United States securities and exchange commission logo
May 14, 2021
Le Yu
Chief Strategy Officer
Dingdong (Cayman) Ltd
Building 6, 500 Shengxia Road,
Shanghai, 200125
People s Republic of China
Re: Dingdong (Cayman)
Ltd
Draft Registration
Statement on Form F-1
Submitted April 16,
2021
CIK No. 0001854545
Dear Ms. Yu:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1
Our Mission, page 1
1. Please provide the
basis for your claims that you provide "first-in-class user experience."
Prospectus Summary, page 1
2. Please revise page 1
and elsewhere, as applicable, to precede disclosure of GMV with
disclosure of your
revenues to avoid giving undue prominence to this metric.
Le Yu
FirstName LastNameLe
Dingdong (Cayman) LtdYu
Comapany
May NameDingdong (Cayman) Ltd
14, 2021
May 14,
Page 2 2021 Page 2
FirstName LastName
Corporate History and Structure, page 6
3. Please revise your introductory paragraph to clarify that investors
will own shares in a
holding company that has no material operations of its own and does
not directly own all
of its operations in China. Also, please briefly disclose in this
section the significant
restrictions on payment of dividends imposed under PRC law and
disclose the
circumstances under which the funds of your subsidiaries are
distributable as cash
dividends to you.
Conventions That Apply to This Prospectus, page 7
4. We note your definition of GMV represents the total value of all
orders placed, regardless
of whether the products are sold or delivered. Please tell us why you
believe it is
meaningful to include orders placed that were not sold or delivered.
Please also tell us
how a placed order would not be sold or delivered. Additionally,
please explain the
difference between GAAP revenue and GMV.
Any lack of requisite approvals, licenses, permits or filings..., page 24
5. Clarify why you have registered some of your regional processing
centers and frontline
fulfillment stations, even though you also state that you do not
believe you are required to
do so. Quantify the number of such centers and stations, to put this
risk in context.
The defects in certain leased property interests, page 31
6. We note that you are still in the process of applying for certain
necessary licenses and
permits. We also note that you have not registered all of your lease
agreements. Please
disclose when you expect to be in compliance with relevant regulatory
requirements and,
if the amounts at issue are material to your operations, whether you
may be subject to
retroactive penalties and sanctions for non-compliance.
We face risks related to natural disasters, page 32
7. We note conflicting disclosure regarding the effect of the coronavirus
pandemic on your
operations. On one hand, we note disclosure at pages 32 and 71 that
you "could" or "may
be" adversely affected by COVID-19. On the other hand, you cite the
pandemic as a
reason for your nearly 200% growth in revenues in 2020. While your
disclosure would
not seem to be irreconcilable, please revise to provide a more
detailed discussion of the
effect of the pandemic upon your historical operations. Also, please
update your
disclosure to discuss future prospects as local and world economies
re-open after the end
of the pandemic, including the possibility that demand for online
groceries may wane and
that inflation may rise as government stimulus and customer demand
threatens to increase
the prices of goods and services.
Le Yu
FirstName LastNameLe
Dingdong (Cayman) LtdYu
Comapany
May NameDingdong (Cayman) Ltd
14, 2021
May 14,
Page 3 2021 Page 3
FirstName LastName
Risks Relating to Doing Business in China, page 36
8. Revise your risk factors to disclose the risk of regulations relating
to restrictions on
foreign investments for companies with operations in China generally
and as applied to
Value-Added Telecommunications Businesses. While you discuss those
regulations on
pages 120-121, you do not address how those regulations apply to you
and your business.
In this regard, we note that you have not opted to utilize a variable
interest entity structure
that has been adopted by many companies with operations in China to
obtain necessary
licenses and permits in the industries that are currently subject to
foreign investment
restrictions in China. Please revise or advise.
Our dual-class voting structure will limit your ability to influence, page 46
9. Please revise this risk factor heading to prominently disclose that
your chief executive
officer and founder will retain significant voting control of the
company. In addition,
please revise your ensuring risk factor disclosure with respect to
your dual class structure
to discuss:
that a dual-class structure may render your shares ineligible
for inclusion in certain
stock market indices, and thus adversely affect share price and
liquidity, and may
adversely affect public sentiment;
that any future issuances of Class B ordinary shares may be
dilutive to the voting
power of Class A ordinary shareholders;
the votes per share which each share of Class A and Class B
ordinary shares are
entitled; and
the impact, if any, of the conversion of Class B ordinary
shares on holders of Class A
ordinary shares, including dilution and the reduction in
aggregate voting power.
Please include similar disclosure under "Description of Share
Capital."
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our ability to effectively invest in our fulfillment infrastructure and
technology, page 71
10. You state that you have established 40 regional processing centers in
14 cities in China
and established over 950 frontline fulfillment stations in 29 cities
as of March 31,
2021. Please revise to clarify what you mean by the term "established"
and whether it
means own and operate.
Business, page 94
11. Please discuss your expansion efforts into new products and markets
(i.e., lower tier
cities) and the challenges related to competition, pricing, product
selection, profit margins,
regulatory issues and marketing in these new markets. For example, it
is unclear whether
new product offerings are expected to sacrifice profitability in order
to generate sufficient
market share, and whether you will aggressively abandon products or
locations if they do
Le Yu
FirstName LastNameLe
Dingdong (Cayman) LtdYu
Comapany
May NameDingdong (Cayman) Ltd
14, 2021
May 14,
Page 4 2021 Page 4
FirstName LastName
not achieve desired results in a short time period. Also, please
explain how you determine
whether the "order density" is sufficient for you to maintain
operations in a market.
Key Operating Metrics, page 97
12. We note the graphic entitled "Average Spending per Transacting
User/Member" on page
98. For additional context, please revise the narrative discussion
under this graphic to
disclose the average dollar amount per user per order for members as
compared to non-
members as well as the retention rates for your members.
Highly Scalable Business Model, page 102
13. Please revise to explain the meaning of the term "consumption
upgrading" and why you
believe it is currently accelerating in China.
Dingdong Membership, page 109
14. Given the significance of member-generated revenue to your business
model, please
expand your discussion of your membership program. In this regard,
please describe the
subscription framework, monthly or annual fees, if any, and the value
of the discounted
shipping arrangements, product offerings, and other benefits available
to members.
Procurement, page 110
15. You disclose on page 110 that two of your competitive strengths are
your sourcing and
procurement capabilities. Please provide further detail about how your
products are
sourced, the terms of your material agreements (including how they can
be terminated),
and whether they are exclusive. Also, please discuss the costs
incurred by farmers to
comply with your D-GAP agricultural practices. File any material
agreements related to
sourcing and procurement with your next amendment.
Self-Branded Products, page 111
16. Please revise to disclose the costs to you of launching private label
products and whether
you intend to launch additional self-branded products in the future.
To the extent material,
quantify the significance of your private label products to your
revenues, describe the
material terms of your agreements to produce and distribute these
products, and file the
agreements as exhibits.
Quality Control, page 114
17. You disclose on page 70 that your online store offers more than 12,500
SKUs. Please
provide additional disclosure here and at page 114, as appropriate,
about the qualifications
and capacity of your quality control team to conduct inspections of
hundreds of different
types of food products and daily necessities throughout China. Also,
we note your
disclosure on page 17 about several cases of sub-par products being
sold on your site.
Please revise this section to disclose defect percentage rate, if
material.
Le Yu
Dingdong (Cayman) Ltd
May 14, 2021
Page 5
Technology, page 115
18. We note disclosure that your technology such as digitalization and
artificial intelligence
provides your most significant competitive advantage. Please revise this
section to provide
additional disclosure regarding the capacity and specific expertise of
your engineering
team. Also, explain whether, and to what extent, your technology consists
of modified
commercial products, new in-house applications created by your employees
and
contractors, or a combination of both.
Management, page 137
19. Please revise to provide Mr. Ding's professional biography for the most
recent five year
period.
You may contact Aamira Chaudhry at (202) 551-3389 or Lyn Shenk at (202)
551-3380 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at (202) 551-3314 or Mara Ransom at (202) 551-3264 with
any other
questions.
Sincerely,
FirstName LastNameLe Yu
Division of
Corporation Finance
Comapany NameDingdong (Cayman) Ltd
Office of Trade &
Services
May 14, 2021 Page 5
cc: Steve Lin
FirstName LastName