Dada-JD Daojia, China’s leading online-to-offline (O2O) e-commerce platform, has announced that it covered 91 cities during this ‘618 Shopping Festival’, China’s major mid-year shopping event onJune 18. Apart from a full coverage of tier 1 and tier 2 cities, the company has brought its 1-hour delivery system to more than 50 third-tier and lower cities, most of which have been newly added since the second half of last year.
Sales for JD Daojia between June 15-18, this year, has doubled over the same period last year. The sales revenue grew even faster in the tier 3-6 cities than average. In some newly added lower-tier cities, JD Daojia’s sales revenue grew by over 100% month on month during the 618 Shopping Festival, putting it in the lead among e-commerce platforms which provide the same type of instant retail services.
As China’s lower-tier cities are becoming richer and more eager to spend, all leading e-commerce giants in China, including Alibaba, JD.com, Suning and Pinduoduo, saw lower-tier markets as a new growth point to tap into.
In these smaller cities, there are more than 600 million active mobile Internet users, but the local e-commerce penetration rate is still below the national average. With rapid urbanization in China, these residents with more disposable income are eager to get higher quality goods and better shopping experience. They are therefore seen as a huge demographic dividend and business opportunity in the industry.
How to quickly win the minds of these consumers presents a real test of various e-commerce platforms’ ability to extend to lower-tier markets.
Merchant base, logistics and traffic are three key advantages for Dada-JD Daojia to outperform its competitors and achieve rapid expansion to lower-tier cities.
Dada-JD Daojia provides 1-hour professional delivery service for more than 74 million users, covering massive goods such as fresh fruits and vegetables, groceries, flowers, baked goods and pharmaceutical products. It has reached in-depth cooperation with more than 300 well-known chain retailers including Walmart, Carrefour, Vanguard, Yonghui supermarket and Watson’s, with a total of over 5,000 merchants of all sorts.
Among them, Walmart, Carrefour, Yonghui supermarket and Vanguard as leading chain retailers in China have a total of more than 4,000 stores in the country. They can help Dada-JD Daojia to quickly access premium store resources after entering new lower-tier cities. For its part, Dada-JD Daojia can help these retailers achieve omni-channel development. In the 618 Shopping Festival, Walmart saw its sales revenue grow 180% over the same period last year.
In addition, leveraging its years of intensive experience in retail business, Dada-JD Daojia has also forged cooperation with many regional chain retailers in smaller cities, which command high awareness and trust among local consumers. Dada-JD Daojia can provide them with a set of mature and fast replicable solutions in their digital transformation and fast online sales growth.
As for the indispensable link of logistics distribution, Dada as the local on-demand logistics platform covers more than 450 major cities across China. Through a crowdsourcing service model, Dada can process tens of millions of orders daily and substantially reduce the distribution pressure on Dada-JD Daojia after its rapid entry into lower-tier cities.
JD.com, one of the major investors of Dada-JD Daojia, has more than 300 million active users. It has long provided Dada-JD Daojia with an independent entry port on its APP homepage, which effectively connects the commodity search results. JD.com recently announced that it would build an all-new platform with WeChat to acquire more users. As JD.com faster expands into smaller cities, it will also bring more traffic resources and opportunities to Dada-JD Daojia.
As it faster extends to lower-tier markets and develops all-category product business, Dada-JD Daojia has become a new popular venue for more brands to make online sales. In this year’s 618 Shopping Festival, dozens of world-class FMCG brands, including Unilever, Procter & Gamble, Mars Wrigley and Pepsi which have closely cooperated with Dada-JDDJ, all achieved an overall sales revenue growth of 120% year on year, outstripping the general growth of the platform.
Philip Kuai, founder and CEO of Dada-JD Daojia remarked, 1-hour delivery is no longer exclusive to citizens in tier-1 cities like Beijing and Shanghai. Real-time retailing is changing the lifestyle of citizens in lower-tier cities across China. In addition to fresh fruits, demand for 1-hour delivery of vegetables, flowers, cosmetics, pharmaceutical products and baby products is also rising fast. The company wants to use data and technology to build a retail ecosystem that blends online and offline channels in a unified way, which is pushing Chinese retail into the future.
“Expanding to small- and medium-sized cities and gaining more lower-tier markets are of strategic value and significance to both Dada-JD Daojia and merchants on the platform. We will make every effort to help the omni-channel development of traditional retailers and gain access to broader markets,” Philip said.