JD.com and Dada Group Jointly Publish White Paper, "Chinese On-Demand Consumption Trends Report 2021"

SHANGHAI,June 10,2021 -- JD.com,China's leading technology driven e-commerce company and Dada Group ("Dada"),a leading platform of local on-demand retail and delivery in China,jointly published a white paper todaytitled,"Chinese On-demand Consumption Trends Report 2021." Featuring proprietary insights into the latest on-demand economy trends in China,the report highlights the key growth opportunities and near-term challenges in China's rapidly growing on-demand and hyperlocal e-commerce industry.

On Mar. 22,Dada announced that JD.com will increase its stake to 51% by investing a total of US $800 million in newly issued ordinary shares. Leveraging JD's devoted strategic support,Dada will better fulfil demands for local on-demand retail and its delivery on JD,covering various scenarios and categories,and expand the omni-channel cooperation with JD.

The report includes detailed data on consumer demand trends and market penetration and growth rates based on the billions of orders fulfilled by JDDJ,Dada's on-demand retail platform,and Dada Now. JDDJ,a partnership between Dada Group and JD.com,is one of China's largest integrated digital solutions providers bringing traditionally offline retailers,such as supermarkets,flower shops,beauty brands,and other local stores,online. Dada Now is China's leading local on-demand crowdsourcing delivery platform covering more than 2,700 cities and counties,providing customers with one-hour delivery for groceries,cosmetics,electronics,smartphones,medicines and more.

"The unprecedented growth of China's on-demand economy in recent years,particularly its accelerated momentum through COVID,is revolutionizing consumer behaviour across China." said Huijian He,Vice President of Dada Group. "The rise of on-demand,hyperlocal one-hour delivery of goods,has transformed the retail industry and increased consumers' expectations for a best-in-class shopping experience. With significant consumer demand in first- and second-tier cities,and large and rapidly growing demand in lower-tier cities,retailers,on-demand retail platforms and delivery services are increasingly competing for higher speed,flexibility and convenience across the on-demand economy. With millions of riders across thousands of cities and regions in China,Dada Group is actively working to meet this demand and we are excited to continue our growth as we expand to new geographies and enter new partnerships with stores,retailers and brands."

Hui Liu,Chief Data Officer at the JD Big Data Research Institute,commented,"We are excited to issue this white paper,which provides our first-hand data-driven observations and insights based on the billions of orders fulfilled each year by JDDJ and Dada Now. We look forward to leveraging this data to continue to drive innovation across our platform as we deliver the speed,flexibility and convenience that consumers are increasingly demanding and realize the numerous growth opportunities in China's on-demand economy. JD.com and Dada Group are uniquely positioned to benefit from this recent paradigm shift in the commercial and retail landscape in China."

The white paper's key findings include:

On-demand consumption is here to stay

The onset of the coronavirus pandemic and stay-at-home mandates drove widespread consumer adoption of technology solutions to facilitate the on-demand delivery for daily household products. While fresh food is,by far,the largest segment of the on-demand delivery,accounting for 70% of daily consumption according to a user survey by JDDJ,other areas such as electronics,beauty products,and clothes have increased dramatically in 2021,with year-on-year growth rates of:

Dairy: +120%

Personal Hygiene: +114%

Snacks: 91%

Maternity and Baby care: 90%

Millennials are still the most prevalent consumer group,making up 50% of the on-demand economy,with female consumers born after 1980 as the most dominant consumers,representing 67% of the on-demand market. That said,the market is attracting an increasingly diverse group of consumers,by both age and region. The white paper details how the number of male consumers has jumped by to 33% in 2021,up from 25% in 2018,while the proportion of middle-aged and elderly users (40+ years old) has increased to 28% in two years,up from 22% in 2019.

In addition to the significant expansion in customer demographics,on-demand consumption is rapidly expanding to new markets,including increased penetration into lower-tier cities,particularly in the Midwestern region of China,where the local residents demand one-hour hyperlocal e-commerce delivery. In the fourth quarter of 2020,gross merchandise value (GMV) of JDDJ in lower-tier cities soared 150% year-on-year. In 2020 alone,the proportion of users in lower-tier cities increased by 26%. According to JDDJ's sales from the 415(April 15) Anniversary Shopping Festival,which covered more than 1,500 cities and counties across China,90% of merchants that joined JDDJ for over a year saw sales double year-on-year.

The on-demand market continues to grow exponentially across China. The top three regions in terms of on-demand consumption orders are South,North and Southwest China,accounting for nearly 70% of all orders. Orders in southwest China accounted for nearly 20%,overtaking East China to rank third. Among them,Sichuan is a major province in terms of on-demand consumption,with orders accounting for nearly 10%.

The rise of out-of-home and out-of-hour on-demand spending

Driven by easing lockdowns and an increasing focus on connecting people with a wider array of products,post-pandemic on-demand consumption in China has experienced a shift from households (74%) to workplaces (8%) and educational institutions (3%),which is further extending to recreational venues,including fairgrounds,tourist hotspots and parks.

There is also significant demand for 24/7 on-demand services,and those businesses serving late-night (12 pm – 2 am) customers are reaping the benefits from a new wave of customers who want reliable delivery service outside of traditional business hours.

Omnichannel retailing on the next level

China is leading the way in omnichannel retailing. A new wave of transformational change of omnichannel retailing is underway,fuelled by the integration between traditional e-commerce,offline retailers and on-demand retail platforms to meet the customer demands for a more diversified shopping experience.

In the era of hyperlocal e-commerce,one-hour delivery has become the new normal and it is quickly emerging as a major channel for supermarkets and grocery chains to win business. Leveraging the highly efficient logistics networks of on-demand retail platforms,a growing number of offline retailers and brand owners are cooperating closely with on-demand platforms like JDDJ and Dada Now to establish delivery channels for their customers,while benefiting from their enormous online traffic pool to increase foot traffic in brick-and-mortar stores.

On-demand Services

Service consumption in China is steadily increasing and on-demand retail platforms are partnering with brick-and-mortar stores to offer consumers value-added on-demand services. JDDJ is the first platform in the industry to create a nationwide credible delivery service,providing delivery services for high-value orders. Many on-demand platforms have started bringing mobile phone trade-in services to the customers' doorstep,saving the time and effort of visiting a retail store.

"Minutes-level" delivery is on its way

The digital neighborhood stores will give birth to so-called "minute-level" delivery. This allows users to choose a nearby store to place an order at based on their GPS location,after which the delivery rider will pick up and deliver the goods within the user's neighborhood. The entire hyperlocal e-commerce process is completed within a few short minutes.

Dada is pioneering one-hour delivery services in China,available to consumers in more than 2,700 cities and counties across the country. With its extensive logistics networks and delivery infrastructure,Dada works in tandem with JDDJ to shorten delivery times. As a result of this joint effort,the average delivery time of on-demand orders has been reduced by 17% compared with 2019,with the fastest deliveries taking less than 10 minutes.

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