At the recent China FMCG Channel Innovation Conference, New Distribution had the honor of inviting Mr. Jiang Jun, General Manager of Business Growth at JD Daojia. JD Daojia is a leading local instant retail platform under Dada Group, ranking first in the supermarket O2O platform market share, covering over 100,000 offline stores across about 1,400 counties and cities nationwide, and is also one of the platforms with the deepest brand cooperation and most innovative brand marketing in the instant retail sector. Mr. Jiang is responsible for JD Daojia's FMCG, fresh produce, health, and group commercialization growth. In the wave of new retail, as a platform, how does Mr. Jiang think about instant retail as a rapidly growing model, and what is JD Daojia's methodology? New Distribution has compiled and excerpted the highlights of Mr. Jiang's speech at the conference for our readers. Over the years of O2O development, many O2O companies have been eliminated. JD Daojia has come this far through continuous iteration and meticulous work. The content is mainly divided into four parts: 1. What changes are happening in the industry? 2. What is JD Daojia doing? 3. How to empower the growth of retailers and brands. 4. Cooperation cases between JD Daojia and brands. -01- What changes are happening in the industry From national big data, the overall economic growth in 2020 slowed down. Especially during the pandemic, there was a significant negative growth, but due to effective epidemic control, recovery began in the second half of the year. Looking back, the retail sales of consumer goods in 2020 also saw a significant decline in growth, indicating that the consumer goods market was generally sluggish in 2020. Looking at online retail data, the year-on-year growth rate of online retail was relatively less negative and recovered faster. Driven by the pandemic, home delivery business grew rapidly, also driving overall O2O growth. It is estimated that the market will reach 3 trillion yuan in 2021, with huge market space that neither brands nor retailers can ignore. Within JD Daojia, there is an important concept that divides e-commerce into three eras. The first is the long-distance e-commerce era, with a service radius of 100 kilometers, typically using national warehouses with longer delivery times, such as Tmall; The second is the short-distance e-commerce era, with a service radius of less than 100 kilometers, typically using city warehouses with same-day/next-day delivery, such as JD.com; The third is the micro-distance e-commerce era, with a service radius of within 3 kilometers, typically using front warehouses/store models with half-hour/1-hour delivery, such as JD Daojia. In the micro-distance e-commerce era, consumers can buy all nearby goods within 1 hour. It can be said that in the new decade, instant retail in the micro-distance e-commerce era will be the biggest opportunity. -02- What is JD Daojia doing? Many people are curious why the company is called Dada Group and the platform is called JD Daojia. In 2014, the founder established Dada Group, specializing in same-city delivery. In 2016, JD.com spun off JD Daojia and merged it into Dada Group, resulting in two business segments. One is Dada Now, which is same-city delivery. The other is JD Daojia, which is same-city O2O, bringing offline stores and product categories online. Briefly introducing the two businesses, Dada Now is the number one in the instant delivery open platform market share, covering 2,700 districts and counties, with hundreds of thousands of delivery riders, delivering 1.1 billion orders annually, with a peak of over 10 million orders. The delivery categories are rich, including supermarkets, restaurants, fruits and vegetables, flowers, insurance documents, medicine and health, and 2C business, individuals, etc. In addition, with last-mile delivery, Dada's riders help JD Logistics, J&T, and other e-commerce and logistics platforms deliver the last kilometer or last three kilometers. The second business is JD Daojia, which is currently the number one in the local retail supermarket O2O market share. It covers 1,400 provinces, districts, counties, and cities, with over 40 million users, 100,000 active stores, and most partner stores are chain stores, so the overall quality and sales of these 100,000 stores are very good, with annual total sales exceeding 25 billion yuan. The covered store types include supermarkets, fruits, medicine, mobile phones, clothing, etc. Except for Alibaba's ecosystem, almost all top retailers are listed on JD Daojia. For home delivery business, in addition to retailers, another very important partner is brands. Similarly, JD Daojia has established cooperation with the top brands in China. -03- How to empower the growth of retailers and brands First, I want to emphasize: JD Daojia insists on not touching goods, only helping retailers and brands sell goods, improve efficiency, and digitize, but resolutely not touching goods, only selling goods. According to JD Daojia's financial report last year, the overall business grew 107% year-on-year, with sales reaching 25.3 billion yuan, and most brands cooperating with us achieved triple-digit growth. JD Daojia's growth is mainly in four aspects: 1. Aggregating traffic For O2O platforms, the first is to capture traffic; without traffic, it cannot become a platform. Traffic sources are divided into three parts: **First, JD Daojia is an independent platform, with a lot of traffic investment and purchase based on LBS, with very precise supermarket user traffic. **Second, JD.com's high-quality user traffic; the most golden position in the upper right corner of JD.com's mall is JD Daojia, and JD.com's traffic helps in user search, centralized and decentralized places. Third, offline store promoters precisely attract traffic. JD Daojia will digitize its users together with retailers. 100,000 stores may have over 100 million traffic daily, but these users come and go. **For retailers, they don't know who came, what they did, or how to find users. JD Daojia helps them digitize, so they can find users in the future. In this process, stores also become traffic entrances. 2. Market sinking With a lot of traffic acquisition online, there needs to be enough offline stores to receive this traffic, convert it, and provide services to users. So market sinking is something we continuously do. In 2020, JD Daojia added more than 200 districts, counties, and cities. In the fourth quarter, GMV growth in low-tier cities was faster than the platform average, so we will continue to develop more low-tier cities. Because our core cooperation is with hypermarkets, low-tier is not that low; places that can support a hypermarket have a decent economy. Overall, we still focus on hypermarkets to open new markets. 3. Digitalization In recent years, almost all industries have been talking about digitalization, which may be more important for O2O. The core digitalization of O2O is actually doing four things: 1) Product digitalization. Moving all offline products online seems simple but is actually very complex. Maintaining basic information for all products is a huge task. Images, descriptions, attributes, specifications, etc., all involve a massive amount of work. Because JD Daojia cooperates with 100,000 stores, each with its own products, billions of products need to be digitized. Once the product infrastructure is in place, we need to expand categories, manage out-of-stock, and manage categories. All of this starts with digitizing the products themselves; only with basic product attributes can we do everything else. 2) User digitalization. There are many offline users that O2O platforms have not yet reached. For retailers and brands, we haven't helped digitize these potential users, and there are no corresponding tags and data to describe their profiles. 3) Operational digitalization. The efficiency of matching products and users, how to quickly combine product digitalization and user digitalization to achieve precise recommendations, pushing good products to people in need. Most retailers still lack digital applications in operations. JD Daojia is an O2O platform and an internet company, with strong marketing digitalization, and we have sales data from 100,000 stores to help improve efficiency in digital marketing. 4) Fulfillment digitalization. In everyone's view, an O2O platform is just delivery, delivering goods to the doorstep, but there is actually a lot behind it. First, warehousing: opening a dedicated in-store picking warehouse for O2O in supermarkets. Because hypermarkets are tens of thousands of square meters with tens of thousands of SKUs, picking is difficult. If picking takes half an hour and delivery takes 2 hours, it's not O2O. Second, picking: instant delivery is prone to picking errors, picking too few or too many items, which greatly harms user experience. So the system manages who picked the goods, whether it was good or bad, and ultimately evaluates, just like managing delivery riders. Finally, handover: because hypermarkets have many orders, some may have thousands of orders a day. Without standard handover processes and areas, this cannot be completed. 4. Marketing matrix With high-quality traffic, receiving stores, and digitalization, many users may not understand or hear about it. So we need good marketing to make users understand, and also consumption scenarios and usage scenarios to make users purchase. Today's users don't buy just because a product is on the shelf; they need reasons and certain scenarios to place an order. Because there are too many channels, a product can be bought on any online platform or offline store. Why choose O2O? Besides immediacy, we need to give them reasons. -04- Cooperation cases Why users buy, why they buy at this time, why they buy this product—all these require the platform and brands to jointly do marketing, educate users, and let users know. Generally, joint marketing strategies between platforms and brands are divided into four types: The first is cross-category marketing, multi-brand cross-border marketing activities, integrating and penetrating based on the commonalities and connections of different categories, products, and users, leveraging brand mutual borrowing to expand channel coverage and user penetration. For example, Super CP Day. The second is joint IP marketing, pan-entertainment fan marketing activities, linking IPs such as brands and celebrity spokespersons to help brands realize IP traffic monetization and accumulate user assets. For example, Super Fan Day. The third is vertical platform marketing, single-brand annual explosion, innovating O2O omni-channel marketing models to achieve dual explosion of brand voice and sales. For example, Super Brand Day. The fourth is omni-channel full-link marketing, focusing on online and offline supermarket channels, integrating brand, merchant, and JD Daojia resources to improve brand product price control, product operation efficiency, and product penetration of brand platforms and merchants. For example, Super Big Brand Season. These marketing methods should be familiar to e-commerce colleagues, as they are constantly played in e-commerce. But for O2O, they may be more important. Why? Most brand sales are still offline, but all market cooperation fees are provided online, and offline doesn't enjoy much fee support. So we hope through these marketing activities to better connect online-only marketing methods, tools, traffic, and budgets to offline. This is a big future trend. Many companies previously separated online and offline, but in recent years, we can see online and offline gradually integrating, and integrating better. Through these marketing methods, JD Daojia and some brands have achieved win-win results. Here are a few case results. Case 1: Yili Normal Temperature Yili low-temperature was the first brand to cooperate with JD Daojia. Yili normal temperature started cooperation in 2019, began IP marketing in 2020, and in May 2020, did a live broadcast with Mr. Guo Yunlong, Vice President of Yili Group, with great results. As cooperation deepened, we started category captain, and in September, we did a strategic cooperation, with monthly sales exceeding 100 million yuan. From 2019 to 2018, growth was 126%, and after deepening cooperation in 2020, growth reached 182%. This year, it's still triple-digit growth, and on the basis of about 1 billion yuan last year, it will double this year. Case 2: Unilever JD Daojia's first IP marketing activity was an omni-channel marketing with Unilever. By resonating online platforms and offline scenarios, feeding online elements back to offline stores, displays, floor stacks, promoters, etc., and linking marketing, both years achieved triple-digit growth. Case 3: Mars In 2019, growth wasn't particularly good. After 2020, cooperation deepened, and sales growth doubled. The two sides jointly did several important actions: The first is smart promoters. Unlike beverages, leisure snacks have few store promoters, but JD Daojia helps store promoters and clerks, through digitalization, to market products in stores without promoters. The second is checkout counter recommendation. Now people don't look at checkout counters. Early last year, Mars said it was painful because the golden position was the checkout counter shelf with many chewing gums, but now users look at their phones at checkout, not the shelf, so no one buys, and consumers visit stores less and less. Is there an opportunity online? We developed an online checkout counter recommendation. With this, online users must see recommendations when paying; they can't pay without seeing them. Through these innovations, Mars saw significant growth last year. Case 4: Mondelez Recently, a popular variety show called "Sisters Who Make Waves" aired. JD Daojia and Mondelez did a joint IP, using top in-site resources and real-time interaction, off-site social + advertising resources for concentrated exposure, strong traffic attraction, plus offline KA store empowerment. After a full set of activities, Mondelez achieved explosive growth last year. In conclusion: In the retail industry, e-commerce is a purely online model. The real sign of internet penetration into traditional industries is O2O. O2O was initially a very non-internet model. Essentially, O2O has been difficult to develop to this point, requiring not only online platforms but also support from offline retailers and local regional departments. As Mr. Jiang said, the most important thing about O2O is not just online; always think about offline, otherwise no one will play with you. Tips will be paid 400-2000 yuan once adopted.