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By leveraging their combined crowdsourcing network, the new entity will provide low-cost delivery services to China’s retailers, service providers and O2O enterprises

Leading Chinese online direct sales company JD.com has announced that it has signed a definitive agreement under which its O2O business JD Daojia will merge with crowdsourcing delivery platform Dada Nexus to form a new company.

Upon closing, the newly-formed company will continue to operate its crowdsourcing delivery platform under the Dada Nexus brand.

By leveraging the combined extensive crowdsourcing network of Dada and JD Daojia, the new company will provide low-cost delivery services to China’s retailers, service providers and O2O enterprises.

The O2O supermarket platform will continue using the JD Daojia brand, leverage the expanded delivery network and focus on the location-based mobile commerce sector, co-operating with offline supermarkets, convenience stores and other local businesses.

Also Read: China’s Dianping and Meituan launching O2O services to take on Baidu

Pursuant to the agreement, JD.com will receive approximately 47.4 per cent of the new company’s equity in exchange for the JD Daojia business, various resource support and US$200 million in cash.

Philip Kuai, CEO of Dada, and Zhijun Wang, President of JD Daojia, will serve as CEO and President of the new company, respectively.

The deal is expected to close in the second quarter of 2016, subject to certain closing conditions.

“This merger is a win-win cooperation and an important step forward in building a sustainable O2O ecosystem,” said Richard Liu, CEO of JD.com. “JD Daojia and Dada’s business are highly complementary, with the companies sharing a deep commitment to providing fast delivery service and excellent user experience.”

Since launch in June 2014, Dada uses a crowdsourcing model to solve last-mile delivery, one of the Chinese O2O market’s biggest bottlenecks. Dada already has 1.3 million crowdsourced delivery personnel who have registered on the platform using their real names. Dada operates in 37 key cities providing average daily deliveries of over one million in peak seasons for 300,000 merchants. Dada is a leader in China’s crowdsourcing delivery market.

Launched in April 2015, JD Daojia provides consumers two-hour delivery of products from local supermarkets and other partners through its location-based app. Daojia covers over 3 million customers in 13 cities.

Image Credit: Shutterstock

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