• Ernie Diaz

Don't Cry Dada

It's like a Chinese, consumer-oriented reboot of The Wild One. Rival electric bike gangs infest the cities, hell-bent on delivering people's all-important breakfast bananas and eyebrow combs in record time. Their test-buzzer scooter horns fill the air and disturb the peace.

Their bosses won't have it any other way. Just as with ecommerce, more than a decade ago, the delivery racket wars are wars of attrition. Which company can take the thousand cuts, bleed a Yangtze river of cash flow, and still be standing?

JD spinoff Dada is donating more than a pint to the cause. Despite home delivery being the new normal, and revenues of almost $300m in Q1 2021, from both express parcel and grocery delivery, Dada still realized a $110m net loss. That revenue isn't going to biker health care, unsocialistically, but rather massive marketing budgets and rising operational costs.

"Having a heavyweight strategic investor like JD is great, but no longer enough," says Jimmie Jeremejev. "Especially since Dada is tackling both parcel and grocery delivery. You have companies coming out with new tech-enabled business models that will gain market share the old-fashioned way, better service. Take Miss Fresh, for example: algorithm-based distribution to mini-warehouses that can be set up cheaply from Tier 1 to "Tier 88 cities"."

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