Alicia Yap: So my question is related to the new user profile, purchasing behavior and also the retention rate. So specifically for those newly acquired user through the JD Shop Now, is it the supermarket category that attracted them to join Dada JDDJ? Or is it the non-supermarket category to attract them for the first time? And then what are the purchase frequency that come from this user? Are they having a higher purchase frequency? Or it’s about the similar? And then on user retention and consumption pattern, under these current challenging macro environment, have you noticed the retention rate is actually lower and consumer are more sensitive to price discount and rebate? So when you scale back the subsidy, have you seen higher churn rate? Or are the user purchasing frequency actually cut down?
Caroline Dong: Thank you for your question. So about the first question on the user. The customers we acquired through the JD Shop Now channel, so they are mainly the buyers of the same category that are used to shopping on JD.com, for example, the users who buy supermarket categories in Shop Now are existing JD supermarket shoppers, and the consumers who buy consumer electronics products on Shop Now, they are existing shoppers of JD’s consumer electronics products. And that’s because most of our traffic from JD Shop Now is from the search result entry point. So as you all know that search is a highly intention-based shopping channel. So we are seeing that users are continuing their pre-existing shopping preference in category in the JD Shop Now channel.
And then about your second question, so as we scaled back our subsidies, there is naturally some customer churn. But the good thing is the customers that have left our platform are actually very price sensitive, they are very subsidy-driven shoppers. So it’s not bad. And in terms of the shopping frequency, we do have observed an increase in shopping frequency. For Shop Now consumers, their shopping frequency is a bit lower than those who shop on our JDDJ independent app, which is not full because there are other services on the JD app. So the consumers of JD Shop Now can shop for other categories and services on the JD app. And the good thing we — the good thing we are observing now is that for the users who have tried the Shop Now service on JD, we’re seeing an increase in their shopping frequency.
Thank you.
Operator: Your next question comes from Ashley Xu with Credit Suisse.
Ashley Xu: Just also want to check about the KA business on the Dada app. What’s our current strategy? And what’s the expectation of future growth and also UE?
Caroline Dong: Thank you for your question. Our KA business saw a very impressive growth and the continuous improvement in service quality over the past 2 years. We have gained market share and high customer satisfaction. In Q3, our KA revenue grew by over 40% year-over-year, and we expect growth to be around 50% in Q4. On the profitability front, unit gross profit for KA orders continued to improve in Q3 after turning profitable in Q2. We expect a sequentially stable unit gross profit for Q4, leading to — due to pandemic resurgence in multiple regions since early October, which led to a higher rider cost for Q4.
Operator: Your next question comes from Andre Chang with JPMorgan.
Andre Chang: Let me quickly translate my question. My question is about the long-term profitability and the path toward that. With all these changes over the recent quarters, the cooperation with JD, weakening macro environment, et cetera, are we seeing our long-term profitability target change toward higher or lower or unchanged? Also, the trajectory toward that, is it going to be faster or slower, considering that JD, our parent group, are talking about more focus on the profitability. So the margin ramp-up may be faster than the originally expected.
Beck Chen: Okay. So Andre, this is Beck. Let me address this question. So the short answer is we will still balance the growth rate and the bottom line optimization or improvement. So because the intra-city on-demand retail market is still a lower penetrated market. So we believe that for the next few years, at least, the growth rate of this category is still very high potential, encouraging, compared to the other sector of the e-commerce area. So there is a huge potential for the on-demand retail market. So we will still target a higher growth rate of top line compared to the other tier companies. And at the same time — and for the bottom line, we will also keep to optimize on a year-over-year basis. So we still, like we have talked before, we still have great confidence to further — first of all, further to increase our marketing revenues cost.
We have a few masses to improve our marketing dollars, just like we talked in the previous quarters. For example, like we are further monetized on the LBS home system within the system to provide a lot of exposures for our brands and the retailers to those consumers nearby. So for next year, we believe this marketing tool will be a major marketing revenue-driven tool for us. And at the same time, for this year, we have dramatically increased our subsidy or incentive efficiency. So we believe that for the next 2 or 3 years, we still have great room to further improve our incentives given to the consumers. And at the same time, while our overall on-demand delivery platform orders is growing very fast for Q4 and also for the second half of this year, we expect the total on-demand delivery orders, it’s growing very fast.
And we expect for next year, we will keep to grow at a faster growth rate compared to our peer company. So overall rider cost and the delivery cost could be further optimized and improved as well. So this is the path that we grow our top line particularly while we continue to optimize either by some additional tools and methods provided all by further efficiency optimization way to improve our bottom line next year. It’s just — it’s not improve the bottom line, it’s just like growth of the bottom line profit. So the on-demand retail platform is very typical, just like the localized JD Mall or localized Tmall. So we believe the overall long-term profitability in terms of the revenues should be very encouraging, just like other traditional e-commerce platform as well.
