Behind the listing in the US, the geometry of the front?
Editor’s note: This article comes from the WeChat public account “IPO Something” (ID: ipopress), author matcha latte.
There are indications that Dada-Jingdong’s listing at home should be a matter of course.
On the evening of August 13, Jingdong announced the second quarter of 2019. Among them, net income reached 150.3 billion yuan, a new high in a single quarter, exceeding Wall Street expectations; Non-GAAP net profit was 3.6 billion yuan, an increase of 644%, a 9% increase from the previous month, a record high.
Strong performance boosted Jingdong’s share price. As of August 19, the company’s gains have accumulated 16.27%. What can be seen is that with the raging Liu Qiangdong scandal coming to an end, Jingdong is recovering its vitality at a speed visible to the naked eye. However, although Liu Qiangdong himself has been very low-key recently, even the major events such as Jingdong “618” have not appeared on the platform, but the happy events related to Dongge have been continuously transmitted.
On August 19th, it was reported that Dada-Jingdong, who is controlled by Jingdong, was in close negotiations with a number of investment banks to seek listing in the US in 2020. The estimated amount of funds raised is 5- Between $1 billion, a cornerstone investor is currently being sought. Although the official does not comment on this matter, according to a series of actions of Dada-Jingdong’s recent layout, this rumor does not seem to be groundless.
On the one hand, as early as April this year, Reuters has exposed the potential listing plan of Dada-Jingdong to the home; on the other hand, in the past few days, several companies operated by Dada-Jingdong There have also been a number of business changes in the main body, which is likely to be preparing for the listing.
Tianjinchao showed that on August 12th, the legal representative of the owner of Dada-Jingdong’s operation, “Shanghai Jingdong to Jiayuanxin Information Technology Co., Ltd.” changed, and Dada-Jingdong’s CEO, Jia Jiayu, stepped down. General Manager Yao Jun took over. At the same time, the registered capital of the entity also increased by 311.76% to 700 million US dollars from 170 million US dollars.
There are indications that Dada-Jingdong’s listing at home should be a matter of course. It is only curious that, among the two strong barriers such as the US Mission and Hungry, Dada-Jingdong has chosen to go to the US IPO at this time. How much can it be divided?
01 Why does Jingdong come to the house to merge with Dada?
As the name suggests, Dada-Jingdong is home to two operating entities consisting of Dada and JD.
In June 2014, Dada was established as a platform for providing instant delivery services in the same city based on crowdsourcing and mobile internet. In July, the company received a multi-million-dollar A round of investment from Sequoia Capital (China) and completed a $300 million Series D round of financing led by DST and Sequoia Capital China at the end of 2015, with a valuation exceeding $1 billion.
In April 2015, JD.com was officially launched, and as an O2O subsidiary of the JD Group, it provides consumers with services such as supermarkets and homes. After the consumer orders, the crowdsourcing deliveryman picks up the goods at a nearby supermarket and delivers the goods to the consumer. The supermarket will return 3-10% to Jingdong to get home, and Jingdong will charge the consumer 4 yuan shipping fee.
On April 15, 2016, the two parties jointly announced a final agreement on the merger. After the merger, JD.com acquired the assets of Jingdong, the business resources of Jingdong Group and 200 million US dollars of cash in exchange for approximately 47.4% of Xinda’s shares, and became the single largest shareholder.
In August 2018, Dada-Jingdong completed the last round of financing of US$500 million, which was increased by Wal-Mart and JD. The cumulative financing amount as of that time exceeded US$1.3 billion.
There are problems, and they are doing well in their respective fields. Why do you want to merge? Perhaps the compelling ingredients are bigger, just like the quick merger of Didi. At that time, Jingdong’s home actually had two core businesses, one was the fresh supermarket O2O business, and the other was the crowdsourcing logistics built for the O2O business.
Fresh supermarket business, although the order size can be around 100,000 a year, it is also in fierce competition. Based on the subsidy of 10 yuan per order, the amount of losses in 2015 was as high as 400 million yuan. At the same time, if Jingdong’s crowdsourcing logistics network is only serving itself, it is certainly not cost-effective. Because of the order quantity, Jingdong was only one-tenth of the size of Dada.
For Dada, there is not a lot of orders because the order quantity is over one million. On the contrary, the bigger the subsidy is, the more losses there are. How to make a profit is a big problem. Dada serves hundreds of thousands of merchants, transforming to O2O e-commerce or a good way out, but Dada itself lacks e-commerce experience.
The merger of Dada and JD.com can be said to be both complementary resources and a helpless group to warm up. Coupled with the same major shareholder such as Sequoia, the promotion of the capital level can be imagined.
The new company after the merger is positioned as “the same city express information service platform and unbounded zeroSelling real-time consumption platform, it also logically includes two business segments: crowdsourcing logistics platform and supermarket fresh O2O platform. Among them, crowdsourcing logistics platform is the crowdsourcing logistics system integrating original Dada and Jingdong home, and continue Use the “Dada” brand; O2O platform will continue to use the “Jingdong home” brand, including supermarket convenience, fresh fruits and vegetables, snack snacks, flower baking, medical health and other services.
Related data shows that Dada currently covers more than 450 major cities across the country, serving more than 1.2 million merchants and over 70 million individual users. Jingdong has also covered nearly 67 major cities including Beijing, Shanghai and Guangzhou, with more than 74 million registered users and over 30 million monthly active users.
02 Initial distribution industry head players initial pattern
Jingdong’s hand in hand with Dada, which caused a lot of sensation in the real-time distribution field.
Data Source: iResearch
As we all know, the rapid expansion of the take-away platform has promoted the rapid development of the immediate distribution industry in the same city. Nowadays, all the way down, under the promotion of the new retail model and the lazy economy in the current market, the scale of the real-time distribution industry in the same city has continued to record high, and the war between enterprises has been continuously upgraded. According to statistics, the volume of immediate delivery orders in 2019 will reach 18.5 billion, and the scale will exceed 131.2 billion yuan.
In the face of the 100 billion-level market, a large amount of capital is rushing in, and the main e-commerce platform is accelerating the layout in the real-time distribution field. Not only does Jingdong invest in Dada, but also Tencent invests in the US delegation, Alibaba and The holding rookie network has invested in hungry (hummingbird delivery), point-to-point, aiming, etc., providing a new impetus for the development of real-time distribution enterprises. In addition to the accelerated expansion of these traditional real-time distribution companies, express delivery companies have begun to enter the market, such as SF Express recently publicized its own real-time distribution business on social platforms such as Vibrato.
With the large-scale layout of capital giants, leading enterprises have become more vertical and horizontal, and the platform competition pattern has also taken shape. According to the data, 20In the 17-year real-time distribution platform order share, hummingbird distribution (hungry) ranked first with 28.9%, new Dada ranked second, accounting for 26.2%, and US group taking out third, accounting for 21.6%. . As a direct participant in real-time distribution, Hummingbird Distribution, Meituan Take-out, and New Dada’s three-legged, Dada-Jingdong’s position in the real-time distribution field is very important.
But look carefully. In 2017, China’s instant delivery orders are mainly for out-of-sale services, with a market share of up to 65% in the instant distribution market. In the field of take-out service segmentation, the US group take-out accounted for more than half of the market share. Hungry is its main competitor, and the market share of other take-out platforms is very small. This means that although Xindada has a leading share of distribution orders, the distribution is basically not the most familiar food and beverage take-out order, and more or instant services such as fresh, super, medicine, flowers, etc. It’s a direct confrontation with the two giants who are hungry and the US group, but the customer’s stickiness is inevitably lower.
In the short term, such a three-pronged situation should not be easily shaken, but the industry structure is not yet mature, and there are still large variables in long-term development.
It is worth mentioning that in 2018, the new retail format of the supermarket built by Alibaba, Ma Xiansheng, although entering the market, has also launched a direct confrontation challenge for Dada-Jingdong’s status. It is reported that Box Ma Fresh Life is a heavy model, self-built supermarket, the entire supermarket is built according to the fast delivery service, commodity standardization, the system supports fast picking and delivery, after the consumer places the order, the picker picks the goods, the delivery staff delivers, 30 Minutes delivered. The most important thing is that Box Ma’s current business already includes real-time distribution and other businesses that Jingdong has arrived at home, and Dada-Jingdong’s home has no perfect pre-warehouse service, which is inevitably inferior when competing with each other. It is one of the problems that need to be solved after the company goes public.
03 Product quality and safety issues are a hidden danger
Although Jingdong has been strengthening quality supervision at home, there are still many problems.
Not long ago, Hangzhou Consumer Protection Committee selected 7 grocery shopping APPs including Jingdong to go home for evaluation. On June 12, the Hangzhou Consumer Protection Committee provided evaluation results showing that the net weight of the litchi purchased by Jingdong was slightly insufficient. It’s not just Jingdong’s home, but there are similar problems in various local life projects. Box Horse Fresh has also been punished. However, this is still not good news for JD.com, and the quality of the products is very important for life projects.One problem, this will have an impact on its future operations.
More seriously, not long ago, reporters from the China Consumer News surveyed nearly 20 online pharmacies and third-party platforms that provide drug trading services, 17 of which can buy prescription drugs. In the absence of a prescription, the reporter used the pet dog photo as a prescription, and was able to successfully order a minimum of 10 mg of the toxic drug prescription, atropine sulfate tablets, which could lead to child death. Among the 17 third-party platforms, including Jingdong, the prescription drugs are ineffective.
If Dada-Jingdong is going to go public, it is imperative to look at the quality and safety of the operating platform.