Dada Group’s Business Model Analysis — The Ultimate Winner in Last-Mile E-Commerce

Instant retail differs from food delivery, and also differs from traditional logistics such as express delivery and warehouse-based distribution. Put simply, it refers to on-demand delivery services tailored for supermarket and retail businesses—i.e., the integration of ‘retail + delivery.’ Unlike e-commerce platforms’ ‘next-day delivery,’ instant retail delivers within one hour—or even half an hour—akin to food delivery platforms. As smartphone penetration and mobile payment adoption continue rising, consumer expectations evolve accordingly: online shopping and rapid home delivery for daily necessities are now commonplace. To meet this demand, retailers have experienced explosive growth in their need for internet channels and highly efficient digital solutions. Dada’s core mission is to bridge the gap between consumers’ and retailers’ needs—building a platform that connects both sides and generates revenue through this linkage. Customer Base: Dada’s primary customers are end-users seeking instant retail services, predominantly young consumers. As a platform committed to delivering everything consumers need, its customer base on the consumer (C) side is broad and inclusive. On the business (B) side—i.e., retailers—Dada prefers strategic partnerships with large national supermarket chains and enterprises possessing strong, stable, long-term delivery capacity. That said, Dada does not exclude small- and medium-sized merchants or individual senders. The company delivers services via two platforms: DadaNow (serving B-end clients) and JD Daojia (serving C-end users). By ensuring excellent user experience, Dada retains existing users and attracts new ones. Ultimately, the relationship established with users—both B-end and C-end—is foundational to Dada’s existence and ongoing operations; it is precisely through these relationships that the company earns revenue. 03 Operational Model Marketing Model [Dada’s innovative marketing model centers on deep strategic alignment with major clients to drive user acquisition and create a closed-loop marketing ecosystem—simultaneously strengthening both supply and demand sides: On the demand side, Dada is deeply integrated with JD.com, leveraging JD’s massive user base for traffic acquisition and user onboarding, supplemented by user subsidies and other incentives. On the supply side, Dada has forged robust strategic alliances with leading supermarket chains—including Walmart, Yonghui, and CR Vanguard—enabling sustained expansion of its user base through these partnerships.] Dada’s principal marketing approaches include: 1. Strategic partnership and deep client integration: Dada’s business benefits significantly from collaborations with key strategic investors—some of whom are also its major clients—such as JD.com and Walmart. Notably, JD.com and Walmart rank as Dada’s first- and second-largest clients, respectively. 2. Channel下沉 (penetration into lower-tier cities) and localization with regional supermarkets: Dada has aggressively expanded into third-, fourth-, fifth-, and sixth-tier cities. As of late September 2019, JD Daojia had covered 133 cities, over two-thirds of which were tier-three or lower. Following its merger with Dada, JD Daojia further deepened channel penetration and accelerated deployment in tier-three and tier-four cities. Concurrently, JD Daojia has placed greater emphasis on regional supermarket leaders, helping brands rapidly expand into lower-tier markets. 3. Consumer subsidies and JD.com’s traffic support: Dada employs standard internet-product marketing tactics—but two strategies deserve special attention: first, direct consumer subsidies; second, traffic support enabled by its strategic partnership with JD.com.

Richard Liu Takes Over Billions-Worth of Dada Shares

Richard Liu and JD.com have substantially increased their stake in Dada Group. According to an announcement dated September 17, JD.com fully acquired Walmart’s entire equity stake in Dada, raising its ownership to 63.2%. As of the end of March, Walmart held a 9% stake in Dada—valued at approximately RMB 216 million based on current market capitalization. Walmart stated in its response to 21CBR: “This decision allows us to better focus on China’s robust growth… reallocating assets toward other priority initiatives.” It added that Walmart will maintain its cooperative relationship with Dada. “Back when JD Daojia entered the instant retail O2O space, it was virtually the sole dominant player. However, the rise of competing platforms—such as Meituan Instant Delivery—has placed significant pressure on JD Daojia,” noted Zhuang Shuai, founder of Bailian Consulting, in an interview with reporters. With this change in shareholding structure, Richard Liu’s control over Dada has intensified further—and his strategic push into instant retail and delivery services has accelerated accordingly. 1. Strengthening Control Acquiring Walmart’s Dada shares aligns with Richard Liu’s broader strategy to double down on instant retail. Prior to this transaction, JD.com had already reinforced its control over Dada through successive equity increases and executive reshuffles. In 2022, JD.com invested USD 546 million in cash plus strategic resources to increase its stake in Dada to 52%, becoming its largest shareholder. Subsequently, Dada’s founding team—including co-founders Kaiqi Kuai and Jun Yang—stepped down one after another, and executives from JD.com assumed full leadership. At the critical position of Board Chairman, JD.com appointed first Sun Lijun—CEO of JD Retail—and later Shan Su—JD Group’s Chief Financial Officer. Dada operates two platforms: Dada Express and JD Daojia—previously managed relatively independently. At the beginning of this year, Richard Liu identified three must-win battles for 2024—one being instant retail. In February, ‘JD Hour-Delivery’ introduced free delivery for orders exceeding RMB 29 to capture market share. To support this strategy, Dada was further integrated into JD Group’s broader ecosystem. In May, Dada upgraded its instant retail brands—‘JD Hour-Delivery’ and ‘JD Daojia’—into a unified brand named ‘JD Second-Delivery,’ prominently featured on the homepage of the JD App, receiving prioritized traffic allocation and exposure. Three months later, Dada Express was renamed ‘Dada Second-Delivery.’ Under Richard Liu’s restructuring, JD Daojia shifted from independent development to serving as the operational backbone for JD’s retail business—achieving remarkable growth. In Q2, both the number of high-frequency users and the volume of online orders for ‘Second-Delivery’ on the JD App more than doubled year-on-year. However, this came at a cost: due to the free-delivery initiative, JD Second-Delivery’s revenue in Q2 totaled RMB 912.4 million—a decline of over 40% year-on-year. This drag contributed to Dada’s overall revenue falling 9.5% to RMB 2.35 billion—the first revenue decline in five years. 2. Benchmarking Against Meituan Instant Delivery Per Richard Liu’s vision, Dada must shoulder JD’s instant retail ambitions—a formidable challenge. In August, Dada appointed Qing Guo as its new Board Chairman. Guo joined JD.com in April as Group Advisor, having previously served on Meituan’s highest decision-making body—the S-team. Qing Guo | Source: Internet During an internal closed-door meeting, Dada was explicitly instructed to benchmark itself against Meituan Instant Delivery—the instant retail platform under Meituan. Estimates suggest Meituan Instant Delivery achieved GTV exceeding RMB 200 billion in 2023—roughly 2.5 times JD Daojia’s figure. Dada initially focused on building an O2O platform for supermarket and pharmacy retail, concentrating on categories such as pharmaceuticals, electronics, and groceries. Later, it expanded into a full-category offering.

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