JD.com will invest US$800m in Dada Nexus, the operator of rapid delivery service JD Daojia, in the latest move by the Chinese e-commerce giant to establish a stronghold in the burgeoning community group buying sector ahead of a public listing of its JD Logistics unit in Hong Kong.
The South China Morning Post reports JD.com founder Richard Liu Qiangdong has created a community group buying unit to compete in what has become a key battlefield for China’s internet giants, including Meituan and Pinduoduo.
Alibaba has also embraced the business model that allows residents in a community to buy groceries and other daily essentials in bulk at prices cheaper than what they would pay individually.
Analysts said JD.com is trying to maximise its logistics advantage by doubling down on Dada Nexus, which operates JD Daojia and Dada Now, an on-demand delivery platform.
Fast delivery is a critically important aspect in the community group buying business, and the latest investment will see JD.com’s equity stake in Dada increase to 51 per cent.
With control of Dada, together with JD Logistics – which has 240,000 delivery workers and service crew and more than 800 warehouses across the country – JD.com will be able to speed up its deliveries
“Our increased investment will facilitate the expansion of on-demand retail and delivery, as well as omnichannel collaboration,” said Xu Lei, chief executive of JD Retail.
“This will help further diversify our retail services [and] enable our partners, especially real economy enterprises … to accelerate their intelligent digital transformation to deliver faster, better and richer services for consumers,” he added.
