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Why Dada Nexus Zoomed Nearly 12% Higher Today

What happened

Chinese food-delivery giant Dada Nexus (NASDAQ: DADA) saw its stock rise by 11.9% on Wednesday. Investors believe the shares are looking more beautiful following news of a fresh collaboration with a peer in that country.

So what

Dada said in a press release that its JD Daojia (JDDJ) unit is partnering with Perfect Diary, a cosmetics business held by beauty products specialist Yatsen Holdings, to provide a new delivery channel for Perfect Diary's offerings.

Image source: Getty Images.

The Dada/Perfect Diary arrangement will see the two businesses "collaborate deeply in products management, digital marketing, targeted user operations, and order fulfillment optimization with a comprehensive omni-channel retail solution," Dada wrote.

Practically speaking, Chinese customers will be able to order cosmetics and other beauty products from their local Perfect Diary store. Dada said that they will get their goods within one hour. At the moment, Dada added, more than 160 of the stores are in the JDDJ system, and they collectively cover "hundreds" of municipalities in the sprawling Asian nation.

Additionally, thanks to a deal Dada has in place with online retail giant JD.com, Perfect Diary's goods will be made available through that site.

Now what

This isn't Dada's first collaboration in the cosmetics and beauty industry. The company said that it currently offers products from more than 3,400 such stores and has "close partnerships" with popular Chinese brands such as Wow Colour and The Colorist. It also partners with international companies in the industry, notably Sephora.

Dada is clearly a believer in the potential of the Chinese beauty sector. It quoted an estimate from CBN Business Data Center that forecast total sales in the domestic market will reach 360 billion yuan ($56 billion) this year.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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