Crowdsourced grocery delivery service thrives despite pandemic woes

Early this year, Philip Kuai MNG '07 and his team were faced with a challenging decision about whether to continue on their pathway to publicly offer their company, Dada Group, in the midst of a global pandemic. While there was much uncertainty in the market at the time, the team’s perseverance and dedication paid off in June when Kuai rang the Nasdaq opening bell remotely from Shanghai, China, signaling Dada’s listing in New York.

His company’s vision is to “bring people everything on-demand.” It achieves this through two complementary business platforms, Dada Now and JDDJ. Dada Now is a crowdsourcing delivery infrastructure with 634,000 active riders that cover more than 2,400 cities and counties. Last year it was the largest open on-demand delivery platform in China by number of orders. Dada’s other platform, JDDJ, facilitates digital transformation for retailers. It was the largest local on-demand retail platform for supermarkets by gross merchandise value, with 27.6 million active consumers in the year ended March 31. Dada Now and JDDJ are independent platforms that have an overlapping multilateral network and a synergistic business strategy.

By providing retailers with technology-enabled solutions to improve efficiency and consumers with convenience and a broad product selection, Kuai’s company takes a unique approach that raises the bar in service level. During the world’s largest shopping event on China’s Singles Day in 2019, Dada boasted that it delivered each of its 1.5 million orders in less than two hours. Combining this kind of service level with additional omni-channel and online-to-offline (O2O) marketing promotions has established the strength of the company’s business model and scalability. Two major e-commerce players, both in China and the United States, are longstanding investors and partners, as Dada continues to innovate and scale their capabilities across China.

Kuai cites his time at MIT, entrepreneurial spirit, and good business practices as the foundations of his company’s success. In 2006 and 2007 while at MIT, Kuai worked with Schwan’s frozen foods and their direct store delivery model for his master’s thesis project within the Master of Engineering in Logistics (MLOG) program, now the Program in Supply Chain Management. The thesis, he says, shaped his thinking about last-mile deliveries. “One of our key investors even dug out my master’s thesis from the MLOG program at MIT and told me they really enjoyed reading it,” says Kuai.

According to MIT Senior Research Scientist Chris Caplice, who was executive director of the MLOG program at the time, “Philip quickly integrated systematic thinking about how to reach a customer using network dynamics. For context, his thesis work was underway even before the introduction of crowdsourced ride-sharing services like Uber, and just shortly after the introduction of apps like Facebook and YouTube. It’s satisfying to see this kind of visionary thinking mature into a successful business.”

Even under stress, the business continues to grow. During the Covid-19 outbreak in China, Dada Group was a critical player in providing essential products like medical supplies and fresh produce to customers despite the imposition of stay-at-home orders and closures. “Having experienced the last unbelievably challenging six months, we are extremely proud to have been able to achieve this significant milestone, and look forward to continuing to build the Dada platform,” says Kuai. “We learned a lot through this process, and we were the very first company to present our investor roadshows 100 percent online following widespread travel bans.” The initial public offering (IPO) will allow the company to invest more heavily in its proven O2O marketing strategy and grow its user base.

Kuai’s path to taking Dada Group public shows that commercially successful ideas spring from many sources — including research carried out for a master’s degree at the MIT Center for Transportation and Logistics. Having reached the major milestone of an IPO, Kuai and his team are now firmly focused on the future.