Morning, ladies and gentlemen. Thank you for standing by for Dada third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the management's prepared remarks, there will be a question- and- answer session. As a reminder, today's conference 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 third quarter 2021 earnings release was distributed earlier today and is available on our IR website at ir.dada.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 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 defined in 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 upon management's 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. Further information regarding these and other risks, uncertainties or other factors is included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law. 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 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 strong quarter. I would like to highlight recent progresses and then provide updates on our two platforms, and Beck will go through our financial results in greater details. Earlier this year, the CPC Central Committee clarified China's strategic vision and the government's priorities in the 14th five-Year Plan and long-range objectives through the year 2035. With this, it sets a goal of accelerating digital development and building digital China. According to statistics from China Academy of Information and Communications Technology, China's digital economy accounted for 38.6% of total GDP in 2020. While that number leads among developing countries, there is still a notable gap with the 54.3% average in developed countries. The main engine to drive China's digital economy lies in industrial digitalization, which contributes 80.9% of the total digital economy. First, industrial digitalization will build up the country's competitive edge of digital economy. It's a key theme that Chinese government wants to promote. Dada Group is well-positioned in the national trend of digital economic development. As a leading local on-demand delivery and retail company, we have always been committed to driving digital transformation in the retail industry. Together with JD.com, we are further empowering traditional industry and driving the development of the real economy. This naturally leads to our strengthened strategic cooperation with JD. In October, Dada Group and JD.com jointly launched Shop Now or Xiaoshigou, a unified brand for all on-demand retail services within the JD ecosystem. Through Shop Now, users can access on-demand services via multiple channels on JD, including the Nearby, Fujin tab, and all the entry points of Wujingtianze program. Shop Now is powered by Dada Group. Leveraging our years of LBS-oriented operational experience and accumulation of technological capabilities, we will fulfill all needs of local on-demand retail and delivery on JD. We both strongly believe in the huge potential of on-demand retail in China. With Shop Now, Xiaoshigou, we will leverage our respective strengths to lead the development of this quick growing industry and bring win-win results for both groups. For JD, Shop Now will enrich both product supplies and delivery options, providing consumers with a better shopping experience. For Dada Group, Shop Now will increase our penetration rate among JD's vast user base. This should become a stronger driver for our long-term development. Before discussing the recent performance of our two platforms, I would like to provide some highlights of our Double 11 shopping festival. With over 150,000 stores on JDDJ participating in the event this year, JDDJ achieved record high in the peak day GMV and grew the total GMV during the 11 days from November first to November eleventh by over 100% year-over-year. Now let's move on to JDDJ, the leading local on-demand retail platform in China. JDDJ continues to drive the digitalization of offline retail in three ways, empowering retailers at broader scale, helping brands improve marketing efficiencies, and innovating technology solutions. First, empowering retailers at broader scale. On one hand, partnering with more retailers help us enrich product offerings and bring better shopping experience to more consumers. The number of active users on JDDJ increased by 53% year-over-year to RMB 57.1 million. On the other hand, as we expand the merchants and category coverage, we're helping more offline retailers building digitalization capabilities. Let me take you through two different verticals and talk about some exciting recent developments. In the supermarket category, we continue to enhance our leading position. We now have established partnerships with 82 out of the top 100 supermarket chains in China. The Super Merchant Day provides supermarkets with a great opportunity to engage with users on our platform. In the third quarter, during the eight Super Merchant Day sessions for local winner supermarkets such as Jiajiay ue and Bubugao, weekend sales all increased by over 200% year-over-year. In the smartphone category, we continue to expand partnerships with brands. This quarter, we established direct partnerships with Samsung and HONOR. For Apple, we saw impressive results for new product launch. On September 24th, more than 900 authorized stores on the JDDJ platform started to sell the iPhone 13 series. On launch day, sales on our platform were a remarkable 7 x greater than the launch day of iPhone 12. For small home appliance, we deepened collaboration with the leading retailer chains such as Chongbai, Changshe, and Shuidian to strengthen online/offline integration. Our efforts paid off, as the GMV in the third quarter increased by about 100% quarter over quarter. In the pharmacy category, we launched a 24-hour free online medical consultation service to provide user with real-time assistance. Meanwhile, 24-hour retail and delivery services are also available in more than 3,300 pharmacy stores on our platform to meet consumers' needs for medicine at any time. Secondly, helping brands to improve marketing efficiency. In the third quarter, revenue from online marketing service on our JDDJ platform grew by over 140% year-over-year, a significant acceleration from the 110% growth in the previous quarter. Online marketing monetization rates jumped to 3%, further demonstrating JDDJ as the go-to platform for brands to drive total sales. We now have strategic partnerships with more than 200 brands. We are committed to help brand partners improve marketing efficiency and engage with consumers effectively. As part of this, we recently introduced a new marketing program called Super New Product Day for product launch promotions. In August, Unilever launched a campaign under this new program. As a result, sales increased by 190% from the previous week. Certainly, we're innovating technology solutions. Our Haibo system continues to be popular among retailers. Recently, Haibo now reached the milestone of serving 5,000 retailer stores. Based on the broad cooperation with retailers, we have a great understanding of their pain points in O2O operations, and are able to innovate quickly. For example, in the third quarter, to better support merchants' holiday bundle promotions, we launched a new module on Haibo to manage bundled products. This module provides a one-stop solution to address the pain points in inventory synchronization and expenses allocation. As a result, it could improve the processing efficiency for bundled products by as high as 20 x. In addition, based on our capability to allocate expenses down to the SKU level, we launched a tool to enhance marketing efficiency. This tool integrates the subsidies from brand partners, merchants, and platforms into one single coupon, the three-in-one coupon, to improve the ROI of marketing dollars for brands and help merchants to improve sales by expanding the number of products on promotion. For example, this tool enables to create three-in-one coupons that cover around 2,000 SKUs across over 100 brands. In September, the average daily sales during the weekend that offered three-in-one coupons were more than 10 times than the sales in normal weekends. Our digitized in-store picking service, the Dada Picking, maintains strong growth momentum. In the third quarter, orders fulfilled by Dada Picking grew over 70% quarter-over-quarter. During the Double 11 shopping festival, order volume more than doubled compared with June 18th's promotional period, effectively helping merchants to improve on-time fulfillment rates while saving costs. Now I would like to move on to Dada Now. Our revenue from on-demand delivery services to key accounts or KA, the merchants increased more than 110% year-over-year. Revenue from supermarkets KA increased by over 90% year-over-year. In the third quarter, we added geofencing functions to our on-demand delivery service. This function enables merchants to accurately determine the delivery area for each store without additional investment. Revenue from restaurants KA increased by 150% year-over-year. Orders from fast food chains and tea beverage chains continued to increase significantly. Moving to SMEs. The number of SME merchants that completed orders on Dada Now in the third quarter increased over 90% year-over-year. This was mainly driven by our refined graded operational strategy and continued optimization of our fulfillment capabilities. In September, we officially announced the launch of our logistics SaaS, software as a service, the Dada Smart Delivery. This product provides the third-party delivery service providers and merchants who deploy their own delivery fleets with a suite of digital tools to manage orders, dispatching, and routing for omni-channel on-demand delivery orders. Our digital logistics platform has helped a lot in improving our operational efficiency in the last seven years. Now, by opening up our technology in the form of a standardized SaaS product, we hope to further enhance the service capability and efficiency for the whole on-demand delivery industry. Lastly, last mile delivery. We saw strong growth in pickup services with the number of pickup orders in the third quarter doubling from the previous quarter. This growth is built upon our enhanced system integration with JD Logistics and increased penetration in various order types. We expect pickup services to be another driver for our last mile business. With that, I'll now pass the call over to Beck Chen to go over our financials for the 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. Therefore, all percentage changes I'm going to give will be on year-over-year basis, and all numbers are in RMB unless otherwise noted. Total net revenues increased to RMB 1.7 billion, aligning the revenue recognition method of Dada Now last mile delivery services to a comparable net-net basis. Pro forma revenue growth would have been 86% year-over-year, which represents an accelerated growth rate compared with 81% revenue growth in the last quarter. Net revenues from Dada Now were RMB 614 million. The pro forma revenue growth rate was 90% year-over-year, mainly driven by the increases in order volume of intracity delivery services to chain merchants. Net revenues from JD DJ increased by 84% to RMB 1.1 billion, mainly due to the increase in GMV, which was driven by increases in the number of active consumers and the average order size. The increase in online marketing services revenues as a result of the increasing promotional activities launched by our brand owners also contributed to the revenue growth of JD DJ. Moving over to the expense side. The operating and the supporting costs were RMB 1.2 billion. The rise was primarily due to an increase in rider costs 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 JD DJ platform, and partially offset by the decrease of rider-related costs incurred by our business upgrade of last mile delivery services. The selling and marketing expenses was RMB 780 million. Increase was primarily due to the growing absolute dollar amount of incentives to JDDJ consumers, and an increase in personnel costs in connection with the company's growing businesses. The G&A expenses decreased to RMB 99 million, primarily due to decreased share-based compensation expenses. R&D expenses rose to RMB 148 million, mainly attributable to the increase in research and development personnel costs as the company continues to strengthen its technology capabilities. The non-GAAP net loss attributable to ordinary shareholders of Dada was RMB 480 million, compared with RMB 324 million in Q3 last year. The non-GAAP basic and diluted net loss per share was -$0.48, compared with -$0.36 in Q3 last year. As of September 30, 2021, the company had RMB 3 billion in cash equivalents, restricted cash and short-term investments. Under the $150 million share repurchase program announced in June 2021, as of October 31, we have repurchased approximately $131 million of ADSs. For the fourth quarter of 2021, we expect total revenue to be between RMB 2 billion and RMB 2.1 billion, representing a pro forma growth rate of 88%-97%, adjusting 2020 Q4 and the 2021 Q4 Dada Now last mile revenue to a comparable net basis. In addition to the acceleration in revenue growth, we further expect the pro forma net loss margin based on the comparable net basis revenue to continue to experience significant year-over-year improvement in the fourth quarter of 2021. This concludes our prepared remarks. Now, operator, we are now ready to begin the Q&A session. Thank you. Thank you. Ladies and gentlemen, we will now begin the question- and- answer session. To ask a question, press star one on your telephone. To cancel a request, press the pound or hash key. Your first question comes from Ronald Keung of Goldman Sachs. Please ask your question. Hi, Ronald. You may be on mute. Hello? Hello, can you hear me? Yes, go ahead. Okay. Sorry about that. Hello, Philip and Beck. Congratulations on the results. I have two questions. First is on the Shop Now function. How has that channel grew, or how have we seen the traction with that with JD users clicking that nearby button? Is our fourth quarter revenue kind of acceleration that we guided mainly contributed from this new channel, and how do we see that Shop Now function that will progress through, say, the next one or two years in driving additional growth for the company? Then we've seen the sales and marketing costs come down as a percentage of revenue, which is encouraging. Could you just share how that subsidy rate trend has been going? Is that how a newer channel is driving efficiencies that is leading to lower subsidy rates? Thank you. Okay. Hi, Ronald. The Shop Now certainly is a key growing very quickly, and we expect it will become one of the key driver of our future growth. We're happy to see the traction has been very good. The Shop Now includes not only the Nearby, the Fujin channel, but also various entry points and collaborations. For example, if you are searching using the search engine on JD and you click on the search results and purchase, it also consider as a part of the Shop Now. The contribution from the Shop Now will absolutely growing up for the foreseeable future. Both JD and us are very confident about the growth potential. In October, we launched the unified brand of this Xiaoshigou. I think the consumers will be building up the mentality around the on-demand retail on JD. I think over time, we will see the potential going up. Also we have a joint agreement with JD Retail to grow the user penetration of Shop Now, Xiaoshigou, all the way to 50% of the user penetration. I think that's the future we are looking at. At the same time, we're also very happy to see the subsidy level going on down partially thanks to the Shop Now, the new channel and the new traffic. At the same time we're improving our marketing efficiencies overall. That also helps to drive down the subsidy level. We are quite confident about both growth and the profitability in the future. Thank you, Philip. Thank you. Your next question comes from Eddie Leung of Bank of America Securities. Please ask your question. Good morning, guys. I have a follow-up question on Ronald's question about subsidies and sales and marketing. Could you elaborate a bit on the unit economics trend and whether it's still on track with our previous target in terms of the break-even point? Related to that, could you also elaborate a bit on the competitive landscape in the overall grocery and fresh produce category? 'Cause we have heard some potential reduction of subsidies in some of the other formats in these categories. Just wondering how that might affect our sales and marketing and subsidy strategy going forward. Thank you. Eddie, let me take the first question. Just like Philip said, in Q3, just like we have communicated in the earnings call last quarter. In the second half, we expect, we expected the consumer incentives given to JDDJ consumers will decrease significantly compared to first half of this year. Actually, in Q3, the incentive ratios was decreased more than our expectation before. In Q3, it was 5% for the consumer incentive versus 6.2% in the first half of this year. This is the main contributor to our greater improvement of our direct margin level. In Q3, our direct margin was improved significantly to -0.6%, which is thanks to like the 120% improvement for the consumer incentives. Partially, this has improved the cost and the contribution of those Xiaoshigou or Shop Now initiatives. The other is like the tools implemented, just as Philip mentioned the earlier script that, for example, we have created a three-in-one coupon to combine the platform money, merchant money, and also the brand owner's money together to improve the efficiency of the subsidies. This also help us to improve a lot. In our expectation for the fourth quarter, we believe the subsidy ratio should be no more than 5%, which should help us to further improve the direct margin level in Q4. Yeah. In terms of the overall market landscape and competitive landscape. First of all, I think as we can all see that, both retail and the economy are under general pressure. Most of the brands and retailers are certainly under pressure. At the same time, people are all looking for growth and all looking for channels can provide efficiency improvement. JDDJ is certainly considered as the fastest growing channel for most of the brands and also can helping them to improve the efficiencies. That's why, while we're seeing this pressure, at the same time, most of the brands we have been working with are now more than willing to allocate more marketing resources through our channel, the JDDJ channel. At the same time, we improve the ROI of such marketing dollars. By the three-in-one coupons. That's why we are not only getting more marketing resources from the brands, but also improving ROI. In terms of the competitive landscape, I think one of the key player in the market, or at least used to be the very key player in the market, is the community group buying. As you probably have seen that the regulations have recently toughened up on community group buying, and that they certainly are now seeing some slowdown. Subsidies from the community group buying has certainly been reduced as well. For us, all of the provinces that group buying are most active, we are seeing the GMV of 400% year-over-year growth in Q3. Again, we are able to grow despite the competition from the community group buying. I think looking forward, with the regulations as well as the economic pressure, we would envision that each player in the market will be more reasonable and rational instead of like burning too much of subsidies. We're certainly happy to see that, as we are getting to a more healthy competition environment. I think that's good for everybody. At the same time, we are certainly strengthening our collaboration with JD to achieve a win-win situation, right? To both increase the scale and improve the efficiencies for both JD Retail and JDDJ. We are very confident about our competitive edge going forward. That's very helpful. Thank you, Ken. Your next question comes from Thomas Chong of Jefferies. Please ask your question. Hi. Good morning. Thanks management for taking my questions. I have two questions. My first question is about our KA business under Dada Now. The business growth momentum is very strong. Just want to get a sense about how we should envision the growth momentum as we enter into 2022, and also how we should think about the competition in this segment as well as the investment that we are going to be made in this KA segment. My second question is on JDDJ. Can management comment about the category mix in Q3 and also the average order value? On the other hand, with regard to our strong online marketing revenue growth, given that it is about 3% right now, how should we think about the takeaway for online marketing in future? Thank you. Thank you, Thomas. Let me firstly elaborate on the questions and I will leave the competition question to Philip. For the numbers thing, first for JDDJ, our average order value in Q3 was RMB 194 for the platform. Going forward, we expect that this AOV will be further increased because we further diversify our platform categories mix, and also even for the supermarket category still it's very high. It's like RMB 146 in Q3. We think the AOV will further go up in the following quarters. In terms of the category mix, in Q3, two-thirds was coming from supermarket category, and 25% was coming from you know the 3C category, including smartphones, home appliances and PC and pets. We also expect that the non-supermarket categories will contribute more and more gradually in the following quarters. In terms of the online marketing services, 3% of the GMV in Q3, and we expect that this monetization rate should be you know at least maintained in the following quarters, but we will you know still be prudently further monetize for the online marketing revenues. I believe that for the following quarters, it should be no less than 3% for the next few quarters. Also for the key accounts, the chain merchants, delivery services for the Dada Now business, it is growing by more than 110% in Q3. We think in Q4 it will further like grow by triple-digit on a year-over-year basis. Yeah, I will leave the competition question to Philip. Yeah. Regarding the KA, the Dada Now KA business, I would like to give more color and background. First of all, one of the reason why we can continue to grow very fast is we are building up a solid reputation among the key accounts players. Because in order to serve the KA well, you need to win the trust, and you need to get people's confidence in you. As we are serving, like, all the big names well for quarters after quarters, that's how we are now able to win the trust and build up a good reputation in the market. In addition to reputation, we're also building up a very solid capabilities and know-hows. There are few key segments of KA we are now serving, including supermarkets, restaurants, and pharmaceutical chains. Each segment require very different know-how and capabilities. For example, like a supermarket, as you can imagine, it requires, like, to handle very heavy and bulky packages, and also, from packaging to delivery. It's quite complex. That's why leveraging our service of Dada Picking integrated with our Dada Now delivery, we are providing a lot of value adds for the supermarkets. That's why most of the leading supermarket chains in China, like most of them, are using our service. For restaurants, it's very different from supermarkets, as you may imagine. So restaurant, the number of stores can be much more than the supermarkets. At the per store level, the orders are fewer, much fewer than supermarkets. It requires very different order bundling and routing operations. For pharmaceutical, you need to be able to deliver around the clock, 24 hours. It also requires very different capabilities. All of this, we have been building such capabilities and know-how and efficiencies over years. That's how we can win the customers. Last but not least, Dada Now is a third-party delivery platform considered by all the KAs, so we are very valuable as an independent player. Unlike, for example, like Meituan or Ele.me, which owns the order-taking platform, they're not considered as independent. Most of the KAs want to use independent delivery services because they don't want to be too much tied to the order-taking platforms. All this, as I mentioned, explains why we are able to continue to grow fast on Dada Now, and at the same time improving the profitability. We are very confident to carry it on for the next year or so. Thank you. Got it. Thank you. Your next question comes from Alicia Yap of Citigroup. Please ask your question. Hi. Good morning, management. Thanks for taking my questions. I have two questions. First is, I think, management mentions about, you just launched this digital logistics SaaS service, open to other players. Wondering if there's any revenue opportunity down the road from these service that you're licensing out. Second is on the Singles' Day performance. I think management mentioned, you know, JDDJ achieved over 100% growth. Just, if management could elaborate a little bit the category performance during the Singles' Day on the supermarket versus the non-supermarket. I would assume, the fresh category probably contributed a much higher percentage during the Singles' Day. Any colors on the category mix during the Singles' Day would be helpful. Just on, you know, related to that is the consumer behavior. I guess given the macro slowdown, just not sure if you have experience or have seen any change of the consumer behavior during this Singles' Day in terms of the demand and the category preference. Thank you. Okay. Actually there's three questions. Alicia, let me take the first two questions and leave the macro question to Philip. About the Dada Smart Delivery, Dada's logistics SaaS product, it's a pure SaaS platform which can be provided to all those third-party delivery service merchants or those service providers. Up to now it was implemented or used by like 5,000 stores. Right now, you know, it I think the revenue contributing to our like RMB 6 billion revenue per year is still very minimum, but it will further expand our, you know, service scope to be like fulfilled by Dada. We don't need to physically fulfill the orders by our Dada riders. We can even provide a software or SaaS product to those merchants. We are right now in close, like, review about the development of the logistic SaaS product. I think maybe it will be better to further talk about the revenue contribution and the, like, those expectations in the next few earnings call. For the Singles' Day mix, the Singles' Day growth for the category mix, you're right. 3C product is growing faster than the, like, the supermarket categories. Generally right now, we think the supermarket categories for the Double Eleven campaign period is still growing very promising. That's why our, like, revenue guidance for Q4 is given. We believe that the JDDJ growth rate will be still very fast, which is mainly contributed by the revenues of supermarket category, 'cause supermarket categories monetization, including the online marketing services, is much more than the 3C categories. I don't actually, you know, I don't look at the detail like the mixed growth rate for the Double 11 campaign period, but I believe the overall Double 11 campaign period promoting results should be very satisfied to you know all those merchants. For example, even for Walmart. Walmart, the annual campaign, usually annual campaign peak is their August 8 promotion day. For the Singles' Day, like the November 11, is like still growing by 25% compared to their August 8. They're selling all supermarket category products. Right. In terms of the consumer behavior and the market situations, there's an interesting small accelerator, I would say, for the Singles' Day, which is right before Singles' Day, the government encouraged consumers to stock up a little bit at home. You might have seen in the news. I think this also helps to boost the sales a little bit. Overall, I think if you look at the big picture, we're seeing two things happening. One thing is the consumers are now more and more used to on-demand retail. Historically, they may buy restaurant foods and get delivered on demand. Now, a large number of consumers are now used to buy like everything on demand. I think this is a very important trend we're absolutely seeing. At the same time, we're also seeing, mostly from this year, that more and more vertical retailers are now willing or more than willing to work with ours and get listed. For example, like a smartphone, consumer electronics, and also like personal care cosmetics, and like a parenting, or like a pet supplies, or like a liquor and alcohol. All those kind of vertical specialty stores, they didn't work with like an online platform before. Especially this year, we're seeing a strong trend that the vertical retailers are now very much willing to work with ours. I think this creates a very good situation while consumers are more used to on-demand retail and get delivered instead of going offline to visit the stores. At the same time, all the stores, the quality suppliers are now getting online. We're happy to see this, combination. Great. Thank you. Your next question comes from Ashley Xu of Credit Suisse. Please ask your question. Thanks, management, for taking my question. I actually want to follow up on our nearby entry point. I understand that it has been gradually rolling out and still under a test stage. Could management share more color on the recent progress and our plan or target by year- end? At the same time, for those rolled out regions, how, what's the effectiveness we have seen in attracting more users? For our Q4 guidance, does that reflect any contribution from this new entry point? Thank you. To give you some background and color about this Nearby and perhaps that will have anything there. The Nearby channel is now available for access in most of the tier one and tier two cities and some of the lower tier cities. We're happy to see that since June, when the Nearby channel launched, the technology and the engineering behind it. As you can imagine, there are a lot of engineering work behind the scenes, because literally we are transforming the JD app from a B2C app and now to a location-based app. There are a lot of technology needs to be done, and we are working very closely around the clock with the JD technology team to make that happen. With that happening, we're happy to roll out the service to most of the tier one, tier two cities. At the same time, we'll keep enriching the product supplies and the store supplies to the consumers and expanding our geographic coverage. Like every week, we are seeing more retailers sign up and get listed on the Nearby channels. I think that's the fundamental because you need to have quality supplies and broad coverage. At the same time, we're also happy to see the operation matrix around Nearby channels has continued to improve ever since launch. Going forward, we plan to be focusing on the key cities, the top cities to improving the mentality of consumers and to build up the Shop Now brands among consumers, and also to improve the penetration into the JD user base. At the same time to improve the conversion rates, conversion levels of this Nearby channel. I think this is certainly a significant, very significant step. Still just with like six months so far or five months so far, so we're still seeing this channel at a very early stage, and we're very looking forward to grow this and to expand it in the future. Also in the Q4 guidance, we are very prudent in, like, calculating the business coming from the Fujin tab, Nearby tab, in Q4. More businesses of JD ecosystem should be coming from the traditional, those like the search results in Q4 because it's a more mature product and for the Fujin tab still, I think, like Philip said, it takes a few times to just further, you know, improve the product and invest all those merchants and build up the consumer mind for the Nearby shopping. Thank you. Your next question comes from Wei Xiong of UBS. Please ask your question. Hi, good morning management. Thank you for taking my questions. First, I want to get an update on the geographical coverage expansion. Could management share your latest update of JDDJ in terms of further expanding the geographical coverage this quarter? Also, do we have a target for the number of cities and counties we cover next year? If there is a GMV contribution from the lower tier market that you can share, that would be appreciated. Second, I just wanna follow up on the point that we mentioned as the non-supermarket categories continue to grow their GMV contribution. I was wondering, could we get an update on the different commission level across different product categories, and how will that mix shift affect the future trends of our commission level? Thank you. Okay. I will give you my view and see if Pat have anything to add. First of all, in Q3, the GMV from our lower tier cities on JDDJ grew by about 100%. So far we have covered over 1,700 cities and counties, and we will continue to penetrate into the lower tier cities. For now, we'll be focusing on especially the category development and expansion in the existing cities, that the cities we have already opened. That's about the geographic coverage. In terms of the commissions, I think different categories have different commission rates, but different categories, we are improving the commissions and improving the monetization from each category. With our stronger collaboration with the brands, and also we are generating more value to the retailers. That's why we can improve the commissions in different categories. That's independent from the mix of segments. Yeah, I'll see if Matt have anything to add. For supermarket categories, usually, you know, we have commissions, delivery fees, and also especially for FMCG products, we have marketing dollars from those brand owners and. At the same time, we are also given lots of subsidies to consumers because they should be more frequent to purchase FMCG products instead of other non-supermarket categories like 3C products, home appliances. For all those other newer categories, including smartphones, home appliances, pet products, their monetization rate is lower than the supermarket overall monetization rate. You don't need to give so much incentives to them. This will give us like the positive direct margin for each order generated for those non-supermarket category products. The contribution from those non-supermarket categories will also contribute to the overall margin improvement of the platform. We still emphasize that the FMCG products is the most important category of the platform, so we still need to give some incentives to, and subsidies to consumers to retain them. That's why, up to this moment, we are still have a slightly negative direct margin for the platform wise, for the platform because our investment in the FMCG and the supermarket categories. In the long run, we believe that we can still improve our overall monetization rate, while significantly improving the direct margin level 'cause we continue to improve our incentive ratio by decreasing the incentives given to FMCG and supermarket categories, while we don't give so many incentives to other non-supermarket categories. By the mix contribution, we believe that our overall direct margin is on track to break even next year for the whole year basis. Thank you. We've still got time for one last question, and our final question comes from Robin Leung of Daiwa. Please ask your question. Hi, management. Thanks for taking my question. Actually, it's just a follow-up question. Looking into 2022, on one hand, I understand that we will realize some cost savings from user acquisition in the JD ecosystem. On the other hand, if user contribution starts to kick in, is it possible that JDDJ will step up its spending again if the ROI is strong and is further improving, like what you mentioned? Are we going to actually increase the subsidies in those like FMCG categories? If management could share some of our strategy within the JD ecosystem, that would be great. Thank you. Okay. First of all, as you said, we are happy to see, we're getting strong support from JD in terms of user acquisition. This can certainly help us to reduce the cost for user acquisition. Still, we are in the early stage of this journey, and we are. Our goal is to reach like the 50% penetration. We are now at single digits, so there's a long way to go. In terms of the subsidies, I think overall, the trend and our goal is to improve the efficiencies and not to increase the subsidies. As we explained earlier, we are getting more and more marketing dollars from the brands and also the resources from the retailers. We are combining all these and improve the overall efficiencies instead of increasing them. We're happy to see the ROI of our incentives has continued to grow. I think that's very important for all parties, and we will continue that way. Also for the general competitive landscape, as we explained earlier, we're happy to see that most of the players are now more rational and not like burning too much of the subsidies as they used to be. That's why overall, I think we are optimistic about both growth and profitability going forward. Thank you. Great. Thanks. I would now like to hand the conference back to Caroline. 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 all disconnect.