During the National Day holiday, Dada Group's (DADA.US) share price rose significantly. As of press time, the stock has risen 31.05% in the past five days, with a 10.18% increase on Monday alone, closing at $2.49.

In terms of news, JD.com has taken over Walmart's stake in Dada, including 87.4813 million ordinary shares and 1.875 million American Depositary Shares, further increasing its cumulative shareholding ratio to 63.2%. Based on the current market value, the value of Dada's stake acquired by JD.com is approximately $216 million.

As soon as news of Liu Qiangdong's increased stake was released, Dada Group's share price rose by 21.7% on the same day, even driving JD.com's share price up by 2.36% concurrently.

Industry insiders believe that JD.com's continued increase in its stake in Dada is obviously due to the rapid rise of platforms like Meituan Flash Delivery, putting significant pressure on JD Daojia, the dominant player in the instant retail sector. After this acquisition, Liu Qiangdong may take even more significant actions in the instant retail sector.

Dada, JD.com's "Favorite"

The latest financial report data shows that Dada Group's revenue in the second quarter of 2024 was approximately RMB 2.35 billion, down from both the previous year and the first quarter. During the same period, the company's net profit loss was approximately RMB 286 million. Its two main businesses, JD Express Delivery, generated revenue of RMB 912 million, a year-on-year decrease of 43.6%, while Dada Express Delivery generated revenue of RMB 1.338 billion, a year-on-year increase of 46.6%, primarily due to an increase in the number of same-city delivery service orders.

Among them, Dada Express Delivery has nearly 1.3 million annually active riders and tens of millions of registered riders. Meanwhile, the number of catering chain merchants cooperating with Dada Express Delivery continues to increase. Dada's Chief Financial Officer Mao Jun stated during the second-quarter earnings call, "In the second quarter, the overall revenue from chain merchant businesses increased by nearly 50% year-on-year, with net revenue from catering chain merchants increasing by nearly 80%, and the number of new stores more than doubling year-on-year."

It is worth mentioning that Dada changed its name to "Dada Express Delivery" to clarify its market positioning in instant delivery. This name change not only reflects Dada's pursuit and commitment to speed but also showcases its professionalism and competitiveness in the instant delivery sector.

However, the real test lies in whether its service quality can keep up. Only by truly achieving "instant delivery" can it win the trust and reputation of consumers. Therefore, while enhancing delivery speed, Dada needs to focus on improving service quality and optimizing user experience.

In contrast, JD.com's renewed move clearly implies deeper intentions. Liu Qiangdong has a profound understanding of instant delivery, realizing that whoever controls efficient delivery services will gain a competitive edge in the retail market.

As of the end of March this year, JD.com held a 53.1% stake in Dada, while Walmart held a 9% stake. Since JD.com first invested in Dada in 2015, Liu Qiangdong has continuously increased his stake, gradually expanding his shareholding ratio. From initially holding less than 10% to the current 63.2%, this is not just a change in shareholding but also the result of Liu Qiangdong's careful layout in the instant retail sector.

Walmart's withdrawal, on the other hand, stems from more complex considerations. On the one hand, the challenges facing traditional retail have compelled Walmart to focus on developing core businesses like Sam's Club. On the other hand, as e-commerce infrastructure continues to improve, the value of Walmart's "marriage" with Dada gradually diminishes.

Furthermore, with its keen business acumen, Walmart judged that while this withdrawal might result in short-term losses, the recouped funds would effectively enhance its cash flow, enabling it to better navigate the current economic landscape. Consequently, after weighing the pros and cons, Walmart chose to let go.

Giants Abound: What Are JD.com and Dada's Chances?

In the rapidly changing instant retail market, Dada Group faces multidimensional competition from formidable opponents like Meituan and Ele.me. However, thanks to its deep strategic collaboration with JD.com, Dada Group has established a unique competitive advantage through the integration and optimization of commodity supply chains and the exploration of brand cooperation resources.

Looking back, the powerful union of JD Daojia and Dada in 2016 opened up new development opportunities for both parties. By 2021, with the official launch of "Hourly Shopping," JD.com and Dada's collaboration deepened, allowing consumers to quickly dispatch orders to nearby physical stores within a 3-5 km radius, enjoying the ultimate one-hour delivery service with just a tap.

This innovative measure not only significantly enriched JD.com's instant retail business portfolio but also set a new benchmark for the entire industry.

Image source: Dada Express Delivery's official Weibo account

Earlier this year, Liu Qiangdong, JD.com's CEO, personally laid out a strategy, making instant retail one of the three must-win battles for 2024, underscoring its importance. Data shows that JD Express Delivery has mushroomed across over 2,300 counties, districts, and cities nationwide, collaborating with over 500,000 partner stores to weave a vast instant delivery network.

On the homepage of the JD.com app, the Express Delivery section occupies a prominent position. By lowering delivery thresholds, offering subsidies, coupons, and other initiatives, JD.com has further enhanced user shopping experiences and loyalty. Today, even a RMB 9.90 coffee can enjoy free delivery through JD Express Delivery, demonstrating JD.com's commitment and investment in the instant retail sector.

According to the "Development Report on the Instant Retail Industry (2023)," China's instant retail industry has maintained an average annual growth rate of 50% since 2018. It is projected that by 2026, its annual growth rate will remain high at 47.1%.

The China Chamber of Commerce Industry Research Institute's forecast is even more specific, predicting that China's instant retail market will reach a staggering size of RMB 1,156 billion in 2024. Such a vast market prospect has naturally attracted numerous giants, with platforms like Meituan, JD.com, and Douyin becoming the main players in the instant retail sector.

Among them, Meituan Flash Delivery leads the industry with a 50% market share, thanks to its strong market penetration and brand influence. In 2023, its order volume increased by 40% year-on-year, with transaction value estimated to exceed RMB 200 billion, 2.5 times that of JD Daojia. Facing the strong momentum of Meituan Flash Delivery, Dada Group feels unprecedented pressure.

Under the direction of JD.com's senior management, Dada Group not only continues to delve into traditional strengths like pharmaceuticals and 3C products but also actively expands its full-category delivery services. In the second quarter, the number of new catering merchant stores increased by over 100% year-on-year, demonstrating strong market adaptability and innovation capability.

However, Meituan is not Dada Group's only competitor. The emergence of Douyin as a formidable force cannot be ignored. Since launching its group purchase delivery project and one-hour delivery service last year, Douyin has continuously invested in the instant retail sector. Early this year, it revised several e-commerce rules to enhance consumer shopping experiences. Additionally, Ele.me has established in-depth cooperation with over 500 brands through the "Double Hundred Plan," aiming to secure a share of the instant retail market.

Amidst the fierce competition among giants, can the union of JD.com and Dada Group stand out and seize the initiative in the market? This is undoubtedly a question filled with challenges and opportunities.

In the future, as technology continues to advance and the market deepens, will JD.com and Dada Group join forces to write a new chapter in instant retail? These questions require the test of time and market feedback to provide definitive answers.