China Food

With Nestle, Yili and Pepsi all holding Jingdong home, the share price of the parent company has risen by more than 250%

In the post epidemic period, the real-time retail platform occupying a new air outlet is not only favored by major food FMCG brands, but also “Dancing” in the capital market.

After the first wave of stock price rise in the third quarter of this year announced on Friday, the share price of dada group, the local real-time retail platform, hit a new high since its listing for three days in a row. By the time of publication, the market value of dada group was nearly 12.7 billion US dollars.

In addition to Jingdong home, the group also has a local instant delivery platform, dada express delivery. Relying on dada express delivery and retail partners, Jingdong home provides customers with one hour delivery service including supermarket convenience, fresh fruits and vegetables, digital 3C, medicine and health, etc.; dada express focuses on providing instant delivery service for various businesses and individual users through crowdsourcing transportation network.

Data shows that dada achieved a total revenue of 1.302 billion yuan in the third quarter, with a year-on-year growth of 85.5%; the revenue of Jingdong home platform, one of its core businesses, increased by 91% to 583 million yuan. Thanks to the increase in customer price and number of active users, Jingdong home’s total transaction volume (Gmv) increased by 90.7% compared with the same period last year.  

Kuai Jiaqi, founder, chairman and CEO of dada group

Kuai Jiaqi, founder, chairman of the board of directors and CEO of dada group, once said that as a real-time retail platform connecting online and offline, brand merchants and retailers, Jingdong home will fully invest and utilize its own resources and experience in global marketing, category operation and supply chain capacity building, so as to comprehensively help brand companies realize digital marketing and help brand companies build a platform based on Digital user management system. He also revealed in the third quarter analyst meeting that Jingdong home has deepened strategic cooperation with a number of well-known brand companies, and advertising marketing revenue has increased by 400% year-on-year.

Chen Zhaoming, chief financial officer of dada group, said that based on the rapid growth momentum, the revenue of Jingdong home platform is expected to achieve a year-on-year growth of 100% in the second half of the year.  

Epidemic situation creates new air outlet

In February this year, the omni channel Committee of China Chain Store Association released an enterprise survey results, which showed that under the influence of the epidemic situation, the home business of offline enterprises generally increased by 80% – 200%, and the online business of some enterprises during the period from January 25 to February 8 increased more than three times compared with the same period last year.

For many fast-moving food and beverage brands, “home” and o2o channels have become “powerful weapons” to break the dilemma of Limited sales channels.

On the one hand, home life during the outbreak of the epidemic has greatly reduced the consumption of consumers in the outdoors, and the limited transportation channels have also seriously affected the offline retail channels, thus affecting the sales of many food and beverage enterprises in traditional channels, and a large amount of demand has been transferred to the line rapidly. On the other hand, consumers’ demand for fast delivery of food and beverage as living materials has also greatly increased, and the demand for close distribution around the radius of home life has also increased significantly.

However, for some brands whose original core business inclines to traditional channels such as online and offline, it has become a big challenge to make up for the “homework” of all online channels in the short term. In this trend, the instant retail platform represented by Jingdong home has undoubtedly become the first choice of many brands.

According to the company’s prospectus released in May this year, dada’s net income soared to 1.099 billion yuan in the first quarter of this year, close to the annual net income level of 2017.

In order to help brand merchants obtain traffic and deal in massive online information, Jingdong home launched a number of marketing IP, such as “super brand day”, “super CP day”, “supermarket big brand season”. It is understood that the platform has also opened up a new way of o2o live broadcast, which is “live shopping in one hour”. It has opened up the whole shopping consumption chain of watching live broadcast, placing orders online and receiving goods within one hour. It has brought a new sales growth engine and a new marketing position for the brand o2o channel.

According to the iResearch consulting report, at present, JD home ranks first in the market share of the super o2o platform of local retailers in China, increasing from 21% in 2019 to 24% in the third quarter.

The layout of FMCG brands

After noticing the above new trends, many brands quickly adjusted their strategies to increase the distribution of “home” and o2o channels.  

In the third and fourth quarter of this year, several international and domestic well-known FMCG brands such as Pepsi, Nestle, Mengniu, Yili, Mars, Kimberly’s, etc. have successively announced the upgrading and deepening of strategic cooperation with dada group.

A group photo of Kuai Jiaqi and the representatives of brand executives

At the bell ringing ceremony of dada group’s landing on NASDAQ on June 5 this year, representatives of Unilever, Yili, Mengniu, Pepsi, Mars Wrigley, Nestle and other first-line FMCG brands at home and abroad also witnessed this moment.

Kuai Jiaqi also revealed at the analyst meeting that dozens of well-known brands such as Unilever, P & G and PepsiCo have joined the project of “live shopping in one hour” of Jingdong home.

As one of the first brands to cooperate with Jingdong home, Mars arrow signed a strategic cooperation agreement with Jingdong home platform in January this year, and also announced the cooperation vision for the next three years, including in-depth cooperation focusing on scene building, new product construction, member operation and data cooperation, so as to jointly improve the sales growth of leisure food categories in Jingdong home platform.

Data shows that in the first half of this year, Mars Wrigley achieved a three-digit growth in Jingdong home platform. During the Expo, Ma’s Wrigley disclosed to the snacks agency that its sales volume on Jingdong home platform doubled from January to August this year, and the sales volume of the brand in Jingdong home leisure food category ranked first.

Yili and Yihai Jiali, who first tried the new game of “double brand president group live delivery with goods” for the first time in September this year, also gained a lot. According to reports, on September 5, the special live broadcast of “cream CP” attracted more than 670000 viewers, setting a new high in Jingdong’s home studio. Yili and Yihaijiali’s single day sales volume have more than doubled compared with the previous week, among which Yihaijiali’s one-day sales volume has set a new record on the brand’s Jingdong home platform.


Create new opportunities

Xiaoshidai noticed that in the eyes of many fast food consumption brands, the online consumption habits cultivated during the epidemic period and the explosive growth of channel businesses such as “home” and o2o will become a new development trend in the post epidemic period.

For example, previously, Nestle Group CEO Schneider once said that the biggest change brought about by the epidemic to the food and beverage industry was the transformation of consumption from off home consumption to home consumption. He also believed that nestle had many opportunities to introduce its products and services into the “explosive growth” of new delivery services.

Meiyuan Jixing, managing director of Guangzhou Yiliduo, also talked to the snack food agency not long ago that with the changes in consumption patterns brought about by the epidemic, e-commerce sales channels have gradually become its important customers. Since this year, the company has strengthened the cooperation among o2o platforms and physical stores including Jingdong.

As a matter of fact, for brand merchants, the o2o channels such as Jingdong home are far more than solving the problem of “reaching the last kilometer”, and its digital advantages can also help brand companies to achieve breakthroughs in Omni channel digital management, channel sinking and big data precision marketing.

One example is that the financial report shows that dada Haibo system has been launched in dozens of medium-sized chain supermarkets such as Zhongbai warehousing, Huaguan, Yongwang and bofenglianhua. More than 1500 large and medium-sized chain stores have been applied in the hyperstores, and the membership system has been applied to nearly 35000 retail stores. This important progress also coincides with the brand companies aiming to develop o2o channel.

In addition, with the help of Jingdong home’s rapid coverage of traditional offline channels, brand merchants are able to carry out o2o business in more low-end cities. In addition to gaining new growth momentum, they can also master more sufficient big data of sinking market.

At the same time, with the popularity of new social e-commerce such as live shopping, many brand companies have begun to invest online marketing resources on the o2o platform in order to gain more accurate delivery effect. According to dada’s third quarter financial report, due to the increasing brand promotion activities, the increase of online marketing service revenue also contributed to the growth of Jingdong home platform’s revenue.

It can be predicted that o2o track is expected to usher in an all-round outbreak in the post epidemic period, while the real-time retail platform represented by Jingdong home may just begin.

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