Dive Brief:
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Wal-Mart Stores Inc. is expanding its China operations through its partnership with Alibaba rival JD.com and a new $50 million strategic investment in Chinese grocery and same-day delivery company New Dada, which is also partially-owned by JD, the company said on Friday.
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Earlier this summer, Wal-Mart sold its Chinese e-commerce platform Yihaodian to JD, China's second-largest online retailer behind Alibaba, while almost doubling its stake in the company earlier this month.
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Ahead of the blockbuster Nov. 11 sales event known as “Singles Day” in China — spearheaded by e-commerce giant Alibaba but joined by JD and other retailers — Wal-Mart is opening digital storefronts on JD’s platform for both its Wal-Mart and Sam’s Club stores, experimenting with drone delivery in more remote parts of China through JD and offering two-hour delivery from many Wal-Mart stores in the country, Bloomberg reports.
Dive Insight:
While Wal-Mart’s sale of its Chinese e-commerce company to JD earlier this year was viewed by many observers as the world’s biggest retailer throwing in the towel on digital sales in the country, Wal-Mart instead appears to be making assertive moves to boost sales of its flagship and Sam’s Club units in China.
That’s an acknowledgement of the importance of e-commerce in China, which is a more mature market than in Europe and the U.S. While Wal-Mart never got much traction online in the country, its brick-and-mortar presence is also somewhat small, with 426 stores in 170 cities, according to the company.
Grocery and delivery company New Dada, an independent joint venture of JD and Dada, has more than 25 million registered customers and provides local on-demand delivery capabilities with 2.5 million crowd-sourced deliverers across more than 300 cities in China, Wal-Mart said Friday.
The Chinese market remains very important to Wal-Mart. Despite a slowdown in China’s economy, Wal-Mart expects it to deliver a quarter of the company’s global retail growth in the next five years, CEO Doug McMillon told Bloomberg.
While it’s not clear just how successful the Wal-Mart/JD partnership will be to either company, there are a few obvious benefits to JD right off the bat — in addition to the infusion of money to boost operations, the partnership greatly expands JD’s consumer goods assortment. The retailer’s merchandise is now heavily weighted with electronics, which have seen sales temper as China becomes more saturated with smartphones.