Good morning, ladies and gentlemen. Thank you for standing by for Dada's second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference 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. Thank you, operator. Hello everyone, and thank you for joining us today. Our second quarter 2021 earnings release was distributed earlier today and is available on our IR website at ir.imdada.cn, as well as on GlobeNewswire services. On the call today from Dada, we have Mr. Philip Kuai, Chairman and Chief Executive Officer, Mr. Beck Chen, Chief Financial Officer, and Mr. Jun Yang, Co-founder and the Chief Technology Officer. Mr. Kuai will talk about our operations and company highlights, followed by Mr. Chen, who will discuss the financials and guidance. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defining the Section 21E of the Securities Exchange Act of 1934, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our management current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results or performance to differ materially. Full information regarding these and other risks, uncertainties or factors is included in the company's filing with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. In addition, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our chairman and chief executive officer, Mr. Philip Kuai. Philip, please go ahead. Thank you, Caroline, and thank you all for joining us today. We're pleased to announce another set of solid results for the second quarter of 2021. I would like to start by providing updates on our operations and highlights, then I will turn the call over to Beck to dive deeper into our financial and operating results. As a leading local on-demand delivery and a retail company, we have long served the real economy and been growing together with the brick-and-mortar retailers and brand partners. Leveraging our unique advantages of retail plus delivery capabilities, we are fully committed to supporting the healthy development of China's real economy and promoting domestic circulation. We believe this is the key element of the country's dual circulation strategy. Especially, we enable our retailer and brand partners in achieving their digital transformation and adaptation to the new social era. As a pioneer of the on-demand retail and delivery model, we empower our retailer and brand partner with our five core pillars of open platform, fulfillment, marketing, user engagement, and digital empowerment. Recently, we have seen an evolving regulatory environment in China. While our government fully support the development of innovative internet companies that can enhance China's international competitiveness, the authorities also aim to create a sound legal environment to ensure that companies maintain compliant operation. For example, the government recently strengthened anti-monopoly efforts to prevent the disorderly extension of capital. Our business model is in line with policy directives. We welcome the strengthening of regulation and believe an orderly and a fair environment will lead to the long-term sustainable development of the industry. Now, I will move on to the updates of our JDDJ platform, the leading local on-demand retail platform. For the 618 Shopping Festival, we have achieved extraordinary results. Our total GMV more than doubled, and GMV of consumer electronics, cosmetics, and home appliance all grew more than double year-over-year. It's vital for China to boost domestic market and build new expansion models by enlarging domestic demand and promoting high-quality economic development. We will leverage our strength to support national economic policies to help foster win-win situations and common prosperity. I would like to discuss JDDJ's progress on four fronts: serving users, enabling retailers, boosting brand promotions, and technology empowerment. Overall, by creating value for participants along the value chain, we aim to drive long-term sustainable value creation. First, in terms of serving evolving consumer needs, we continue to win customers' trust by providing timely, efficient, and high-quality services. The number of active consumers increased significantly by around 60% year-over-year to 51.3 million. We will continue our in-depth cooperation with JD to better serve the omni-channel and on-demand needs of JD's over 530 million active users. In July, our JDDJ one-hour e-commerce platform project was selected as a demonstration project for a new form of retail by the State Ministry of Industry and Information Technology, which demonstrated the government's recognition in our innovative model and our ability to satisfy the growing needs of consumers for a better and more convenient life. Second, in terms of empowering retailers, we provide integrated digital solutions encompassing open marketplace, fulfillment, membership management, and technology platform to help retailers improve sales and enhance operating efficiency. We continue to see enormous growth potential for local on-demand retail services. According to the National Bureau of Statistics, offline retail still accounts for 76.3% of consumer goods sold in the first half of the year. To realize quality growth and stay competitive, we believe accelerating digital transformation will continue to be the strategic focus of physical retailers. With our vision of bringing people everything on-demand, our JDDJ platform keeps expanding category and merchant coverage. We maintain the leading position in the supermarket category by deepening our strategic cooperation with existing partners and establishing a partnership with new supermarket chains. We have now onboarded 80 out of the top 100 supermarkets, including nine out of the top 10. In the smartphone category, we are glad to see that the value of on-demand retail is increasingly recognized by smartphone manufacturers. To ensure sufficient and high-quality supply of smartphones, we have already partnered with hundreds of authorized distributors. In the second quarter, we went further and established direct partnerships with smartphone brands, including Apple and Vivo. In the PC category, we have newly partnered with Microsoft, Asus, Dell, and Alienware. We're helping these brands strengthen O2O presence by gradually onboarding their offline stores onto JDDJ. We also continuously roll out value-added services to retailers. For example, our Dada Picking service helps retailers to improve order picking efficiencies while reducing their store personnel costs and the staff shortages. Currently, Dada Picking is deployed by Walmart, CR Vanguard, Yonghui Superstores, 7Fresh, and other merchant stores. During the second quarter, Dada Picking gained significant pace. The number of stores, number of units picked, and income for pickers all increased by around 60% quarter-over-quarter. During August 8th promotional campaign, the average picking time for Walmart stores, which utilize our Dada Picking service, was reduced down to just three minutes. Third, online marketing service for brand partners. During the second quarter, online marketing revenue from brand partners remained very strong, increasing by more than 110% on a high base in Q2 last year. This further demonstrates our unquestionable leading position in the on-demand retail sector for brand partners. On top of deepening our cooperation with existing brands, we have also signed several new domestic FMCG brands, including WH Group, C&S, and Blue Moon, and emerging global brands such as Oatly. We're promoting the China national tides, or the guó cháo, and they're riding on emerging consumption trends. Technology empowerment. As enterprises become more digitized, networked, and intelligent, they will add new momentum to economic development. Under the backdrop of the state's promotion of digital economy development and industrial digitalization, we abide by the national policy directives of building digital China. Our Haibo System can be a good example. Haibo is a SaaS product that enables retailers to drive O2O sales while streamlining operations. As of the end of August, Dada Haibo has been adopted by more than 4,300 retail chain stores, up significantly from 3,300 stores as of the end of April. Our Dada Haibo System now covers over 30% of the top 100 supermarket chains. In the second quarter, we launched a new intelligence pricing module to replace manual pricing adjustments. This module helps merchants improve their O2O promotional efficiency and profitability. As a result, stores that have utilized the new module have seen a 60% increase in profit and a 5 percentage point improvement in gross margin. Let's move on to Dada Now. As a platform that connects consumers and the merchants with crowdsourced based delivery services, we provide a large number of flexible employment opportunities. At the same time, we are committed to protecting the rights and the interests of every gig worker, as is encouraged by the authority. On rider care, we listen to and understand the rider's pain points and needs in time via multiple channels. Accordingly, we continuously optimize our platform to help riders deliver more efficiently and safely. At the same time, we regularly host training sessions to improve rider delivery experience and service capabilities. In addition, we have upgraded our rider stations. In the new stations, we not only set up rest areas, but also provide convenience amenities including drinking water, medicine, epidemic prevention materials, and battery charging services. On business progresses. During the second quarter, our on-demand delivery service to chain merchants, so-called the key accounts, continued to see explosive growth. The revenue year-over-year growth accelerated to over 140%. In the supermarket category, revenue increased by 70% year-over-year. We have recently announced partnership with CP Group, we provide comprehensive on-demand delivery services for the omni-channel to O2O orders of CP Lotus. In the restaurant category, year-over-year revenue growth was over 200%. We have seen significant growth from our existing partners, merchants such as McDonald's. This was driven by an increase in the number of stores and the increase in order volume per store. In the meantime, we have expanded into the tea beverage category and have signed a number of new tea brands in the second quarter. Small and medium-sized merchants are very important to the country's economy. Dada Now allows small business owners to gain access to on-demand delivery service at reasonable cost. The number of merchants that place orders continued to double year-over-year in the second quarter. For our last mile delivery business, we successfully transitioned to a more asset-light model this quarter. Based on our crowdsourced rider network, we provide comprehensive and cost-effective last mile delivery and picking solutions, especially during the peak seasons. Going forward, we will continue to deepen our cooperation with JD Logistics. Last but not least, I would like to talk about our exciting technology developments in the logistics industry. Technology innovation is an important driver to promote a positive change in quality, efficiency, and growth engine of China's economy. Upholding the spirit of national guidance of building a Digital China and benefiting the public, we have always been the pioneer of developing cutting-edge technology. Recently, on-demand consumption is becoming the new norm of how people shop. We believe the use of unmanned vehicle for on-demand delivery is paramount to improving both our operational efficiency and consumer shopping experience. In July, we officially launched the Dada Autonomous Delivery Open Platform, which is open to autonomous vehicle companies, leveraging our on-demand orders, operational knowhow, and order dispatching capabilities. Our open platform accelerates the application of unmanned delivery in the on-demand retail industry. Currently, unmanned delivery powered by our open platform is on trial runs in selected districts in Beijing and Shanghai. In the short term, autonomous delivery will be utilized to supplement manual delivery and help to ease the capacity constraints, especially during peak order seasons or periods of extreme weather conditions. Over the longer term, it will significantly reduce the cost of delivery as the scale becomes larger. I would like to end with a brief recap of how we are shouldering social responsibility. Dada Group has made social responsibility an essential aspect of the company and its leadership. While creating value for business partners and our users, we also adhere to our original intention to fulfill our corporate social responsibility initiatives. Recently, we made more efforts to improve people's livelihood. For example, we ensured living needs during pandemic containment in Guangdong and Jiangsu, provided a disaster relief in response of Henan flood, promoted internet inclusion among the elderly. Launch a series of programs and to support the social well-being. With that, I will now pass the call over to Beck to go over our financials for this quarter. Thank you. Thank you, Philip. 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, and therefore, all percentage changes I'm going to give will be on year-over-year basis, and all figures are in RMB unless otherwise noted. Total net revenue increased to RMB 1.5 billion. Aligning the revenue recognition method of Dada Now last mile delivery services to a comparable net basis, pro forma revenue growth would have been 81% year-over-year. Net revenues from Dada Now were RMB 594 million. The pro forma revenue growth rate was 81% year-over-year, mainly driven by the increases in order volume of intracity delivery services to chain merchants. Total net revenues from JDDJ also increased by 81% to RMB 881 million, mainly due to the increase in GMV from the same quarter last year, which was driven by increases in the number of active consumers and the average order size. The increase in online marketing services revenue is a result of the increasing promotional activities launched by brand owners, also constituted an increment of the net revenues generated from JDDJ. Operations and support costs were RMB 1.1 billion. The rise was primarily due to an increase in rider costs as a result of increasing order volume for intracity delivery services provided to key chain merchants on the Dada Now platform and the retailers on the JDDJ platform, partially offset by the decrease of rider-related costs incurred by the business upgrade of our last mile delivery services. Selling and marketing expenses were RMB 824 million, mainly due to a growing absolute dollar amount of incentives to JDDJ consumers and an increase in advertising and marketing expenses, which was primarily attributable to the increase in referral fees paid to the staff at retailer stores and third-party promotional service providers for their efforts to attract new consumers to the JDDJ platform. G&A expenses decreased to RMB 100 million, mainly due to the decreased share-based compensation expenses as share-based compensation expenses were recognized immediately in the second quarter of 2020, resulting from options granted to employees with an actual performance condition. R&D expenses were RMB 132 million, mainly because of the increase in research and development personnel costs as the company continues to strengthen its technology capabilities. Non-GAAP net loss attributable to ordinary shareholders was RMB 549 million versus RMB 390 million in Q2 last year. Non-GAAP diluted net loss per share was - RMB 0.58 compared with - RMB 0.80 in the second quarter of last year. As of June 30th, 2021, we had RMB 4.7 billion in cash and cash equivalents, restricted cash and short-term investments. Under the $115 million share repurchase program announced in June, we have repurchased approximately $73 million of our ADSs as of August 31st, 2021. For the third quarter of 2021, we expect the total revenue to be between RMB 1.63 billion and RMB 1.68 billion, representing a pro forma growth rate of 80%-86%, adjusting Dada Now last mile revenue to a comparable net basis in Q3 of both years. In addition, net revenues from JDDJ increased by 81% in Q2 this year. We also expect the revenue growth of JDDJ to accelerate in the second half. With continuous improvement in operating efficiency, we expect the pro forma Non-GAAP net loss margin after adjusting revenues of last mile delivery services to a comparable net basis to further narrow in the third and the fourth quarter of 2021 on both year-over-year and a sequential basis. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Once again, it is star one to ask a question. First question comes from the line of Ronald Keung from Goldman Sachs. Please ask your question. Thank you. Thank you, Philip, Beck, and Caroline. Two questions. Firstly, would like to hear our latest deepening cooperation with JD.com. As this omnichannel continues to be a key focus, just want to hear, is there any updates, further changes for the natural selection or any further dedicated projects that you're working on from dedicated channels? How are we planning to expand categories in order to promote this higher on-demand shopping, not only for our own JDDJ app users, but also into the JD.com users? My second question would be, Beck, you talked about the accelerating growth for JDDJ in the second half. Just want to hear within our revenue guidance, what is the kind of embedded JDDJ standalone growth that we're expecting in the third quarter? Do we expect any seasonality between third and fourth quarter to drive your expectation of a faster JDDJ growth in the second half of this year? Thank you. Thank you, Ronald. I will take the first question, and I will have Beck to address the second one. Our partnership with JD Group has been really, really important and a win-win for both parties. We have together dedicated to provide good services to the customer needs and to improve the consumer experience. In Q2, we are very happy to see that our partnership has significantly strengthened. In Q2, the GMV from the Shop Now, the which is empowered by us, had a quarter-over-quarter growth of 90%. You perhaps have already noticed that if you open up a JD app in many cities, including Shanghai and Shenzhen and many cities, you have seen on the very top on JD's homepage, there's a new entry point called or nearby or local. This is in test, and we plan to roll out this new service to more cities and have a bigger scale of expansion. This will essentially bring our customers more on-demand delivery experience and the shopping experience. At the same time, we are working closely with JD to improve the penetration into the JD's 530 million annual active consumers for more and more of them to experience the on-demand retail services. We'll continue to do that. We'll continue to work very closely with JD to improve the shopping experience and to streamlining the products and services and to improve the penetration. Our partnership with JD, not only happens with the JD Retail, but also with the JD Logistics. In addition to the existing order picking and order delivery partnership, we have recently launched a new partnership with JD Logistics on the Dada Autonomous Delivery Open Platform. We will jointly to promote the upgrade and transformation of the intelligent delivery business and to jointly improve the infrastructure of intra-city delivery and on-demand delivery. We are, again, very happy and excited with what's happening with JD Group, and we jointly will push this forward, and it's a highly win-win partnership. Okay. For the second question about the JDDJ growth. Basically, I want to add more color on the extension of categories. By cooperation with JD.com, we are expecting to explore into or just extend our cooperation into more categories, including home appliances. Not only just like a supermarket, fast FMCG products and smartphones products before. Previously, we were exploring to more business, including home appliance and cosmetics by cooperation with the JD.com group. There is some similarities for the second half when we expect Q4's revenue growth of JDDJ will be even more than Q3's numbers, because usually for Q4 there will be our big campaign and also for all those businesses like apparels and smartphones, there will be new product launch. We expect Q4 will be even better than Q3. We are confident that the online marketing revenues growth rate. Because in Q2, as we have discussed that the online marketing revenues is increasing by over 100% on the higher base of Q2 last year. If everybody's remembering Q2 last year, the brands actually spent a lot of marketing dollars on different e-commerce platforms, not only us, but also JD.com and Alibaba as well. In Q2 this year, we still witnessed the triple-digit growth rate of the marketing dollars, and we also expect that for the second half of this year, for each quarter of this year, our online marketing revenues will continue to grow triple-digit year-over-year. With that support, we believe that our overall monetization rate will be also growing not only on a year-over-year basis, but also on a sequential basis for Q3 and Q4. This is the guidance for JDDJ growth for Q3 and Q4. Wonderful. Thank you, Philip and Beck. Your next question comes from the line of Eddie Leung from Bank of America. Please ask your question. Good morning, guys. I have two questions. The first one is about the rider costs. We saw that on your press release, you mentioned that the operations and support costs went up and partly because of an increase in rider costs. Just wondering if you could give us more color on the rider costs. For example, any trend in terms of the rider costs per order and is that anything that, going forward, we need to buffer for extra costs because of the call for protection of worker benefits? Secondly, about sales and marketing. Just wondering if you could give us some color about the customer incentive portion versus advertising and staff costs. Thank you. Okay. Thank you for the question, Eddie. For the first question about the rider cost. Basically, we were talking about the absolute dollar amount of the rider cost increase. Because generally, like the chain merchant benefits was growing by almost 150% year-over-year. We will pay more absolute dollar amounts of the rider cost to the riders. Basically the cost per order value is generally stable this year and also for the sales and marketing customer incentives. On a sequential basis, our consumer incentives is still maintaining the same level, a little bit decreased compared to Q1 this year. We also expect that on a sequential basis, the consumer incentives given to the customers will be decreasing in Q3 and Q4 this year. Also in terms of the operation cost as a percentage of the GMV of JDDJ, we also expect it to decrease on a sequential level, not only in Q2 but also in Q3 in the second half. Yeah. Just want to add a little bit. Sure On top of what Beck just mentioned. If you look long term in terms of sales, marketing, and customer incentives, I think one of the very positive thing we're now looking at is our partnership with JD.com. Unlike what happened in the last few years, we need to acquire brand-new customers for JDDJ. Now as we are working closely with JD.com, we are working together with JD.com to penetrate into JD.com's massive active user base. We envision that this partnership, in the long term, will help to drive down the sales and marketing and customer incentive dollars because those customers have already been JD.com's customers. As you might imagine, that the acquisition cost or the conversion cost for those customers might be lower than the brand-new customers. Also for the rider cost, the same thing. If you look the mid to long term, we're confident that with the increase of our order density, as you can see that the growth of our, the Dada Now on-demand delivery business has been very fast. We are now serving more and more chain merchants. At the same time, the order numbers of JDDJ has been growing very fast as well. The order density will also help to reduce the rider cost. The higher density, the more numbers of orders that riders can carry and can deliver in a certain period of time. This will improve the efficiency and therefore reduce the cost. To summarize, I think if you look mid to long term, the rider costs can be well managed, and the sales and marketing expense can be lowered. Thank you. Got it. Thank you. Your next question comes from the line of Thomas Chong from Jefferies. Please ask your question. Hi, management. Thanks for taking my question. I have two questions here. First, how should we think about the impacts from COVID and flood to JDDJ and Dada? My second question is that, are there any changes we are seeing in competitive environment in fresh produce for our Dada Haibo System? Are we seeing our peers also offering similar products? Thank you. Hello. Could you repeat the first question? Yeah. My first question is that, how about the impact from COVID and the flood to JDDJ and Dada? The COVID impact on JDDJ and Dada, right? Yeah, COVID and the flood in Henan province. Okay. To give you a quick update on the COVID and the recent flood in Henan. In the last few months, we have seen that occasionally in some cities or areas in China, we are seeing COVID cases. We work very closely with local government to provide the daily supplies and the on-demand delivery for the customers. Almost in every city, we receive recognition from the government to basically giving us very positive feedback on what we have done to help the city and help the society. Certainly, we are seeing that customers are getting more and more used to ordering from online, instead of going to offline stores all the time. I think this, in the long term, will benefit us, basically to help us to acquire and educate more customers. This is something that has already happened in the last two years, and we expect this to continue to happen going forward. At the same time, this also helped to educate the merchants. Therefore, we are now seeing almost all of the top supermarkets have been already working with us. Also, we are seeing that more and more leading merchants from other industries are now turning to working with us. I think this also helped to educate the merchants. Everyone knows that in order to deal with the COVID or to deal with the customer needs shift, they have to transform quickly and digitally. I think this also will benefit us. Also for Q3 financials, we don't think the flood situation in Henan will have any material negative impact on us. Yeah. Your second question regarding the Dada Haibo. Competitiveness. Competitiveness. First of all, we're very proud that the value of Dada Haibo has been recognized by more and more leading retailers. At the same time, because of our neutral positioning of JDDJ, because we are not a retailer ourselves, so that significantly help us as well in terms of penetrating to more and more merchants. In last quarter, we have now seen over 4,300 active stores using Dada Haibo System, and this number keeps going up. At the same time, Dada Haibo System has already been proven as able to increase the efficiency of retailers' O2O business, and also to increase their revenue from O2O business. I think the Dada Haibo System is unquestionably the most adopted and the most leading system in the market. That's very clear. Thank you. Sure. Thank you. Your next question comes from the line of Alicia Yap from Citigroup. Please ask your question. Hi. Good morning, management. Thanks for taking my questions. My first question is related to the community group buying platform. With the slowdown of many of these platform volume, have you seen any additional demand flowing back to your supermarket retail partners? Any qualitative comments on how the demand trend has changed over the last two months versus what you've seen earlier this year that you could share? Then second is, how much, in terms of the longer term, the cost saving that you foresee the autonomous delivery could bring along? How will the pricing or the margin structure that brings along with this autonomous delivery when it gets bigger scale? Thank you. Thank you, Alicia. I will give you my view, and I will see if Beck have anything to add. First of all, the community group buying. I will give you some data points. In Q2, the GMV growth of JDDJ in a number of provinces that are most actively developed by community group buying, including like Hunan, Hubei, Guangxi, Jiangxi, Henan, Shandong. In all those provinces, the GMV of JDDJ achieved over 100% year-over-year growth. We are doing very well in all of those provinces. At the same time, as you probably have noticed that the regulators have now placed tighter regulation in terms of unfair competition and also the anti-monopoly, et cetera. This certainly places a lot of pressure on the community group buying players. We are very confident that in the long term, we will have more competitiveness. Also because we always believe that the supply chain capability is a key to win in this market and to fulfill customer needs. We are able to work with all the local leading players to have the strongest supply chain capabilities and have the broadest geographic coverage that we can fulfill customer needs nationwide with the broadest SKU assortment. All those are incomparable by the community group buying players. At the same time, because we are one-hour delivery, so much more efficient and much better customer experience than the next-day delivery. This also help us to differentiate ourselves. Another thing I want to mention is that, for example, like Meituan, they do both community group buying as well as a platform business, which is quite controversial because for the retailers, they definitely will consider Meituan as a competitor in terms of a neutral players or a partner, right? We have the position of a platform business only, so we are neutral, and we only help the retailers and never compete with them. I think this is also helping us to differentiate ourselves. In short, we are quite confident about the competitiveness against the community group buying players. Yeah. Also for more color. Maybe in the beginning of the year, some of the retailers are in a fierce competition in their local tier 3 or tier 4 cities with the CGB businesses. Right now, I think most of those retailers are in much better position to grow their businesses. What we have witnessed is that for those retailers, their offline businesses, their overall businesses' gross margin is improving apparently. Which makes them to be in a better position to further invest in the online businesses in the second half of this year and going forward. Yeah. Also for the autonomous delivery, I will give my view and see if Beck Chen will have anything to add. We're quite excited to announce our open platform for autonomous delivery in the last few months. We have been working on it for quite a while, working very closely with JD.com Logistics along with a few other partners. We have already successfully launched the service with Walmart, Sam's Club, 7Fresh, Yonghui, in both Beijing and Shanghai. In some districts, according to the local government guidance. In terms of the process or customer experience, I think those are having dramatically improved over the last few months. Autonomous delivery are happening in the real environment and serving the real customers every single day now. We are confident that the customer experience is very good. At the same time, we are seeing that the cost being improving along the time as well. Also, I think in the short term, autonomous delivery will be utilized to supplement a manual delivery and to relieve capacity constraints, especially during peak seasons or during the extreme weather conditions. In the longer term, I think leveraging the scale application of the autonomous delivery, we expect it will significantly reduce the cost of delivery in the long term. Jun Yang. I will add some color on that. Right now, the trial run is still quite limited. The whole ecosystem is in its very early stage. If you look at the cost per order, I think it's still relatively high because of the hardware cost as well as the limited trial. We are seeing already a trend and also the projections, the hardware cost is going to go down quite significantly over the next few years. We are expecting in probably two to three years, I think, there's a chance that the cost will be lower than the human cost in a way. Another trend to watch out is the human cost in the next few years expect to probably get even higher given what the population looks like. That's why we are investing really early stage to making sure we can accelerate the commercial use of the autonomous delivery. Great. Thank you for the color. Your next question comes from the line of Wei Fang from Morgan Stanley. Please ask your question. Thank you. Good morning, Philip, Beck and Caroline. I ask two questions. The first is on the monetization side. I saw that the total monetization rate seems to be stable quarter-over-quarter. Seems like the structure has been changed. I noticed that the delivery fee as a percentage of GMV has dropped by something like 0.5 percentage point. Is there any particular reason behind that we are lowering the charges from the customers or it's just due to the mix of the order types? The second question is on the cost side, it's still about the rider cost. I'm trying to reconcile the overall support and fulfillment cost items. I have noticed that it seems like the rider cost increase is higher than what I can calculate it from the JDDJ's rider cost increase and the Dada Now's rider cost increase. I just wonder whether in the second quarter, are there any one-time or one-off items in the rider cost side, such as some special subsidy to riders during the pandemic or something like that, any one-time impact there? That's my questions. Thank you very much. Thank you, Wei. Yeah, for the first question about the monetization rate. Basically, the overall monetization rate is increasing by 20 basis points on a sequential basis. I also said that for the third quarter and fourth quarter, we expect the monetization to be stably growing on a sequential basis as well. In which online marketing monetization rate is increasing significantly to 2.9% in Q2 this year versus 2.5% Q2 last year. As you mentioned that delivery service fees or commission fees as percentage of the GMV is dropping a little bit. This is mainly because of the mix change about the product categories. In Q2, the smartphone business is increasing relatively faster than the average. Because their commission rate is lower than the average and their AOV is much higher than the average platform AOV, which means less orders compared to the other categories. Also we will just receive less delivery fees as a percentage of the GMV of the smartphones in the business. We also believe that in Q3, the commissions and delivery fees as a percentage of GMV will be a little bit growing on a sequential basis compared to Q2. Because in Q3, usually this is a little bit slack season for the smartphone businesses, the growth rate of smartphone businesses will be lower than Q2. The overall commission rate and the delivery services fee will be growing as a percentage of GMV while we still maintain a relatively higher growth rate of online marketing, which makes a stably growing monetization rate in Q3 and Q4. In terms of the second question about the rider cost, yes, there is some one-time issue. Basically, it's not a one-time issue because as we mentioned that effective from April this year, we successfully transitioning the business model of the last mile delivery services from gross basis to net basis. Actually, it's starting from mid of April. Accounting wise, for the first half of April, for the last mile businesses, we still count on gross basis, which makes us have more rider cost in the operation and the support cost line because we need to pay some rider raise costs to the last mile riders in the first half of April. For the rest of the quarter and also for Q3, there is no such issue. Thank you very much, Beck, for the very detailed answer. Thank you. Thank you. Your next question comes from the line of Ashley Xu from Credit Suisse. Please ask your question. Thank you management for taking my questions. My first question is on the growth outlook for our Dada Now business in KA, because in the past we have seen this business growing quite well. Looking forward, what's our expansion plan and outlook on this front? My second question is about the potential impact from social security requirement on the riders. Any recent updates or change on that front? Thank you. Thank you, Ashley. Let me just take the two questions. For the first question about the growth rate of Dada Now. In the first half of this year, the Dada Now key accounts, chain merchants businesses is growing very quickly by 140% for the first half. We also expect that definitely in the second half, this business will be continued to grow at triple digits, just like we mentioned in the earlier script. Also for the next year, we also expect this business growing at a relatively higher speed. We expect right now we are almost close to the number one player in the chain merchants services businesses. We expect that in the fourth quarter or early next year, our business volume in the chain merchants sector in China should be almost the number one leader. In terms of the potential impact from the rider cost from the law. The Guiding Opinions on Protecting Labor and Social Rights and the Interests of Workers Engaged in New Forms of Employment was jointly released by eight central departments of the government in July. We fully understand the government's policy to better protect flexibly employed social workers and are pushing forward with the implementation of the guidelines. So while we create a large number of flexible employment opportunities through our crowdsourcing network, we are also committed to safeguarding the rights and interests of Dada riders. Specifically, in terms of the work-related injury insurance, I think we have discussed in the last earnings call that we have been actively participating in discussion panels hosted by the government, and strictly stick to the principle of safety production. Under the guidance of the relevant authorities, we are also right now preparing for the test run pilot phase of work-related injury insurance in selected provinces like Shanghai, Guangdong, and Beijing. The incremental cost of purchasing the work-related injury insurance for riders is estimated to be RMB 0.04 per order, just like we mentioned in June. We think this could be well offset by our increasing order density. Based on the opinion, authorities and local governments are formulating specific measures for different industry. For example, for food delivery, the State Administration for Market Regulation, SAMR, subsequently took the lead in the formulation of the guideline to specify the responsibility of food delivery platforms and protect the rights of food delivery riders. Based on our communication with SAMR, the guideline released by SAMR is not applicable to us because we do not operate a food delivery platform, and our riders do not work for self-owned food delivery platforms. This is just right now the impact for us, and we expect that only RMB 0.04 per order on the work-related injury insurance will be well digested in our cost improvement next year. That's very clear. Thank you. Your next question comes from the line of Robin Leung from Daiwa. Please ask your question. Hi. Thanks management for taking my question. Could management comment on the mix of the supermarket and non-supermarket contributions? As management said, with the deepened cooperation with JD.com, that will have more contribution from home appliances and cosmetics. Should we expect the non-supermarket mix to increase meaningfully? Also, what is the AOV this quarter? With the non-supermarket mix even higher, will that lift the AOV even more? Given the subsidies are mostly spent on the supermarket category. When the non-supermarket category increase, should we expect that to benefit the margin more in the second half? Thank you. Okay. Thank you for the question, Robin. Basically for Q2, for the mix contribution, the supermarket is contributing about 70% to the total GMV while the smartphone or 3C business, I was say 3C including smartphone and the home appliances, like around 20% of the total GMV. With the further cooperation with JD.com, just like we mentioned in the earnings call in June, that we expect their non-supermarket categories will gradually continue to increase the total market share in our GMV amount. In terms of the average order value, in Q2 this year, our average AOV of the platform is about RMB 180. While for the AOV of the supermarket categories is still as high as RMB 140. We think in the second half of this year, we should be still able to maintain the higher AOV for our platform average and also for supermarket average. You're right, so not only because of the mix contribution, but also we are gradually decrease the subsidy level or the consumer incentives given to the shoppers. Our average, the cost percentage and as GMV of JDDJ, will be also sliding down in the second half. That's why for Q2 this year, our direct margin is -2.3% versus 2.8% in Q1 this year, which is improving by 50 basis points on sequential basis. In Q3, we are seeing further improvement by almost 100 basis points to -1.3%. Thank you. Very helpful. I would like to hand conference back to Ms. Caroline Dong for closing remarks. Please continue. Thank you, operator. In closing, on behalf of Dada's management team, we'd like to thank you for your participation on today's call. If you require any further information, feel free to reach out to us directly. Thank you for joining us today. This concludes the call. This concludes today's conference call. Thank you for participating. You may now disconnect.