Walmart has increased its stake in JD.com from 5.9% to 10.8%.
Strategic partnership expands Walmart’s opportunity in China’s ecommerce market
Walmart formed a strategic partnership with JD.com in June, which saw it take a 5.9% stake in China’s second largest ecommerce operator as part of a wide range of business activities, covering online and offline retail. For Walmart, this alliance expanded its opportunity in China’s ecommerce market and sets up its stores and Sam’s Clubs with potential traffic from JD.com’s base of online customers and same-day delivery network.
Leveraging JD.com’s fulfilment infrastructure
JD.com’s customers will also start to gain access to a wide range of new and imported items from Walmart and Sam’s Club, with plans in place for Sam’s Club China to open a flagship store on JD.com. Through this it will offer same and next-day delivery via JD.com’s nationwide warehousing and delivery network, one of the largest fulfilment infrastructures of any ecommerce company in China, covering a population of 600m consumers.
Yihaodian divested to JD.com
As part of the strategic alliance JD.com took ownership of the Yihaodian marketplace platform assets, including the Yihaodian brand, website and app. Walmart, however, continues to operate the Yihaodian direct sales business and sells via the Yihaodian marketplace, leveraging its global supply chain to provide customers a wide range of products.
Improving operations in challenging market
While China has been a challenging market for Walmart, with a number of store closures announced previously as it aimed to re-shape the portfolio and optimise the business, it is on track to open 115 new stores in the country by 2017 as part of a three-year investment plan. In August Dirk Van den Berghe took over the leadership of the business following the appointment of Sean Clarke, to lead its operations in the UK.
Strategy consistent with Walmart’s approach to international expansion
While many saw the divestment of Yihaodian as a step back from China for Walmart, the retailer has a long track record of growing its presence in international markets through initially taking a minority stake in businesses and growing this over time. Its increased stake in the business, along with the potential benefits of stronger store traffic and ability to leverage JD.com’s infrastructure network, could see it build its share in China’s ecommerce market at a much faster rate than it could have achieved on its own.
Walmart moving with purpose to grow ecommerce business
This increased investment in JD.com follows on from the acquisition of Jet.com in the US in August in a deal worth $3.3bn. This deal enables it to build on and complement the foundation already in place in its home market, positioning it for faster ecommerce growth in the future, while also expanding Walmart’s customer reach and adding new capabilities to its team.
You can hear from both Walmart and JD.com at IGD's Online & Digital Summit
Senior director of international e-commerce at Walmart, Saeed Anslow, will be among the speakers at the headline event. Deputy general manager at JD.com will also be taking to the stage. Get your ticket here.
|Stewart Samuel, Program Director, IGD Canada
Based in Canada, Stewart heads up all of IGD's research and coverage on Walmart globally. He is also responsible for shaping IGD's research program across North America. Contact Stewart at [email protected] for further insight on the region.