'd like to remind you that this conference call contains follow-up statements as defining the Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995.
Litigation Reform Act of 90 990.
That Ain't 95.
These forward looking statements. It's a poem management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict any mono voyage are beyond the company's control.
Speaker 2: This voting statement is upon measurement, current expectations, and current market and operating conditions, and relates to events that involve known or unknown risks, circumstances, and other factors, all of which are difficult to predict and a manner of which are beyond the company's control.
These risks may cause the company's actual results or performance.
Speaker 2: These risks may cause a company's actual results or performance to deform maturely.
Before my Julie.
Speaker 2: Further information regarding these and other risks, uncertainties, or other factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any bulletin statements as a result of new information, contrary then to otherwise, except as required under applicable law.
Information regarding these and other risks uncertainties or other factors is included in the company's filings with the U S. SEC.
Company, that's policy any obligation to update enables increased as a result of new information future events or otherwise, except as required under applicable law.
Speaker 2: Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB.
Finally, please note that unless otherwise stated all figures mentioned during this conference call I RMB.
Speaker 2: It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Philip Blissell-Hebb.
It is now my pleasure to introduce our chairman and Chief Executive Officer, Mr. High Fleet Phillips. Please go ahead.
Thank you Caroline.
Speaker 3: Thank you, Caroline, and thank you all for joining us today. We're pleased to announce another strong quarter. I would like to highlight recent progresses and then provide updates on our two platforms. And that will go through our financial results in greater detail.
Thank you all for joining us today.
He used to announce another strong quarter I would like to highlight recent progress and then provide updates on our two platforms.
We'll go through our financial results in greater details.
So earlier this year.
Speaker 3: So earlier this year, the CPC Central Committee clarified China's strategic vision and the government's priorities in the 14th Five-Year Plan and long-range objectives through the year 2035. With this, it sets a goal of accelerating digital development and building digital China. So according to statistics from China Academy of Information and Communication Technologies, China's digital economy
CPC Central Committee clarify China's strategic ambition and governments priorities in the 14th.
Our plans and Lorincz objectives through the years 'twenty certified.
This is seth ago of accelerating digital development and digital China. So according to statistics from China Academy of information and Communications technologies.
Digital economy.
Sure.
Speaker 3: 38.6% of total GDP in 2020.
Eight 6% of total GDP in 2020.
Well that number Lisa developing countries. There are still a notable gaps with the 54, 3% average in developed countries.
Speaker 3: While that number leads among developing countries, there is still a notable gap with the 54.3% average in developed countries. The main engine to drive China's digital economy lies in industrial digitization.
Man engine to drive Chinas digital economy lies in industrial digitalization, which contributes 89% of the total digital economy.
Speaker 3: which contributes 80.9% of the total digital economy.
Speaker 3: Because industrial digitalization will build up the country's competitive edge of the digital economy, it's a key theme that the Chinese government wants to promote.
Industrial digitalization will build up the country's competitive age of digital economy is a key theme the Chinese government wants to promote.
So that group is well positioned in the national trends of digital economy.
Speaker 13: The data group is well positioned in the national trend of digital economic development. As a leading local on-demand delivery and retail company, we have always been committed to driving digital transformation in the retail industry.
Development.
A leading local.
Delivery in a retail company, we have always been committed to.
Driving digital transformation in the retail industry.
Speaker 13: Together with JD.com, we are further empowering the traditional industry and driving the development of the real economy.
Together with <unk> Dot com.
We are empowering traditional industry and driving the development of the real economy.
So this naturally leads to our strengthened strategic cooperation with JD.
Speaker 13: So this naturally leads to our strengthened strategic cooperation with JD.
In October.
Our group and SEDAR Com jointly launched shelf now or shelf serco, a unified branding for our own demand the retail services within the JD ecosystem.
Speaker 13: Datagroup and JD.com jointly launched ShopNow, or Xiaoshigou, a unified brand for all on-demand retail services within the JD ecosystem.
Through shop now users can access on demand services multiple channels, including the nearby 14 tab.
Speaker 13: Through ShopNow, users can access on-demand services via multiple channels on JD, including the nearby, fujing tab, and all the entry points of Wujing Tianze program. ShopNow is.
And all the entry points off within Tien Doe program.
Tough now is powered by that group.
Leveraging our years of lbs oriented operational experience and accumulation of technology capabilities, we will offer a few or needs of local on demand at retail and delivery of J D.
Speaker 13: Leveraging our years of LBS-oriented operational experience and accumulation of technological capabilities will fulfill all needs of local on-demand retail and delivery on JD.
Speaker 13: We both strongly believe in the huge potential of on-demand retail in China.
We both saw I believe English huge potential off on demand at retail in China.
Speaker 3: With ShopNow, XiaoShiGo, we will leverage our respective strengths to lead the development of this quick-growing industry and bring win-win results for both groups.
With <unk>, we will leverage our respective strengths to lead the development of this.
Pre growing industry and bringing readouts for both groups.
For JD chop now will enrich both product suppliers and delivery options, providing consumers with a better shopping experience.
Speaker 3: For JD, ShopNow will enrich both product supplies and delivery options, providing consumers with a better shopping experience.
So the other group Chuck now will increase our penetration rates among jd's vast user base. This should become a stronger drive stronger driver for our long term development.
Speaker 3: For data group, ChefNow will increase our penetration rate around JD's vast user base. This should become a stronger driver for our long-term development.
Yeah.
Before discussing the recent performance of our two platforms I would like to provide some highlights of our double 11 shopping festival.
Speaker 3: Before discussing the recent performance of our two platforms, I would like to provide some highlights of our Double Eleven Shopping Festival.
With over 150000 source <unk>.
Speaker 13: With over 150,000 stores on JDDJ participating in the event this year, JDDJ achieved record high in the peak day GMV and grew the total GMV during the 11 days, from November 1st to November 11th. The 11-day campaign by over 100% year over year.
J D D J participating in the event this year.
D J.
Record high in the peak day GSV and grew the total <unk> during the 11 days from November one.
November 11th the 11 day campaign by over 100% year over year.
Now, let's move on to digitally Jay the leading local on demand retail platform in China.
Speaker 13: Now let's move on to JDDJ, the leading local on-demand retail platform in China.
Speaker 3: JDBJ continues to drive the digitization of offline retail in three ways. Empowering retailers at broader scale. Helping brands improve marketing efficiency.
<unk> continues to drive the Digitization of offline retail in three ways.
Empowering retailers add rather skull.
Helping brands improved marketing efficiencies.
<unk> innovative technology solutions.
First empowering retailers a broader scope.
Speaker 3: First, empowering retailers at broader scale.
So on one hand.
Speaker 13: On one hand, partnering with more retailers helps us enrich product offerings and bring better shopping experience to more consumers. The number of active users on DDDJ increased by 53% year-over-year to 57.1 million.
<unk> with more retailers <unk> enrich product offerings and bring better shopping experience to more consumers.
<unk> of active users on DDG increased by 53% year over year to $57 1 million.
On the other hand, as we expand the merchants and the category coverage or helping more offline retailers feeling.
On the other hand, as we expand the merchants and category coverage, we're helping more offline retailers building digitalization capability.
<unk> capabilities.
So let me take you through two different verticals and talk about some exciting recent developments.
So let me take you through a few different verticals and talk about some exciting recent developments.
So in the supermarket category, we continue to enhance our leading position.
In the supermarket category, we continue to enhance our leading position.
We now have established partnerships with 82 of the top 100 suppliers a supermarket chains in China.
We now have established partnerships with 82 out of the top 100 supermarket chains in China.
And the Super merchant Dave.
And the Super Merchant Day provides supermarkets with a great opportunity to engage with users on our platform. In the third quarter, during the eight Super Merchant Day sessions for local winner supermarkets, such as Jiajiayue and Bubugao, weekend sales all increased by over 200% year over year.
The Super Merchant day provides supermarkets with a great opportunity to engage with users on our platform.
In the third quarter during the eight Super Super Merchant day sessions for local winner.
Super markets, such as <unk> and Google go. So we can sell all increased by over 200% year over year.
And the smartphone category, we continue to expand partnerships with brands. This quarter, we established direct partnerships with Samsung and other.
In the smartphone category, we continue to expand partnerships with brands. This quarter, we established direct partnerships with Samsung and Honor.
For Apple, we saw impressive results for new product launch. On September 24th, more than 900 authorized stores on the JDDJ platform started to sell the iPhone 13 series.
For Apple we saw impressive results for new product launch our September from the force more than 900 authorized stores on the <unk> platform.
With the sale of the iPhone 13 series.
On launch day, sales on our platform were a remarkable seven times greater than the launch day of iPhone 12.
A launch date.
<unk> on our platform or a remarkable seven times greater than the last day of iPhone sales.
Okay.
For small clients.
For small home appliance, we deepened collaboration with the leading retailer chains, such as Chongbai Shuangshe and Shundian.
We deepened collaboration with a leading REIT.
Hello channels such as.
<unk> also shown that the.
To strengthen.
To strengthen online-offline integration, our efforts paid off.
Online offline integration.
Our efforts paid off.
as the GNV in the third quarter increased by about 100% quarter over quarter.
The <unk> in the third quarter increased by about 100% further over a quarter.
In our pharmacy pharmacy.
In the pharmacy category, we launched a 24-hour free online medical consultation service to provide the user with real-time assistance. Meanwhile, 24-hour retail and delivery services are also available in more than 3,300 pharmacy stores on our platform to meet consumers' needs for medicine at any time.
Category, we launched a 24 hour free online medical consolidation.
Service to provide the user with real time assistance. Meanwhile, 24 hour retail and delivery services are also available in more than.
3003 hundred.
Pharmacy stores on our platform to meet consumers' needs for medicine at anytime.
Suddenly.
Secondly, helping brands to improve marketing efficiency.
Helping brands to improve marketing efficiency.
In the third quarter, revenue from online marketing service on our JDDJ platform grew by over 140% year-over-year, a significant acceleration from the 110% growth in the previous quarter.
In the third quarter revenue from online marketing service on our <unk> platform grew by over 140% year over year, a significant acceleration from the 110% growth in the previous quarter.
And all of our marketing monetization rates jumped to 3% further demonstrating the DJ as the go to platform for brands to drive total yourself.
In online marketing, monetization rates jumped to 3%, further demonstrating GDDJ as the go-to platform for brands to drive total sales.
We now have strategic partnerships with more than 200 brands. We are committed to help brand partners improve marketing efficiency and engage with consumers effectively.
And I'll have strategic partnerships with more than 200 brands. We are committed to help better partners improved marketing efficiency and engage with consumers effectively.
As part of this we recently introduced a new marketing program called Super New product.
As part of this, we recently introduced a new marketing program called Super New Product Day.
For a product launch promotions.
In August , Unilever launched a campaign under this new program. As a result, sales increased by 190% from the previous year.
Others in the liver launch a campaign under this new program as a result itself increased by lenders, 90% from the previous week.
Okay.
And thirdly, we're innovating technology solutions.
And certainly.
We're innovating technology.
Solutions.
Our high blood system continues to be popular among retailers. This is Lee hi, Bob.
Our Haibo system continues to be popular among retailers. Recently, Haibo now reached the milestone of serving 5,000 retailer stores.
Now reached the milestone of serving 5000 retailer stores.
Based on the broad cooperation with retailers, we have a greater understanding of their pinpoints in <unk> operations and are able to innovate quickly for example in the third quarter to better supports merchants holiday, although promotions you launch a new module or high board to manage.
Based on the broad cooperation with retailers, we have a great understanding of their standpoint in O2O operations and are able to innovate quickly. For example, in the third quarter, to better support merchants' holiday bundle promotions, we launched a new module on Haibo to manage bundled products.
All those products.
This module provides a one-stop solution to address the pain points in inventory synchronization and expenses allocation.
So this module provides a one stop solution to address the pinpoints in inventories and consolidation and expenses allocation.
As a result.
We improved the processing efficiency for our bundled products.
it could improve the processing efficiency for bundled products by as high as 20 times.
My <expletive> unsafe hybris.
In addition, based on our capability to allocate expenses down to the SKU level we.
In addition, based on our capability to allocate expenses down to the SKU level, we launched a tool to enhance marketing efficiency.
Launch a tool to enhance marketing efficiency. So this tool integrates the subsidies from brand partners merchants and platforms into one single coupon. The three in one Cooper to improve the ROI of marketing dollars for brands and help merchants.
This tool integrates the subsidies from brand partners, merchants, and platforms into one single coupon, a three-in-one coupon.
to improve the ROI of marketing dollars for brands and help merchants to improve sales by expanding the number of products on promotion.
To improve yourself by expanding the number of products on promotion.
For example, this tool enables ZhaJiaYue to create 3-in-1 coupons that cover around 2,000 SKUs across over 100 brands.
For example.
This tool enables.
To create thrilling one coupons, let's cover around 2000 skus across over 100 brands.
In September the average daily itself during the weekend that offered three in one coupons, we're in more than 10 times.
In September , the average daily sales during the weekend that offered 3-in-1 coupons were more than 10 times than the sales.
Then the cells in normal weekends.
Our digitized in store picking service that I'm taking.
our digitized in-store picking service, the Dada Picking.
The diluted.
Dada Youjie maintains strong growth momentum. In the third quarter, orders fulfilled by Dada Picking grew over 70% quarter over quarter.
<unk> strong growth momentum in the third quarter, others fulfilled by that are picking grew over 70% quarter over quarter.
During the Double 11 shopping festival, order volume more than doubled compared with June 18 promotional period, effectively helping merchants to improve on time fulfillment rates while saving costs.
During the double 11 shopping festival other volume more than doubled compared with June 18th promotional periods.
Factually, helping merchants improve online fulfillment rates, while offsetting cost.
I would like to move on to.
I would like to move on to Dada now.
I don't know.
Our revenue from on demand delivery services to key accounts okay.
Our revenue from on-demand delivery services to key accounts, or KA, the merchants increase more than 110% year-over-year.
Merchants increased more than 110% year over year.
Revenue from supermarkets, KA, increased by over 90% year over year.
Revenue from our supermarkets.
Supermarkets.
Increased by over 90% year over year.
In the third quarter, we added geo-fencing functions to our on-demand delivery service. Function enables merchants to accurately determine the delivery area for each store without additional investment.
In the third quarter.
Added geo fencing functions to our on demand delivery services.
Yeah.
To accurately determine the delivery area for each store without additional investments.
Revenue from <unk>.
Revenue from restaurants K increased by 150% year over year.
Restaurants.
Increased by 150% year over year.
Others from fast food chains, and the tea beverage has continued to increase significantly.
Others from fast food chains and the tea beverage chains continue to increase significantly.
So moving to Smes.
<unk> of SME merchants that completed others that are now in the third quarter increased over 90% year over year. This was mainly driven by our refined.
The number of SME merchants that completed orders on DataNow in the third quarter increased over 90% year-over-year. This was mainly driven by our refined, great-based operational strategy and continued optimization of our perfume capability.
Based operational strategy and continued.
Optimization of our fulfillment capabilities.
In September we officially announced the launch of our logistics hub.
In September , we officially announced the launch of our logistics SaaS software as a service, the Dada Zhipei, the Dada Smart Delivery.
Software as a service, but that ought to pay the other smart delivery.
So this product provides the third-party delivery service providers and merchants who deploy their own delivery fleets.
So this product provide these third party delivery service providers and merchants, who have developers who will deploy their own <unk>.
Delivery fleets with.
Suite of digital tools to manage others, the fashion and the routing for Omnichannel on demand delivery orders.
suite of digital tools to manage orders, dispatching, and routing for omni-channel on-demand delivery orders.
Our digital logistic platform has helped a lot in improving our operations.
Our digital logistic platform has helped a lot in improving our operation efficiency in the last seven years.
<unk> seen the last several years.
And now, by opening up our technology in the form of a centralized SaaS product, we hope to further enhance the service capability and efficiency for the whole on-demand delivery industry.
Now by opening up our technology in the form of a centralized SaaS product.
We hope to further enhance the service capability and efficiency for the whole on demand delivery industry.
And lastly.
And lastly, last mile delivery. We saw strong growth in pickup services.
Last mile delivery, we saw strong growth in pickup services OSA.
with the number of pickup orders in the third quarter doubling from the previous quarter. This growth is built upon our enhanced system integration with JD Logistics and increased penetration in various other types. Expect pickup services to be another driver for our last mile business.
The number of pickup orders in the third quarter doubling from the previous quarter. This growth is built upon our enhanced system integration with JD logistics and increased penetration in virus other types.
We expect pick up services to be another driver for our last mile business.
With that I will now pass the call over to <unk> Chen to go over our financials for the quarter Okay.
With that, I will now pass the call over to Baicheng to go over our financials for the quarter.
Thank you.
Thank you, Philip. Before we go over the numbers, just a few housekeeping items in advance. We believe year-over-year comparisons are the most useful way to judge our performance. Therefore, all percentage changes I'm going to give will be on year-over-year basis, and all numbers are in Ramingdy and less otherwise noted.
Before we go over the numbers just a few housekeeping items themed events, we believe year over year comparisons are the most useful way to judge our performance. Therefore percentage changes I'm going to give will be on year over year basis, and all numbers are in renminbi unless otherwise noted.
Total net revenues increased to $1 7 billion aligning the revenue recognition method of that in our last mile delivery services to a comparable net basis pro forma revenue growth would have been 86% year over year.
Total net revenues increased to $1.7 billion. Aligning the revenue recognition method of data now, last mile delivery services to a comparable net basis, performer revenue growth would have been 86% year over year, which represents an accelerated growth rate compared with 81% revenue growth in the last quarter.
Which represents an accelerated.
Both rate compared with 81% revenue growth in the last quarter net revenues from that and now were $614 million. The pro forma revenue growth rate was 19% year over year, mainly driven by increases in order volume of interested delivery services to chain routines.
Net revenues from Delano were $614 million. The performance revenue growth rate was 90% year-over-year, mainly driven by the increases in all the volume of intra-city delivery services to chain merchants.
Net revenues from JDDJ increased by 84% to $1.1 billion, mainly due to the increase in GME, which was driven by increases in the number of active consumers and average order size. The increase in online marketing services revenues as a result of the increasing promotional activities launched by our brand owners also contributed to the revenue growth of JDDJ. Moving over to the
Net revenues from JD DJ increased by 84% Q1, 1 billion, mainly due to the increasing Jeremy which was driven by the increases in the number of active consumers and the average order size increase in online marketing services revenues as a result of the <unk>.
Increasing promotional activities launched our brand owners also contributed to the revenue growth of J D D J.
Moving over to the expenses side, the operating and the support team.
The operation and the supporting costs were $1.2 billion. The rise was primarily due to an increase in rider costs as a result of increasing all the volume for intercity delivery services provided to various chain merchants on the Dynanow platform and the retailers on the JDBJ platform, and partially offset by the decrease of rider-related costs incurred by our business upgrade of last mile delivery services.
One 2 billion. The rise was primarily due to an increasing rider costs as a result of increasing order volume for intra city delivery services provided to various chain merchants on the delano platform and the retailers on the JD DJ platform and partially offset by the decrease of.
<unk> related to costs incurred by our various upgrade of last mile delivery services.
Selling and marketing expenses were $780 million increase was primarily due to the growing absolute dollar amount of incentive to daily DJ consumers and an increase.
The selling and marketing expenses were $780 million, the increase was primarily due to the growing absolute dollar amount of incentives to JDDJ consumers, and an increase in personal costs in connection with the company's growing business.
Personnel costs in connection with the Companys growing opinion says.
G&A expenses decreased to $99 million, primarily due to decreased share-based compensation expenses.
G&A expenses decreased to 19 9 million, primarily due to decrease the share based compensation expenses.
R&D expenses rose to 148 million, mainly attributable to the increase in research and development personnel costs as the company continues to strengthen its technology capabilities.
R&D expenses rose to $148 million, mainly attributable to the increase in research and development personal costs as the company continues to strengthen its technology capabilities.
The non-GAAP net loss attributable to ordinary shareholders of DADA was $480 million compared with $324 million in Q3 last year. The non-GAAP basic and diluted net loss per share was negative $0.48 compared with negative $0.36 in Q3 last year.
Non-GAAP net loss attributable to ordinary shareholders of Diana <unk>.
$480 million compared with $324 million in Q3 last year.
Non-GAAP basic and diluted net loss per share was negative <unk> 48.
Paired with negative <unk> 36 in Q3 last year.
So as of September 30 tons, you don't get when the company has 3 billion in cash.
As of September 30, 2021, the company had $3 billion in cash equivalents, restricted cash, and short-term investment.
Cash equivalents restricted cash and short term investments.
And under the $150 million share repurchase program announced in June and AT&T win.
And under the $150 million share repurchase program announced in June 2021
As of October 31st, we have repurchased approximately US$131 million of ADSes.
As of October October 31st we have repurchased approximately 131 million U S dollar of <unk>.
For the fourth quarter of 2021, we expect total revenue to be between 2 billion and the $2 1 billion, representing a pro forma growth rate of 88% to 97% adjusting Q.
For the fourth quarter of 2021, we expect total revenue to be between $2 billion and $2.1 billion, representing a pro forma growth rate of 88% to 97%, adjusting 20Q4 and the 21Q4s that are now last mile revenue to a comparable net base.
Q4 in <unk> and in our last mile revenue to a comparable net basis.
In addition to the acceleration in revenue growth, we further expect the pro forma net loss margin based on the comparable net basis.
In addition to the acceleration in revenue growth, we further expect that.
Pro forma net loss margin based on the comparable net basis.
revenue to continue to experience significant year-over-year improvement in the fourth quarter of 2021.
That revenue to continue to experience significant year over year improvement in the fourth quarter of 2021.
And this concludes our prepared remarks and operator, we are now ready to begin the Q&A session. Thank you.
And this concludes our prepared remarks. Now, operator, we are now ready to begin the Q&A session. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, press star 1 on your telephone. To cancel a request, press the pound or hash button.
Ladies and gentlemen, we will now begin the question and answer session to ask a question press star one on your telephone.
So we have a question press the pound key.
Your first question comes from Russell Gill of Goldman Sachs. Please ask a question.
Your first question comes from Ronald Keong of Goldman Sachs. Please ask your question.
Hi, Ron you maybe on mute.
Hello, Hello can you hear me yes.
Yes go ahead.
Sorry about that.
Hello, Philip Philip on back and congratulations on the results I have.
I have two questions. Firstly is on the shop now function. How has that channel, how have we seen the traction with that with JD users clicking that nearby button? And is our fourth quarter revenue kind of acceleration that we guided, is that mainly contributed from this new channel? And how do we see that shop now function that will progress through, say, the next one year in driving additional growth for the company?
Two questions Firstly is on the shelf now function.
How has that channel really highlight we've seen the traction with that with JD users clicking that nearby button and is our fourth quarter revenue kind of acceleration that we guided is that mainly contributed from this new channel and how do we see that shop malfunction.
That will progress through say the next one year in driving additional growth for the company.
And then we've seen the sales and marketing cost.
And then we've seen the sales and marketing costs come down as a percentage of revenue, which is encouraging. Could you just share how that subsidy rate trend has been going, and is that how our newer channel is driving efficiencies that is leading to a lower subsidy rate? Thank you.
Come down as a percentage of revenue, which is encouraging could you just share how that subsidy rate trend has been going and is that the.
Our newer channels driving efficiencies that is leading to.
Lower subsidy rate. Thank you.
Okay Hi.
OK, hi Ronald. So the shop now.
Ron.
So the shelf now.
Certainly is a key.
Certainly it's growing very quickly and we expect it will become one of the key drivers of our future growth and we're happy to see the traction has been very good.
It's growing very quickly and we expect it will become one of the key driver of our future growth.
Happy to see the traction has been very good.
And so the shop now includes not only the nearby, the Fujian channel, but also various entry points and collaborations.
So the shelf now includes not only the nearby the Fujian channel, but also virus.
Three points and collaborations.
For example, if you are.
For example, if you are using the search engine on JD and you click on the search results and purchase, it's also considered as part of the ShopNow. So the contribution from the ShopNow will absolutely grow up for the foreseeable future. And both JD and ERS are very confident about the growth potential.
Searching using the search engine on <unk> and then you click on the search results.
The purchase also consider as part of the shop now.
So the contribution from the shelf now.
We will absolutely growing up for the foreseeable future and both JD and <unk> are very confident about the growth potential.
And in October , we launched the unified brand of this Xiao Shi Gou. So I think the consumers will be very, very excited.
And in October we.
Launch of the unified brand of this south should go.
I think the consumers will be.
Building up the mentality around the on demand the retail J D. I think overtime, we will see the potential of going up and also we have a joint.
building up the mentality around the on-demand retail on JD. I think over time, we will see the potential going up. And also, we have a joint agreement with JD Retail to grow the user penetration of ShopNow, Xiaochi Go.
Agreements with JD retail to grow the user penetration of.
Shop now so as we go.
all the way to 50% of the user penetration. So I think that's the future we are looking at. At the same time, we're also very happy to see the subsidy level going down, partially thanks to the shelf now, the new channel and the new traffic. And at the same time, we are.
All the way to 50% of the user penetration so I think thats.
Future, we're looking at at the same time.
We're also very happy to see the subsidy level going down.
Partially to the shelf now.
The new channel and new traffic.
And at the same time, we are.
We are.
We are improving our marketing efficiencies overall. That also helps to drive down the subsidy level. So we are quite confident about both growth and the profitability in the future.
Improving our marketing efficiencies overall that also helped to drive down the subsidy level. So we are quite confident about both growth and the.
The profitability in the future.
Thank you.
Okay.
Thank you. Your next question comes from.
Thank you. Your next question comes from Eddie Leung of Bank of America. Please ask your question.
Eddie Leung of Bank of America. Please ask your question.
Good morning, guys. I have a follow-up question on...
Good morning, guys a follow up question on <unk>.
Ron knows a question about subsidies and sales and marketing.
Ron knows a question about subsidy, even sales and marketing.
If you elaborate on the unit economics.
Could you elaborate a bit on the unique economic trend?
<unk>.
And.
And whether it's still on track with our previous target in terms of the breakeven point.
Or is that still on track with our Pvs.
In terms of the breakeven point.
And then related to that, could you also elaborate a bit on the competitive landscape?
And then related to that could you also elaborate a bit on the competitive landscape in the oval or grocery and fresh boat category.
in the overall grocery and fresh produce category because we have heard some potential reduction of subsidies in some of the other formats.
Category.
We have heard some potential.
Showing no subsidies in some of the other formats.
in these categories. So just wondering how that might affect our sales and marketing and subsidy strategy going forward. Thank you.
These categories. So just wondering how that might affect.
That was at Magadan subsidiary strategy going forward. Thank you.
Okay.
So let me take the first question so.
So Eddie, let me take the first question. So just like Philip said in Q3, just like we have communicated in the last quarter, so in the second half, we expected the consumer incentives given to JGBJ consumers will decrease significantly compared to the first half of this year. And actually...
Yes, just like fixed.
In Q3, just like we have communicated in their earnings call.
Last quarter. So in the second half, we expect we expected consumer incentives given to JD Vijay consumers will decrease.
Significant today compared to.
The first half of this year and actually.
In Q3, the incentive ratios.
In Q3, the incentive ratio was decreased more than our expectation before. So in Q3, it was 5%.
Was decreased.
More than our expectation before so in Q3.
It was.
5%.
For the consensus for the consumer incentive versus a six 2% in the.
for the consumer incentive versus 6.2% in the first half of this year. So this is the main contributor to our greater improvement of our direct margin level. So in Q3, our direct margin was improved significantly to minus 0.6%.
First half of this year so.
This is the main contributor to our greater improvement of our direct margin level also in Q3, our direct margin.
Improve that significantly too.
Minus.
6%.
which is thanks to the 120% BIFS improvement for the consumer incentive.
So which was thanks to like 120% EPS.
Improvements for the consensual incentive.
Consumer incentives.
So partially, this is improved because of the contribution of those shop-to-go or shop-to-go businesses. The other is like the tours implemented. Just Philip mentioned in the earlier script that, for example, we have created a three-in-one coupon to combine the platform money, merchant money, and also the brand owner's money together to improve the efficiency of the subsidies.
So calculate this is improved because of the contribution of those shafts should go or should now be needed. The others is like the tour implemented.
You've mentioned in the script that for example, we have created at the street when coupon to combine the platform money merging money and also the brand owner's money together to improve the.
The efficiency of the.
As subsidies.
So this also help us too.
So this also helps us to improve a lot. And also, in our expectation for the fourth quarter, we believe the subsidy ratio should be no more than 5%, which will help us to further improve in the direct margin level in Q4.
Improve a lot and also.
Gene.
And our expectation quarter fourth quarter, we believe the subsidy ratio showed.
<unk> be no more than 5%, which will help us.
It should help us to further improve in the direct margin level in Q4.
Yeah and in terms of the overall market landscape and the competitive landscape. So first of all.
And in terms of the overall market landscape and the competitive landscape, so first of all, I think we can all see that both retail and the economy are under general pressure. So most of the brands and the retailers are certainly under pressure.
I think as we can see that.
Both retail and the economy or other general.
Pressure so most of the brands and retailers are certainly under pressure.
But at the same time, people are all looking for growth. And all looking for channels can provide efficiency improvements. And JDDJ is certainly considered as the fastest-growing channel for most of the brands, and also helping them to improve the efficiencies. That's why, while we're seeing this pressure,
At the same time.
People are all looking for growth.
I'm looking for channels can provide.
Efficiency improvements.
DJ its certainly consider as the fastest growing.
Channel for most of the brands.
And also can helping them to improve the efficiencies that's why.
While we are seeing this pressure at the same time.
At the same time, most of the brands we've been working with are now more than willing to allocate more marketing resources through our channel, the JDDJ channel.
Most of the brands, we have been working with our now are more than willing to allocate more marketing resources through our channel. The digitization. So at the same time.
So at the same time, we improve the ROI of such marketing dollars by the three-in-one coupons. So that's why we are not only getting more marketing resources from the brands, but also improving ROI.
We improved the IRI of search marketing.
Bye.
Three in one coupons so.
So thats why we are not only getting more marketing resources from the brands, but also improving ROI.
And.
In terms of the competitive landscape I think one of the key.
In terms of the competitive landscape, I think one of the key.
Play.
player in the market, or at least used to be the very key player in the market, is the community group buying.
Player in the market or at least used to be the very key player in the market as the community grew by.
But as you probably have seen, the regulations have recently tightened up on community group buying, and they certainly are now seeing some slowdown. And subsidies from the community group buying has certainly been reduced as well. And for us,
But as you probably have seen that the regulations had.
Listen slates have been up.
Community group buying and suddenly and now seeing some slowdown.
And.
Our subsidies from the community the group buying has certainly.
Being reduced as well.
And first for <unk>.
All of the provinces that group buying are most active, we are seeing the GNV of 100% year-over-year growth in Q3. So again, we are able to grow despite the competition from the community group buying. I think looking forward.
All of the provinces provinces.
Buying our most active we're seeing the <unk> of 400% year over year growth in Q3.
So again we.
<unk> are able to grow despite the competition from the community group I think looking forward.
With the regulations as well as the economy pressure.
With the regulations as well as the economic pressure, we would envision that each player in the market will be more reasonable and rational instead of earning too much of subsidies. We're certainly happy to see that as we are getting to a more healthy competition environment. I think that's good for everybody.
We would envision that.
Each player in the market will be more reasonable and rational instead of like.
Earning too much of.
Our subsidies.
So we're certainly happy to see that.
As we are getting to a more healthy.
Competition environment, I think thats good for everybody.
And.
At the same time, we are constantly strengthening our collaboration with JD.
At the same time, we are certainly strengthening our collaboration with JD to achieve a win-win situation, so to both increase the scale and improve the efficiencies for both JD retail and JD DJ. So we are very confident about our competitive edge going forward.
To achieve.
To achieve <unk>.
We win situation.
So to both increase the scale and improved efficiencies for both JD retail entity. So we are very confident about our competitive age going forward.
That's very helpful. Thank you guys.
Your next question comes from Thomas Chong of Jefferies. Please ask your question.
Your next question comes from Thomas Chung of Jefferies. Please ask a question.
Hi, Good morning, Thanks management for taking my questions.
Hi, good morning. Thanks, management, for taking my questions. I have two questions. My first question is about our KA business under DataNav. The business growth momentum is very strong. I just want to get a sense about how we should envision the growth momentum as we enter into 2022, and also how we should think about
Two questions. My first question is about our business and that had enough.
But based on this momentum.
Where we're strong.
Just wanted to get a sense about I wish.
Ambition the growth momentum.
And the interchange related.
And also how we should think about.
The competition is.
of the competition in this segment, as well as the investment that we are going to be made in this K-A segment. And my second question is on JDDJ, can management comment about the category mix?
And then as well as the investment that we are going to be may indeed.
Yes.
And my second question is on J D J.
My comment about.
We mix.
in Q3 and also the average order value. On the other hand, with regard to our strong online marketing revenue growth, given that it is about 3% right now, how we should think about the takeaway for online marketing in future? Thank you.
In Q3 and also the.
The average order value.
With regard to the our strong online marketing revenue growth given that it's about 3%.
Right now of how we should think about the takeaway.
Online marketing in future. Thank you.
Thank you so much. So let me firstly elaborate on the questions and I will leave the competition.
Thank you Thomas.
So let me.
Firstly elaborate.
The.
<unk> and <unk>.
I will leave the competition.
Catching Fedex so for.
a question to Philip. So for the number of things, so first for JDDJ, our average order value in Q3 was 100 in the 90 perform on the.
So the number of things so first for JD DJ hour.
Average order value in Q3 was.
100, and then in the night for RMB.
Sure.
For the platform.
for the platform. And so going forward, we expect that this AOB will be further increased because we further diversify our platform categories mix. And also, even for the supermarket category still, it's very high. It's like 146.
So going forward, though we expect that this will be will be.
Further increase of course, we further diversify our.
<unk> platform categories mixture mix and also given for the.
Supermarket category still.
It's very high as 90 to 146.
uh in q3 so we think that lv will further go up in the following quarters and in terms of the category mix
In Q3, so we think that there will be we are further go up.
In the following quarters and in terms of the category mix.
In Q3 two thirds.
In Q3, two-thirds was coming from supermarket category, and 25% was coming from the 3C category, including smartphones, home appliances, and PC and a pad. So we also expect that the non-supermarket categories will contribute more and more gradually in the following quarters.
<unk> was coming from supermarket.
Category and 5% was coming from.
The <unk> category, including.
Smartphones home and appliances and PC in the past.
No.
We also expect that known supermarket of categories.
<unk> contribute more and more gradually in the following quarters.
And in terms of the online marketing services there are 3%.
And in terms of the online marketing services, so 3% of the GME in Q3, and we expect that this.
Of the JV in Q3, and we expect that to this.
monetization rate should at least be maintained in the following quarters if we will, you know, still we will be prudently further monetized for the online marketing revenues. But I believe that for the following quarters
Monetization rates should be.
Maintained in the following quarters.
We will still we will be prudently further monetize for the online marketing revenue.
I believe that for the following quarters.
<unk>.
Sure.
it should be no less than 3% for the next few quarters.
Less than 3%.
For the next few quarters.
<unk>.
And also for the key accounts, chain merchants, delivery services, or the data now businesses, it is growing by more than 110% in Q3. And we think
And also for the key accounts are chain merging delivery services or I don't know businesses.
It is growing by more than 100.
10% in Q3, and we think.
In Q4, it will be further macro.
In Q4, it will be further grow by triple digit on a year-over-year basis, and
Triple digit.
Year over year basis.
<unk>.
Uh, yeah, I will leave the competition question to, uh,
Yes, I will leave the competition question too.
Terrific.
Yes, so regarding the K the delano, Okay business I would like to give more.
Yeah, so regarding the K8, the data and OK business, I would like to give more color and background.
As background, so first of ore.
So first of all, one of the reasons why we can grow, continue to grow very fast, is we are building up a solid reputation among the key account players.
So one of the reason why we can't grow continue to grow very fast.
We are building up a solid reputation among them.
Pier House players first.
In order to serve the KOL, you need to win the trust and you need to get people's confidence in you. So, as we are serving all the big names well for quarters after quarters, that's how we are now able to win the trust and build up a good reputation in the market.
The other.
Are there to serve the Kols you need to win the trust.
People's competency EU, so as we're serving like all the big names, where all four quarters. After others. So that's how we are now able to win the trust and a good reputation in the market.
And in addition to his reputation we're also building up a very solid capabilities and knowhow.
And in addition to reputation, we're also giving up a very solid capabilities and know-how.
There are few key segments of okay.
There are a few key segments of KA we are now serving, including supermarkets, restaurants, and the pharmaceutical chain.
We are now serving including supermarkets.
Restaurants, and the pharmaceutical channels.
Each segment requires very different know-how and capabilities. For example, like a supermarket, as you can imagine, it requires to handle very heavy and bulky packages. And also, from packaging to delivery. So the process is quite complex. So that's why leveraging our service of data picking.
Each segment require very different knowhow and capabilities for example, like a supermarket as you can imagine it's.
It requires.
Pica to handle very heavy and bulky packages and also from a packaging to deliver.
Delivery.
So the process has been it's quite complex, so thats why leveraging our service of that uptick in.
Integrated.
integrated with our data now delivery, so we are providing a lot of value-adds for the supermarkets. That's why most of the leading supermarket trends in China, like most of them, are
Integrated with our data and our delivery. So we are.
Providing a lot of value add for the eastern markets. So that's why most of the leading supermarket chains in China.
Like most of them are using our service.
And for restaurants is very different from.
And for restaurants, it's very different from supermarkets, as you may imagine. So restaurants, the number of stores can be much more than the supermarkets. But at the per-store level, the orders are much fewer than supermarkets. So it requires very different order bundling and routing operations.
Supermarkets as you may imagine.
So that's from the number of stores can be much more than that.
The supermarket, but at the per store level as the others are.
Fewer much fewer than supermarkets.
While there are different other bundling in our routing operations and for our pharmaceutical you need to be able to deliver around the clock 24 hours. It also requires different capabilities. So all of this we have been good in such capabilities and Knowhow and efficiencies over the years, that's how we.
And for a pharmaceutical, you need to be able to deliver around the clock, 24 hours. It also requires very different capability.
So all of this, we have been building such capabilities, and know-how, and efficiencies over years. That's how we can win the cost.
And when the customers.
And last one and I'll leave at that now.
And last but not least, LNL is a third-party delivery platform considered by all the KAs.
Third party delivery platform consider by all the case so we are.
very valuable as an independence player. So unlike, for example, like Meituan or Erlemi, which owns the order-taking platform, they're not considered as independent. So most of the KA wants to use independent delivery services because they don't want to be too much.
Very valuable.
Tenders player. So on a like for example, like May 12.
<unk>.
Which owns the other taking platform they are considered.
They are now considered as the independents. So most of it wants to use independent delivery services.
Don't want to be too much.
um tightened to the other taking platforms. So all this as I mentioned explains why we are able to continue to grow fast on data now and at the same time improving the profitability and we're very confident to carry it on for the next year or so.
Tightened to the other taking platforms. So all of this as I mentioned explains why we are able to continue to grow faster than that.
And at the same time, improving the profitability and were very confident.
Coverage for.
For the next year.
Here also.
Okay got it thank you.
Yes.
Okay.
Your next question comes from Alicia Yap of Citigroup. Please ask your question.
Your next question comes from Alicia Yap of Citigroup. Please ask your question.
Hi, Good morning management. Thanks for taking my questions I have two questions. First is I think management mentioned about you just launched this feature to our logistics costs.
Hi, good morning management. Thanks for taking my questions. I have two questions.
First is, I think our management mentions about, you just launched this digital logistics task.
Tavis open to other players.
are open to other players, so wondering if there's any revenue opportunity down the road from these surveys that you're licensing out. And then second is on the single-phase performance, I think management mentioned, you know, JDBJ achieved over 100%.
I'm wondering if there's any revenue opportunity down the road.
Sylvie state licensing.
And then second is on I think the same performance.
Performance.
As Matt mentioned.
<unk> achieved 100% growth Jeff.
growth, just if management could elaborate a little bit the category performance during the single phase on the supermarket versus the non-supermarket. I would assume the 3C category probably contributed a much higher percentage during the single phase. So any colors on the category mixed during the single phase would be helpful. And then just on, you know, related to that is the consumer behavior. I guess given.
Management.
And later bed category performance Julien.
On the supermarket versus the non supermarket.
I assume the PC category, you probably be controversial.
Much higher percentage fueling the CFO.
So any color on the category mix during the think that states will be helpful. And then just on.
Related to that is the consumer behavior I guess given.
The macro slowdown just not sure if you have SB rainfalls have seen Amy Chang.
the macro slowdown, just not sure if you have experience or have seen any change of the consumer behavior during these single phase in terms of their demand and the category preference. Thank you.
<unk> of the consumer behavior I'm doing this thing does Dave in terms of Canada and category preference. Thank you.
Okay. So actually three questions. So Alicia so let me take the first two questions and if the macro question to Fedex.
Okay, so, actually, there's three questions, so Alicia, so let me take the first two questions and leave the Marco question to Philip, so.
Fedex so.
About the Dada Zhipei, the Dada Logistics SaaS product, it's a pure SaaS platform which can be provided to all those third-party service merchants or those providers, service providers. So up to now, it was implemented or used by like 5,000 stores. So right now, it's...
About the.
Doug.
You'll pay that that acts as a logistics hub product, it's a pure SaaS platform, which can be provided to all those third party.
<unk> service merchants.
Are those providers service providers so.
Now it was implemented.
Youth buying back 5000.
5000 stores, so right now.
and you know I think the revenue contribution to our like
I think the revenue contributing to our Leica 6 billion RMB revenue per year is still very.
Minimum, but it will further expand our.
minimum, but it will further expand our service scope to be fueled by data. So we don't need to physically fuel the orders by our data writers. We can even provide a software SaaS product to those merchants. So we are right now in close review about the development of the logistic SaaS product. So.
Our service scope.
Two to be like a few of the or a few of the buy data. So we don't need to call. If a few of the orders by our underwriters, we can even provide a software stack product to those merchants.
So we are right now in close like review about the development after the largest SaaS paas SaaS product so.
the Logitech SAS product. So I think.
I think.
Maybe it will be better to further talk about the revenue contribution and.
maybe it will be better to further talk about the revenue contribution and the
Like those expectation.
like those expectations in the next few earnings calls. And also for the single-stake growth for the category mix,
The next few earnings call.
And also for the.
Singles Day.
<unk>.
The.
Singles' day growth.
For the category mix.
You're right, so 3CE product is growing faster than the supermarket categories, but generally right now we think the supermarket categories for the 2011 campaign period is still growing very promising, and that's why our, like the
Youre right. So three C product is growing faster than that.
Supermarket categories, but generally right now.
We think and Sip market categories.
For the double 11 campaign period is still growing very promising and that's why our like the.
granular guidance for Q4 is given.
Revenue guidance for Q2 four is given.
And also we believe that the JD DJ growth rates will be still very fast, which is mainly contributed by the revenues of supermarket category cost supermarket categories monetization, including the online marketing services is.
And also we believe that the JDDJ growth rate will be still very fast, which is mainly contributed by the revenues of the supermarket category, because the supermarket category's monetization, including the online marketing services, is...
is more, much more than the 3C categories. So I don't actually, I don't, you know, I don't look at the detail like the mixed growth rate for the W11 campaign period, but I believe the overall W11 campaign period promotion
Is it more much more than.
So you see.
The categories, So I don't actually Idaho.
I don't look at that detailed.
Growth rates for the top 11 campaign period, but I believe the overall.
W. Denman campaign period promotion.
Results should be very satisfied.
results should be very satisfied to.
Two.
and you know all those merchants. For example, like for even for like Walmart, so Walmart the annual campaign usually annual campaign peak is their August 8th promotion day but for the singles day, the singles day like the November 11th is like a still growing by 25% compared to their August 8th and their their
All of those machines for example, like for even for like Walmart. So Walmart the annual campaign, usually annual campaign Pks there.
The eight promotion day, but for the singles day.
<unk>.
November you had evidence is this like a still growing by 25% compared to the August eight.
Yeah.
We are setting our supermarket category products.
Right and in terms of the consumer.
Right, and in terms of the consumer behavior and the market situation...
<unk> in the market.
Situations.
There's an interesting small accelerator, I would say, for the single-stay is that right before single-stay, the government encourages consumers to stock up a little bit at home. You might have seen in the news. So I think this also helps to boost the sales a little bit.
<unk>.
Interesting small.
Accelerator OSA for the Single's day is right before the end of day, the government encourage consumers to us.
Stock up a little bit at home you might have seen on that.
The news so I think this also help to boost ourselves a little bit.
But overall I think if you look at the Big picture.
But overall, I think if you look at the big picture, we're seeing two things happening.
We're seeing two things happening one thing is the consumers are now more and more used to on demand to retail. So historically they may buy restaurant food.
One thing is the consumers are now more and more used to on-demand retail.
So historically, they may buy restaurant food and get delivered on demand. But now, a large number of consumers are now used to buy everything on demand. I think this is a very important trend we're actually seeing.
Erika delivers on demands for now.
A large number of consumers now use to buy everything on demand I think this is a very.
Important trends, we absolutely see it.
At the same time, we're also seeing, mostly from this year, that more and more vertical retailers are now willing, or more than willing, to work with SIRS and get
Hi will.
Also see.
Mostly from this year that more of the more vertical.
Dollars are now willing or more than willing to work with.
Got it listed for example, like a smartphone consumer electronics and also like.
For example, like a smartphone consumer electronics, and also like a personal care cosmetics, and like a.
Personal care cosmetics.
And like our currency.
or like pet supplies or like a liquid and alcohol so all those kind of vertical specialty stores
Or like a pet supplies or lack of liquidity in the alcohol. So all of those kinds of verticals specialty stores.
they didn't work with like a online platform before, but especially this year, we're seeing a strong trend that the vertical retailers are now very much willing to work with us. And I think this.
Okay.
They use they didnt work with us.
Online platform before but especially this year, we're seeing a strong trend that the vertical retailers are now very much willing to work with <unk> and <unk>.
This produced a very good situation, while consumers are more used to on demand at retail and it gets delivered instead of going offline to visit the stores.
creates a very good situation. While consumers are more used to on-demand retail and get delivered instead of going offline to visit stores, at the same time, all the stores, the quality supplies are now getting online. So we're happy to see this combination.
Same times or the stores the quality suppliers are now getting online. So we're happy to see this competition.
Great. Thank you.
Your next question comes from Etch Leash of Credit Suisse. Please ask your question.
Your next question comes from Ashley Xu of Credit Suisse, please ask your question.
Thank you management for taking my question I actually wanted to follow up on our nearby entry point.
Thanks, management, for taking my question. I actually want to follow up on our nearby entry point. Understand that it has been gradually rolling out and still under a test stage, but could management share more color on the recent progress and our plan or target by year end? At the same time, for those rolled out regions, what's the effectiveness we have seen in attracting more users?
I understand that it has been gradually rolling out and still on the test stage.
Management share more color on the recent progress in our plan or target by year end.
At the same time flip those regions.
Regions.
What's the effect, we have seen in attacking more users.
and for our full queue guidance, does that reflect any contribution from this new entry point? Thank you.
And for our <unk> guidance does that reflect any contribution from this new entry points. Thank you.
Yes, so give you some.
Yeah, so I'll give you some background and color about this Nearby. And perhaps backhand will help anything there. So first of all, the Nearby channel is now available for access. So in most of the Tier 1 and Tier 2 cities, and some of the lower tier cities.
Some background.
And the color about this nearby and perhaps that hand.
We will have anything there so first of all the nearby chatter.
Channel.
This now available for access.
So most of the tier one and tier two cities.
Some of the lower tier cities.
So we're happy to see that since June , when the nearby
So.
Happy to see that since June.
One the nearby channel launch, we're happy to see.
We're happy to see the technology and the engineering behind it. As you can imagine, there are a lot of engineering work behind the scenes, because literally we are transforming the JD app from a B2C app and now to a location-based app.
The technology.
The engineering behind this.
Imagine there are a lot of engineering work behind the scene.
Literally we are transforming.
JD App from <unk> and now <unk>.
Location based App and there are a lot of our technology needs to be done and we are.
And there are a lot of technology that needs to be done, and we're working very closely around the clock with the JD technology team to make that happen.
We're looking very closely around the cost with the J D technology team to make that happen.
With that happening we are happy to rollout the service too.
So with that happening, we're happy to roll out the service to most of the tier one, tier two cities.
Most of the tier one tier two cities at the same time, we are keep enriching the product supplies and the store supplies too.
At the same time, we keep enriching the product supplies and the store supplies to the consumers and expanding our geographic coverage.
The consumers and expanding our geographic coverage. So every week, we are seeing more retailers signed up.
So like every week, we are seeing more retailers sign up and get listed on the nearby channels. So I think that's the fundamental, because you need to have quality supplies and broad coverage. At the same time.
The list is the.
Nearby channels.
No.
I think thats, the fundamental because you need to have quality suppliers and the broader coverage.
Same time.
We're also happy to see the operation matrix around nearby channels has continued to improve.
We're also happy to see.
Accretion.
Matrix.
Around nearby channels has continued to improve.
Ever since launch so.
everything's launched. So going forward, we plan to be focusing on the key cities, the top cities, to improving the mentality of consumers and to build up the shop now brands among.
Going forward, we plan to be focusing on the.
Key cities the top cities too.
Improving the.
Mentality.
Consumers and to build up.
The shopping our brands Amman.
Sure.
consumers and also to improve the penetration into the JD user base. At the same time, to improve the order conversion rates, conversion levels of this nearby channel. I think this is certainly significant, very significant.
Consumers and also to improve the penetration into the JV user base.
Some time to improve the order conversion.
Res commercial levels.
Of this nearby channel. So I think this is certainly a significant very significant.
Step and steel just with like a six months, so far or five months. So far. So we are still seeing this channel as a very early stage and we have a very looking forward to growth and to expand it.
step, and still just with like six months so far, or five months so far, so we're still seeing this channel at a very early stage, and we're very looking forward to grow this and to expand it in the future.
In the future.
And also in the <unk> guidance, we are very prudent.
And also, in the 4Q guidance, we are very prudent in...
Calculating the.
calculating the business coming from the Fujing nearby tap in Q4. So.
And it's coming from the food team tab nearby tab.
In Q4 so.
and more opinions of JD.
And more businesses.
D.
Ecosystem should be coming from the traditional wooden tens or <unk> search results in Q4, because it's a more mature you are mature.
ecosystem should be coming from the traditional, those Woojin Kenzo, or like the search results in Q4, because it's a more mature product. And for Fujin Tab still, I think, like Felix said, it takes a few times to just further improve for the product.
And therefore, our footing tap Stuart I think luxury said it takes a few.
Few time to do that further.
No it's to improve for the product.
in this all those merchants and build up the
Unless in this all those merchants and.
Build up.
Consumer mind for nearby shopping.
consumer mind for the nearby shopping.
Yes.
Thank you.
Yeah.
Your next question comes from Rachel <unk> of UBS. Please ask your question.
Your next question comes from Ray Shung of UBS. Please ask your question. Hi.
Hi, Good morning management. Thank you for taking my questions.
First I want to get an update on the geographical coverage expansion could management share your latest update of J D. P. J in terms of further expanding the geographical coverage. This quarter and also do we have a target for the number of cities and counties. We covered next year.
First, I want to get an update on the geographical coverage extension. Could management share your latest update of JDCJ in terms of further expanding the geographical coverage this quarter? And also, do we have a target for the number of cities and counties we cover next year? If there is a GMV contribution from the lower-tier market that you can share, that would be appreciated.
If there is any contribution from the lower tier market that you can share that would be appreciated.
And second, I just want to follow up on the point that we mentioned as the non-supermarket categories continue to grow their GMB contribution. I was wondering could we get an update on the different commission level across different product categories and how will that makeshift affect the future trend of our commission level? Thank you.
And second.
I just wanted to follow up on the point.
That we mentioned as the non supermarket categories continue to grow their GMP contribution.
I was wondering could we get an update on the different commercial level across different product categories, and how will that mix shift affect the future trend of our commission level. Thank you.
Okay.
OK, I will give you my view and see if I have anything to add. So first of all, in Q3, the GMV from our lower tier cities, so GDDJ, grew by about 100%.
Have you.
My view and achieve that have anything to add so first of all in Q3, the <unk> from our lower tier cities on JD DTA.
Grew by about 100% and so far we have covers.
And so far, we have covered over 1,700 cities and counties. And we'll continue to penetrate into the lower tier cities.
Over 107.
1700 cities and countries and we will continue to penetrate into the lower tier cities.
<unk>.
And for now, we'll be focusing on especially the category development and expansion in the existing cities, that the cities we have already opened.
For now we will be focusing on.
Especially the category development and expansion in the existing cities. The cities we have already opened.
So.
Um, so, and, uh, so that's about the geographic coverage and in terms of the.
So that's about the geographic coverage and in terms of the.
In terms of the commissions.
In terms of the commissions, I think.
Thank you.
Different categories have a different commission rate. But different categories, we are improving the commissions and improving the monetization.
Different categories have.
Pat.
Difference commission rates up.
Different categories, we are improving.
The commissions and improving the monetization.
From each.
from each category. So with our stronger collaboration with the brands, and also we are generating more value to the retailers. So that's why we can improve the emissions in different categories. That's independent from the mix of segments.
Category, so with our.
Stronger collaboration with the brands and also we are generating more value to the retailers.
So that's why we can.
We can improve the.
Emissions in different categories.
That's the independent from the mix of.
Settlements.
No.
Yeah, I'll see if I can have anything to add. Yeah, so for supermarket categories, usually, you know, we have commissioning fees. And also, especially for FMCG products, we have marketing dollars from.
Yes.
That have anything to add.
Yes, so for supermarket categories usually.
We have commissions fees and also especially for.
FMC products, we have.
Marketing.
From.
And those.
and those brand owners and but in the same time we are also given a lot of subsidies to consumers because they are
Brand owners and but at the same time.
We are also given lots of subsidies to consumers costly.
Sure.
They should be more frequent to purchase FMCG products instead of other non-supermarket categories like 3C products, home appliances.
There should be more.
<unk> FMC Jeep products instead of other non supermarket categories Vaca <unk> products home appliances.
So.
for all of those other newer categories, including smartphones, home appliances, pet products. So their money attaching rate,
For all of those other newer categories, including smartphones home appliances.
The paas products so there.
Manufacturing right.
It's lower than the market overall manufacturing right, but you don't need to give so much incentive to them. So this will.
It's lower than the supermarket overall manufacturing rate, but you don't need to give so much incentive to them. So this will give us the positive direct margin for each order generated for those non-supermarket categories.
Give us like the positive direct margin for each order generated afford those.
Non supermarket category products.
So the contribution from those non-supermarket categories will also contribute to the overall margin improvement of the platform. But we still emphasize that the FMCG products is the most important category of the platform. So we still need to give some incentives to...
No.
The contribution from those non supermarket categories will also contribute to the overall.
<unk> improvement of the platform, but we still.
Emphasizes that the FMC products is the.
Most important the category of the platform. So we still need to give some incentive to.
and subsidies to consumers to retain them. So that's why up to this moment, we still have a slightly negative direct margin for the platform because our investment in the FMCG and the supermarket categories.
Subsidies to consumers too.
To retain and so that's why.
Up to this moment, we SBU had slightly negative margin for the platform wide platform because ours.
Investment in the <unk> in the soup market categories.
So in the long run we believe that.
So in the long run, we believe that we can still improve our overall monetizing rate while significantly improving the direct margin level because we continue to improve our incentive ratio by decreasing the incentives given to FMCG and supermarket categories while we don't give so many incentives to other non-supermarket categories.
We can still improve our overall manufacturing rate.
Wow.
Efficiently improving.
The direct margin level costs, we continue to improve our.
Incentive ratio by decrease the incentives given to F&B CGM supermarket categories, while we don't give so many incentives to other non supermarket categories.
So through the mixed contribution, we believe that our overall direct margin is on track to break even next year.
Hi.
The mix contribution would leave that.
Our overall.
Derek to margin is.
Is on track to breakeven.
Next year.
For the whole year base.
Okay.
Thank you we still got time for one last question and our final question comes from Robyn deal of Teva. Please ask your question.
Thank you. We've still got time for one last question and our final question comes from Robin Leong of Diver. Please ask your question.
Hi management. Thanks for taking my question actually is just a follow up question.
Hi, management, thanks for taking my question. Actually, it's just a follow-up question. Looking into 2022, on one hand, I understand that we will realize some cost savings from user acquisition in the JD ecosystem. On the other hand, if user contribution starts to kick in, is it possible that JDDJ will step up its spending again if the ROI is strong and is further improving? Like what you mentioned, are we going to actually increase the subsidies in those FMCG categories? If management could share some of our strategy within the JD ecosystem, that would be great. Thank you.
Into 2022 on one hand.
I understand that we will realize some cost savings from user acquisition in the <unk> ecosystem on the other hand, if user contribution starts to kick in is it possible that J D. D. J will step up spending again, if the ROI is strong and his staff for improving like what you mentioned are we going to.
Actually increase the subsidies in dose like FMC Gees categories, if management could share some of our strategy within the JD ecosystem that would be great. Thank you.
Okay. So first of ore.
As you said, we are happy to see.
We're getting strong support from <unk> in terms of user acquisition this socially housewares.
Reduce the cost for user acquisition.
for user acquisition. And still, we are in the early stage of this journal and of this journey. And we are.
But still we are in the early stage of this.
Gerardo.
Of this journey and we are.
Our goal is to reach the 50% of the penetration that we have.
Our goal is to reach like the 50% of the penetration. We are now at a single digits. So there's a long way to go. And in terms of the subsidies, I think overall, the trend and our goal is to improve the efficiencies and not
Now as a single digits so.
There's a long way to go and in terms of the subsidies.
I think overall that.
Trend and our goal is to improve the efficiencies.
And not to increase the subsidies.
As we explained earlier, so we are getting more and more marketing dollars from the brands and also the resources from the retailers, so we are combining all these and improve the overall efficiency.
As we explained earlier so we are getting.
More and more marketing.
From a brand and also the.
Resources from the retailers. So we are combining all these and improve the overall efficiencies instead of increasing them.
instead of increasing them. And we're happy to see the ROI of our incentives has continued to grow. I think that's very important for all parties.
People see the ROI of our <unk>.
<unk> has continued to grow I think that's very important for all parties and we will continue that way.
And we will continue that way. And also for the general competitive landscape, as we explained earlier, we're happy to see that most of the players are now more rational. And
And also for the general.
Competitive landscape as we planned earlier, we're happy to see that.
Most of the players are now more rationale.
And.
Not like.
not burning too much of the subsidies as they used to be. So that's why, overall, I think we are optimistic about both growth and probability going forward. Thank you.
Burning too much of the subsidies as they used to be so that's why overall I think we are.
Mr about both growth and profitability.
Profitability going forward.
Okay.
Great. Thanks.
I would now like to hand, the conference back to Caroline Please continue.
Thank you operator in closing on behalf does management team wed like to thank you for your participation on today's call. If you require any further information feel free to reach out to us directly. Thank you for joining US today. This concludes the call.
Thank you, operator. In closing, on behalf of Stata's management team, we'd like to thank you for your participation on today's call. If you require any further information, feel free to reach out to us directly. Thank you for joining us today. This concludes the call.
This concludes today's conference call. Thank you for participating you may all disconnect.
This concludes today's conference call. Thank you for participating. You may all disconnect.