Q4 2022 Dada Nexus Ltd Earnings Call
Participants
Caroline Dong; Head of IR; Dada Nexus Limited
Huijian He; President & Director; Dada Nexus Limited
Zhaoming Chen; CFO; Dada Nexus Limited
Alicia Yap; MD & Head of Pan-Asia Internet Research; Citigroup Inc., Research Division
Andre Chang; Analyst; JPMorgan Chase & Co, Research Division
Ronald Keung; Executive Director; Goldman Sachs Group, Inc., Research Division
Thomas Chong; Equity Analyst; Jefferies LLC, Research Division
Presentation
Operator
Good morning, ladies and gentlemen, and thank you for standing by for Dada's Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, today's call is being recorded.
I will now turn the meeting over to your host for today's call, Ms. Caroline Dong, Head of Investor Relations for Dada. Please proceed, Caroline.
Caroline Dong
Thank you, operator. Hello, everyone, and thank you for joining our fourth quarter 2022 earnings conference call.
On the call today from Dada, we have Mr. Jeff Huijian He, President; and Mr. Beck Chen, CFO; and Mr. Jun Yang, Co-Founder and CTO. Mr. He will talk about our operations and company highlights. Then Mr. Chen will discuss the financials and guidance. Please carefully note that during the Q&A session, Jeff will answer to those questions in Chinese and the consecutive translation will be provided.
In case of any discrepancy between the original remarks and the translated version statements in the original remarks should prevail. Before we begin, I'd like to remind you that this conference call contains forward-looking statements. Please refer to our latest safe harbor statement in the earnings press release on our IR website, which applies to this call.
Also, during this call, we will discuss certain non-GAAP financial measures. Please also refer to our earnings press release which contains a consolidation of our non-GAAP measures to the comparable GAAP measures.
Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our President, Mr. He. Jeff, please go ahead.
Huijian He
Okay. Thank you, Caroline, and thank you all for joining us. During the first quarter of 2022, Dada Group once again achieved a stronger growth with significantly improving our operational efficiency.
Our total net revenues increased by 32% and adjusted net margin improved by [over] 17 percentage points year-over-year. In addition, we achieved a positive free cash flow in the second half of 2022.
I will first provide an update on our deepen cooperation with JD.com, after which I will take you through the operational highlights from our 2 platforms. Beck will then discuss the financial results in detail.
We continue to work closely with JD.com on multiple fronts. During the first quarter, GMV of Shop Now or Xiaoshigou, it's a unified brand for all on-demand retail services within JD ecosystem, increased by more than 80% year-over-year. In particular, GMV from the Nearby or Fujin tab increased by more than 300% year-over-year. Thanks to the significant increased exposure of its entry point. (inaudible) the improved the click-through rate driven by the upgrade of display name to city names and the freeze tab function that keeps the tab freezed when users go down to home page.
On top of the search results exposure and the nearby tab, we continue to roll out RBS features in more than -- more touch points within the JD A-P-P. During this quarter, we newly implemented the RBS feature among the commendation fees on JD homepage which has led to incremental traffic for Shop Now.
Turning now to the operational highlights for our 2 platforms. Starting with JDDJ, the leading local on-demand retail platform in China. In the fourth quarter, JDDJ maintained robust GM growth and (inaudible) and outpaced the industry. Even then committed to leading the development of the on-demanded retail industry, where the retailer and the brand empowerment and the technology innovation in digital transformation.
Let's start with our efforts in empowering retailers. In 2022, there were more than 220,000 active retailer stores on JDDJ, up more than 50% year-over-year. This maintain partners from the essential part of JDDJ ecosystem. And the in turn JDDJ provides them respected support to grow online sales.
In the first quarter, JDDJ continued to expand the and different cooperation with retailers across multiple countries including supermarkets, consumer electronics and home appliance, mom-and-baby (inaudible) in the supermarket exactly, we listen (inaudible) with more top supermarket trends such as HotMaxx (inaudible) and now have established the partnership with 90 out of the top 100 supermarket chains in China.
We also onboarded a more regional campaigns like (inaudible) to further emit our local offerings. From the end of December to the end of January, JDDJ launched the Chinese New Year shopping festival to boost the sales for supermarket chains. Thanks to our SKU strategy of support merchant holiday grew such as (inaudible) and gift box GMV of supermarkets increased by more than 50 year-over-year.
During the 3-week period leading to Chinese New Year event. In addition to large supermarket trends, we have also continued to engage in the (inaudible) variety and the increased store density through cooperation with convenience the store chains. Recently, we signed up Yonghui and other leading convenient stores.
Moving to the fresh product category. We recently launched dedicated entry point of JD Grocery to further improve consumers' (inaudible) share for fresh products on JDDJ. In the first quarter, (inaudible) our fresh products in supermarket orders increased remarkably but GMV of fresh product stores also see significant growth.
For example, GMV of online operators for fruit and vegetable markets, like (inaudible) and (inaudible) increased by several tons year-on-year. We also made further progress in the consumer electronics and home appliance category. In the first quarter, the smartphone category maintained the rapid growth driven by Double 11 shopping festival. While the home appliances (inaudible) also made further (inaudible). As we further depend the cooperation with partners such as Xiaomi Home Appliance, GMV of home appliance in the first quarter increased by more than 400 year-on-year.
In the mom and the baby category, we continue to work closely with top 10 retailers and engage with stores to jointly assess their private domain users. GMV of mom and baby stores saw accelerated growth of more than 300% year-on-year in the fourth quarter.
In the (inaudible) category. We depend our partnerships with leading distributors such as (inaudible) and (inaudible) new corporation with region distributors such as (inaudible) with the chance to further optimize the supply of key SKUs such as multi products. As a result, GMV in the first quarter more than tripled year-on-year.
Turning to JDDJ's efforts to empower brands. In 2022, more than 280 brands partnered with JDDJ in online marketing and an increase of more than 30 year-over-year. Our leading position in on-demanded retail and (inaudible) in ability in auto digital market make us the most trusted auto platform for brands.
In the first quarter, the year-on-year growth of our online marketing services exceeded 70%, driven by further broaden and dependent brand partnerships. We continue to work closely with leading FMCG brands. And we have listened, we signed our new partners with -- such as (inaudible), a brand (inaudible), and liquor brand (inaudible). Together with our brand partners, we keep innovating new market campaigns to attract and convert the consumers.
During the Double 11 shopping festival in 2022 JDDJ and JD.com, we co-launched the first intra-city marketing team on JD's dropdown page, (inaudible) who is managing our intra-city and retail, we intend to boost 10 plans, including (inaudible) and (inaudible) participated in the event.
And the total GMV of participating brands on the campaign day increased by 170% over-year. Next, I will touch on our technology innovation in driving the digital transformation for both the retailers and the brands.
Firstly, on Haibo our omnichannel outdoor operating system for retailers. At the end of December, our Haibo system has been deployed in more than 8,200 retailer chain stores. While we continued penetrate the supermarkets and the stores, we also have recently successfully spending the Haibo services to merchants in mom and the baby and the (inaudible) driven by continuous expansion in merchant base. GMV product set by Haibo system more than doubled on a year-on-year in 2022.
In the first quarter, we continued to upgrade Haibo's features to have the merchants improve outdoor operating efficiency. For example, we newly introduced an intelligent order dispatching function in (inaudible) model. This new function enables merchants to engage the multiple delivery services provides to reduce their delivery cost and enhance the (inaudible) order pickup by riders. Merchants too have tested this upgraded model so 75% improvement in operating efficiency, 6% enhancement in order taking time and a 3% savings in deal costs.
Moving on to our digitized use store picking services for the retailers, Dada Picking. We continue to provide a steady support to leading supermarkets, including Walmart, (inaudible), and (inaudible) and the total number of orders fulfilled by Dada Picking more than doubled year-on-year in the fourth quarter.
Meanwhile, we have been further improving our digital capabilities. We aim to provide merchants with a comprehensive set of digital picking management tools, spending functions, which include the picking, staff recruitment, onboarding and management. Picking products management, data aggregation and analysis and the sales quality monitoring. We also made progress in providing digital insights and solutions to brand. (inaudible) reader system enables brand to digitize channel inventories management. While cloud store project helps brands optimize customer value.
Based on (inaudible) great level sales data and processing management tool, JDDJ launched a perfect store solution to help brands amplify online presence and optimize O2O supply, rolling a pilot program in the third quarter. We partnered with several leading food brands in December to roll out the perfect store solution nation wide. Our partner brands adopting the solutions for a more than 5 percentage point increase in the online ability later of the key SKUs which translated into incremental sales of more than 10 percentage points.
In addition, JDDJ launched the cloud store project to adjust brands pain point of brand user operations. (inaudible) WeChat and our on-demanded retail platform the project enables brands to improve the conversion efficiency of off-line promoters and maximize customer value. Pilot branded in the cloud store projects. So the average number of orders was facilitated by each promoter increased by 230% and 7-day customer retention rate increased by 150%.
Moving on to Dada Now. The leading local on-demand delivery platform in China. In 2022, the new active riders on Dada Now platform reached 1 million, up more than 40% year-over-year, thanks to increasing order volume and our flexible cloud sourcing network.
We have provided a meaningful flexible employment opportunities for a wide range of workers. In the first quarter, Dada loss order volume and revenue both maintained the rapid growth while operating efficiency continued to improve.
In terms of (inaudible) or merchants business in the first quarter. The revenue of on demand delivery services to (inaudible) merchants increased by more than 40% year-over-year. Meanwhile, we continued to improve delivery efficiency and customer experience through measures such as optimizing, dispatching (inaudible).
In the supermarket capital, we continue to consolidate our leading position with revenue increasing by more than 40% year-over-year. During the quarter, while we worked closely with partners such as Walmart, Sam's Club, Yonghui, and the (inaudible).
We also continued to deepen cooperation with other supermarkets retailers such as CR and (inaudible). In the restaurant and the beverage category, our revenue increased by more than 50% year-on-year. We set up new partnerships with restaurant (inaudible) such as Burger King we also strengthened our cooperation with beverage brands such as Luckin Coffee and (inaudible). Restaurant and Beverage increased by more than 150% year-on-year during the quarter.
In addition, in early December, we officially became 1 of the first on-demand delivery partners for the (inaudible) in local (inaudible), offering the level of fulfillment services to further deliver merchants on the lean platform. Currently, the (inaudible) in food delivery service is being imparted in Beijing, Shanghai and Chengdu. Leverage Dada, now sense and nationwide coverage.
Rider dispatching flexibility and high fulfillment efficiency. We believe our care business will serve to in well, when is full deliver services scares up. In our SME and C2C business, we continued to expand our right rider network to serve more SMEs while our C2C business sale searching and service needs of individual consumers during the pandemic.
As a result, orders fulfilled by our SME and the C2C business increased by more than 40% year-on-year in the first quarter. Meanwhile, driven by optimization of pricing and incentive [Magnetism]. We saw an accelerated improvement in UE. For last-mile services, we continue to leverage our flexible outsourcing network to provide a steady support to to JD Logistics by complementing this enhanced (inaudible), especially during the shopping festival and the period when COVID case spiked.
Lastly, an update on Dada Now's autonomous deliver services. At the end of January, our autonomous delivery open platform had fulfilled more than 80,000 on-demand orders for supermarkets through cooperation with autonomous vehicle manufacturers.
This has made Dada Now the largest autonomous delivery platform for supermarkets in China.
Moving on to ESG. We're continuously improving ESG practice and disclosures. Our ratings by leading third-party agencies have been notably improved. In November, MSCI upgraded our ESG rating from BB to BBB, on the strength of higher scores across all 3 dimensions of environment, social and governance. Also in November, we improved our ESG score in S&P Corporate Sustainability Assessment, CSA, to 32, placing us among the top 11% in the global retailing sector. There is still significant room for improvement, and we will further integrate ESG philosophy into our daily operations to enhance our ESG practice.
That covers our operational updates for the 2 platforms. To wrap up, we continued to execute well amid the macro challenges in the past year. Looking ahead, as on-demand penetration steadily progresses in every single local retail category, we believe our track record of enabling retailers and the brands as well as the synergies unleashed from our deepened collaboration with JD.com will position us well to capture opportunities in the coming years.
I will now pass the call to Beck to go our financials. Thank you.
Zhaoming Chen
Thanks, Jeff. Before we go over the numbers, just a few housekeeping items in advance. We believe year-over-year comparisons are the most useful way to judge our performance. Therefore, all percentage changes I'm going to give will be on a year-over-year basis, and all figures are in renminbi unless otherwise noted.
So I will start with Q4 numbers first. Total net revenues in the fourth quarter increased by 32% to CNY 2.7 billion. Net revenues from Dada Now increased by 23% to CNY 883 million, mainly driven by the increases in order volume of intra-city delivery service to chain merchants.
Net revenues from JDDJ increased by 37% to CNY 1.8 billion, mainly due to the increase in GMV, which was driven by increases in the number of active consumers and average order value. The increase in online marketing services revenue also contributed to the revenue growth of JDDJ.
Next, moving over to the expenses side. The operations and supporting costs were CNY 1.6 billion. The increase was primarily due to an increase in rider cost as a result of increasing order volume for intra-city delivery services provided to various chain merchants on the Dada Now platform and the retailers on the JDDJ platform.
Selling and marketing expenses were CNY 1.3 billion. The Increase was primarily due to the growing absolute dollar amount of incentives to JDDJ consumers, an increase in advertising and marketing expenses to attract new consumers to JDDJ platform, and the amortization of the business cooperation agreement arising from share subscription transaction with JD.com back in February 2022.
G&A expenses remained flat at CNY 101 million, mainly attributable to our expense control measures. R&D expenses decreased to CNY 126 million, mainly due to lower R&D personnel costs as we enhance the operating efficiencies.
Non-GAAP net loss attributable to ordinary shareholders of Dada was CNY 179 million. Net loss -- non-GAAP net loss margin was 6.7%, improving by more than 17 percentage points year-over-year and 5 percentage points quarter-over-quarter. In addition, as Jeff mentioned in the beginning, driven by the significantly narrowed loss and efficient working capital management, we are pleased to report a positive free cash flow in the second half of 2022.
As of December 31, 2022, the company had CNY 4.4 billion in cash, cash equivalents, restricted cash and short-term investments. Pursuant to our USD 70 million share repurchase program announced in March 2022, as of December 31, 2022, we had repurchased approximately USD 60 million of ADSs under this repurchase program.
I will now quickly run through a few key full year 2022 financial results. Further details can be found in our earnings release. The total net revenues was CNY 9.4 billion. Aligning the revenue recognition method of Dada Now last-mile delivery services to a comparable net basis, the pro forma revenue growth rate was 49%.
Operations and supporting costs were CNY 5.7 billion compared with CNY 5.1 billion in 2021. Selling and marketing expenses were CNY 4.7 billion compared with CNY 3.4 billion in 2021. G&A expenses were CNY 409 million compared with CNY 400 million in 2021. R&D expenses were CNY 631 million compared with CNY 574 million in 2021. Non-GAAP net loss attributable to ordinary shareholders of Dada was CNY 1.3 billion compared with at CNY 2.1 billion in 2021.
In terms of outlook, for the first quarter of 2023, we expect total net revenues to be between CNY 2.57 billion to CNY 2.77 billion, representing a year-over-year growth rate of 27% to 37%. Heading into 2023, we are confident in further improving profitability while sustaining revenue growth momentum.
So this concludes our prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you.
Question and Answer Session
Operator
(Operator Instructions) Your first question comes from Ronald Keung with Goldman Sachs.
Ronald Keung
(foreign language) I have 2 questions. First, just want to hear about the outlook for JDDJ, some of the strategies for this year. Given pretty healthy growth that you've guided, how should we think about the profit side on the unit economics side? And are we on track to -- for profit turnaround for the business this year?
And my second question would be on the food delivery and announcements on your cooperation with Douyin. And just if this business grows, do we have sufficient rider capacity? How are we thinking about the core operation there and the opportunities?
Huijian He
(foreign language) Caroline, please help me translate.
Caroline Dong
[Interpreted] In terms of business outlook for this year, we are cautiously optimistic following extreme situation. And we expect that the consumer confidence and economic activities to gradually recover in the first half of this year. And in that case, we expect JDDJ revenue to gradually accelerate quarter-by-quarter and reach about 40% in the second half of this year.
Huijian He
(foreign language) Yes, please, Caroline, you translate.
Caroline Dong
[Interpreted] So now I'd like to share some color on the impact on JDDJ since the reopening. During the pandemic, due to mobility restrictions and limited choices, consumers preferred on-demand shopping. Since the reopening, with more shopping options available to consumers, off-line spending for goods and services have somewhat recovered.
Huijian He
(foreign language) Yes, please.
Caroline Dong
[Interpreted] That said, based on our experience of several rounds of resurgence in the last 3 years, users who have formed shopping habits during the outbreak have maintained a healthy retention rate even as the COVID situation abated. Since the reopening late last year, the retention of our users has not significantly changed.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] The reason behind that is consumers have become used this year to shop the convenience of on-demand shopping and are increasingly demanding faster delivery of all product categories. Therefore, they remained on our platform even as other shopping channels now become available. So we feel confident by maintaining a long-term growth rate that significantly outpaces the industry.
Huijian He
(foreign language)
Zhaoming Chen
(foreign language)
Huijian He
(foreign language) Yes, please.
Caroline Dong
[Interpreted] So to address your second question on our cooperation with Douyin, in early December, we officially became one of the first on-demand delivery partners for Douyin local life services, offering fulfillment services to food delivery merchants on Douyin's platform. The fact that we were among the first on-demand delivery partners of Douyin speaks of its recognition of our brand and service quality.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And specifically, as one of Dada Now's key accounts, Douyin will aggregate all of its food delivery orders on the platform and distribute them to the delivery partners. Once we receive the orders, we'll dispatch riders to fulfill them, delivering a convenient premium on-demand [catering experience for consumers.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] In terms of contribution, if Douyin's food delivery service experience has significant growth, there will be meaningful incremental revenue for Dada Now in the coming years.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Currently, Douyin's food delivery service is only being piloted in Beijing, Shanghai and Chengdu with limited order volume.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Leveraging back on our strength of national -- nationwide coverage, rider dispatching flexibility and high fulfillment efficiency, we believe our KA business will gain significant incremental revenue when Douyin's food delivery service scales up. That said, we have not baked in any contribution from our cooperation with Douyin in our financial guidance.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] So in terms of unit economics, as order volume grows, we expect Douyin orders to be quickly on par with other KA orders.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] In terms of our market share on the Douyin platform, apart from us, Douyin food delivery is partnering with SF intra-city and Shansong. We're confident about our long-term market share on Douyin's food delivery platform given our significant competitive advantages.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Compared with Shansong intra-city, we enjoy more stable rider supply and cost advantage. Since we serve a broad range of customers, including supermarkets, restaurants and pharmacies, our orders are spread more evenly throughout the day, whereas the majority of SF's orders are food delivery.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And from a cost perspective, we are also more competitive, thanks to our flexible cloud sourcing model and higher fulfillment efficiency as a result of more even order distribution.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And compared with Shansong, we offer much broader city coverage and lower unit cost. Shansong's presence is mostly in Tier 1 cities, while our service is available in over 2,800 cities and counties across the country. We can fully support Douyin's delivery needs as we [launch our food delivery services in more regions. In addition, Shansong's delivery model is point-to-point delivery. The riders typically pick up and deliver only one order at a time. Due to the high cost, the service does not cater to the needs of most food delivery merchants.
Huijian He
Okay. Beck, (foreign language).
Zhaoming Chen
Yes. So Ronald, so about the first question, so let me just share like about the UE and the profit turnaround. So yes, we are still confident to maintain our outlook to break even in mid of the year for the company level and also for the Douyin cooperation. So we think the rider supply is sufficient. As we can see right now back after like the Chinese New Year in March, going into March, our active daily riders still increased by 40% to 50% on a year-over-year basis for the intra-city delivery businesses. So we don't think the rider supply is [hedging] for us this year.
Operator
Your next question comes from Thomas Chong with Jefferies.
Thomas Chong
(foreign language) My first question is regarding the cooperation with JD. Given the success in 2022, how should we think about the KPI working with JD for this year?
And my second question is on JDDJ. Can you comment about the GMV mix for supermarkets and other categories? And how should we think about the trend for the AOV going forward?
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Thank you for your question. Core KPI for this year remains GMV revenue growth and net income.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] So our priorities are twofold. The first is helping JD acquire new customers in the off-line channel.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And meanwhile, we aim to boost our exposure on JD app to penetrate more users in JD's ecosystem.
Zhaoming Chen
Okay. So Thomas, for the second question about some numbers. So for the category mix. So in Q4, our Market categories account for 53% of the total, while our consumer electronics and appliances account for 43% of the total GMV, while the remaining categories account for like the 6% of the total GMV.
So market and consumer electronic appliances will be still be the major categories in our GMV in Q4. And in terms of the average order value. So for the platform wise, the average order value is further increased to RMB 235, while the supermarket, the average order value has also increased to RMB 165.
So for the trend in 2023, we're now forecasting that the AOV of the platform will still go up very robustly, which was driven by like 2 reasons. One is -- number one is, of course, the mix contribution from those large ticket size products. The second is, of course, the average order value of supermarket categories is also going up on a year-over-year basis.
So just let's -- for example, for the Chinese New Year event and the campaign in January and February. So basically, our average order value for supermarket, we're also growing very much compared to the same events last year. So that's for the second question.
Operator
Your next question comes from Alicia Yap with Citigroup.
Alicia Yap
(foreign language)
Caroline Dong
[Interpreted] So my question is, can management elaborate or share a little bit of competitive landscape on JDDJ business compared to (inaudible). And then would there be any potential conflicts with our partnership ongoing on their local service versus our JDDJ business in terms of the consumer demands on the grocery category or the food category?
And then second question is can management share with us what is the latest consumption trends that you are seeing in terms of the consumption willingness on the bigger ticket items such as the electronics and appliances and also the supermarket category post the Chinese New Year.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Thank you for your question. To answer your first question, we remain convinced of the enormous market opportunity as O2O further penetrates the entire retail sector given the low penetration rate we are seeing now. The industry is large enough to accommodate more than 1 player who can all enjoy healthy development.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Specifically, regarding (inaudible) shopping, they and us have differentiated advantages and third parties will leverage the distinctive strengths to cater to diversified consumer needs.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Now I will share with you my thoughts on our advantages on both the supply and demand side. On the supply front, our main edge lies in our positioning as a pure play platform and our digitalization capabilities, which has enabled us to work more extensively with leading chain merchants and brands, making us more competitive and variety, quality and pricing product supplies.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Now in contrast, our has direct sales business which competes directly with retailers. So retailers have concerns and reservations about launching their platform. In the right case that leading retailers agreed to work with the other platform. Only a number of stores have actually launched.
Our last -- the other company goes through a fundamental strategic shift. It cannot transform into a pure marketplace as we are. That's why we are confident in maintaining this advantage and the long run.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Moving on to our capabilities and digitally empowering our retailers. After years of investments in technology and serving leading retailers, we've accumulated as best-in-class know-how and several well-recognized digital products and solutions such as Haibo and Dada Picking.
These products were crucial in helping us maintaining a solid relation with our merchant partners.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] An auto platform not only provides a delivery network to retailers, but also needs to digitally empower them to improve operating efficiency.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And in terms of potential conflict, as you predict with (inaudible) main efforts right now are centered around the food delivery business. So there's not been much strategic conflict with our on-demand retail business.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] To answer your second question on macro. The economic cycle and the changes in consumer confidence affects the entire retail industry and being -- in an on-demand retail platform, we are another exception.
On the other hand, on-demand retail is still in the early stage with only single-digit penetration rate in the local retail sector. So we remain confident in the long-term potential of the industry.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] So in terms of outlook, we expect faster economic and consumption growth this year versus last year, but there is still some uncertainty in the pace of recovery. So we had higher expectations for the second half than in the first half.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Since the pandemic control measures were lifted towards the end of 2022, there were massive infections in multiple regions in December and January, affecting the supply chain and the consumer confidence.
Now the shocks from COVID outbreaks have gradually subsided, people's daily lives and mobility has normalized, and the overall business environment is improving. So we are expecting better economic and consumption growth this year.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] That said, we are seeing some uncertainties in the pace of recovery, especially in the first half, given that the pro consumption policies take time to bear fruit and the reopenings boost to your consumer income and confidence may not manifest itself immediately.
So we are seeing -- we're expecting modest growth in consumption in the first half and a re-acceleration in the second half as consumer confidence gradually recovers.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] In the long run, thanks to the rapid rise of O2O penetration in retail, the confidence in achieving growth that significantly outpaces the e-commerce sector and other players.
Operator
Your next question comes from Andre Chang with JPMorgan.
Andre Chang
(foreign language) I will translate my question myself. So my questions are related to the traffic allocation from JD. So can management give us an update about the traffic source from multiple entry points in JD, such as [Buy Now], Nearby, et cetera?
And which are the area that provides more growth driver in their view in the future. And second question is about the recent how the debate -- the strategy change of JD Group to give more support on the lower-priced products and the penetration into the lower-tier cities. Will that affect our traffic from JD Group or will actually be no chance for opportunity if we can provide competitive prices from our auto channel.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] Thank you for your question. In terms of GMV mix across the multiple entry points on JD, we have 2 main entry points. The first is search or recommendation fleet on the JD homepage that accounts for 60% to 70% of our total GMV on the JD channel -- on the JD platform.
And the second main entry point is the Nearby page. The Nearby page is the faster -- is a faster-growing entry point. In Q4, the GMV contributed by -- the GMV from the Nearby grew more than 300% year-over-year.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] So in terms of the drivers for the GMV growth, the first and most prominent growth driver is the expansion -- continued expansion on the supply front. We are continuously expanding our SKU selection in more categories and more regional grids.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] So the second driver is our continuous iteration and upgrade in our product capabilities. For example, we are -- I think increasing our exposure rate among the repeat customers of Shop Now in search results.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And the third driver is the retention of users who have experienced the convenience of on-demand shopping through search results. We will retain them with our Nearby shopping channel to increase their consumer stickiness and have (inaudible) habit.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] And to answer your second question about daily strategic change for more low-priced offerings. We are relatively optimistic about the impact on our platform. The main reason for that is, in some categories, the offline channels is efficient in terms of the supply chain. So we will gain faster growth in these categories.
Huijian He
(foreign language)
Caroline Dong
[Interpreted] In some categories, we have achieved double-digit penetration rate. And our long-term target remains to penetrate 50% of JD users.
Operator
That's all the time we have for question-and-answer session today. I'll now hand back to Caroline Dong for closing remarks.
Caroline Dong
Thank you, operator. In closing, on behalf of Dada's management team, we'd like to thank you for your participation in today's call. If you require any further information, please feel free to reach out to us directly. Thank you for joining us today. This concludes the call.
Operator
That does conclude our conference for today. Thank you for participating. You may now disconnect.