Thomas Chong : Hi, good morning. Thanks management for taking my questions. My first question is about JDDJ unit economics in Q3. Can management share about the take rate and expense ratio for different items? And on that front, how should we think about to do the economics as we go into 2024? What are the drivers behind? And my second question is about the O2O opportunities in China? As we mentioned in the prepared remarks, the market size is huge. But on the other hand, we also see the competitive landscape is also quite intense as well. So I just want to get some thoughts from management about how we think about the landscape in 2024? And on that front, what is the long-term direct margin that we are expecting in the coming years?
Beck Chen : Thank you, Thomas. This is Beck. So I’ll address your first question and Jeff can take the second question. So in terms of the monetization of JDDJ in Q3, the monetization rate was increased to 10% in Q3, which is the first time we passed through like the 10% threshold historically. And in the same time, our consumer incentives was further decreased to 3.3%, which is either like decreasing on a Q-on-Q basis or a year-over-year basis. [Indiscernible] our operation costs including rider cost, packing costs was 4.7%, which has decreased on a year-over-year basis, while increased Q-on-Q basically because the seasonality in summer campaign. And in terms of, for example, like 2024, the major driver still, we will keep to increase the commission online manufacturing rate.
And at the same time, we will further decrease our consumer incentives expenses and also operating cost side to further enhance our direct margin on a year-over-year basis. And also in terms of the last question, your second question in terms of long-term margin, so basically, as we have talked about previously, so JDDJ is — could be manage to like the traditional e-commerce platform, which is just a localized version. So in terms of like the operating — operating profit against GMV generated through the platform. So we are a marketplace more neutral platform model, so it should be targeted as a 3% of GMV as our long-term operating non-GAAP operating profit for JDDJ.
Jeff He: Thank you, Beck. Yeah, I’d like to share some thoughts on your second question about the competitive landscape. The fact that more leading international companies are prioritizing the on-demand retail business speaks of its great potential. And we believe the industry can easily accommodate different players to grow vibrantly in their respective areas of strength. For JDDJ, firstly, our strength and extensive partnership with merchants remains rock solid. This is a result of our positioning as an open and neutral platform as well as our cumulated know-how and expertise and empower retailers various systems and services. Merchant ecosystem with built. It’s hard to replicate in a short time by other platforms. For instance, in the supermarket category, we’ve onboarded 93 out of the top 100 chains in China.
In addition, in categories such as smartphones and mom and baby, we’ve also teamed up with most of the leading chain retailers in China. This abundance of high-quality supplies is the basis for us to continuously attract and retain users. Secondly, we enjoy huge potential in penetrating more of JD’s users. Currently, Internet companies are focusing on cultivating the mindset for on-demand retail among their own user base, which means limited head on competition among one and another. And since JD’s users are inherently purposeful shoppers who demand higher merchandise quality and the delivery speed, we believe it’s more efficient for us to convert them into on-demand to consumers. And we remain confident in penetrating 50% of the JD user base in the long run.
Thirdly, on top of market share gains, we value sustainable growth by balancing growth and profitability through a combination of efforts in optimizing subsidies, improving delivery efficiency and increasing online marketing monetization, the profitability of JDDJ has improved significantly in the past few quarters to near breakeven. In the long run, we also believe that JDDJ has higher profitability potential compared with other players, of our significantly higher AOV and online marketing monetizing rate. Thank you.
Operator: Your next question comes from Alicia Yap with Citi. Please go ahead.
Alicia Yap : Thanks for taking my questions. My first question is follow-up on our management comment regarding the supermarket and the electronics category before the Singles Day– the first three weeks of October and then single stage rebound. And so just wondering what is the demand trend post Singles Day that you’re expecting for supermarket and non-supermarket category. And the second question is on the cost of riders. So can I understand the increase in the cost of riders is related to this intracity delivery? Is there anything related depending on the type of the chain merchants that you are servicing? And which specific order demand during this 3Q that resulted in the higher rider costs? Do we expect a higher rider cost into 4Q given it is a promotional season and potentially colder weather? Thank you.
