Walmart, JD.com reportedly integrating customer loyalty in China

Dive Brief:

JD.com has announced partnerships with two of its investors — Walmart and Tencent Holdings — to share operational systems and customer data in a move to gain ground on Alibaba, according to the Nikkei Asian Review.
Walmart and JD.com will integrate their customer loyalty systems for their stores in China (where Walmart has 400 stores). The partners also plan to develop a program for JD.com to fulfill orders by relying on inventory from Walmart.
JD.com also announced in recent days that it is testing two "unmanned convenience store" prototypes in Beijing that use facial recognition, RFID and other technologies to create a "smart store" experience, according to TechNode.

Dive Insight:

It's hardly a surprise that JD.com is pursuing a deeper integration with Walmart. Cooperation between the two in China was hinted at more than a year ago, when reports suggested Walmart's e-commerce business sale to JD.com could involve incentives for the companies to strengthen their bond.

Walmart now seems to be focusing more energy on its digital efforts in the U.S., but is still focused on opening new brick-and-mortar stores internationally, particularly in China. Aligning membership rewards should be a huge benefit to both JD.com and Walmart, whose growing physical presence in China should give JD.com plenty of locations from which to fulfill online orders.

JD.com is also integrating with Tencent's WeChat messaging app, providing customer purchasing data that can help provide product recommendations and other features like messaging users with the help of artificial intelligence. It's not entirely clear if those recommendations would happen in-message, but new solutions like the Swych Giftbot have started to push the possibility for how something like that could work.

The arrangement lets JD.com tap into WeChat's user base of more than 900 million users, while also setting up the potential for other offers, such as the ability to cash in online discounts at brick-and-mortar stores when using the WeChat Pay platform.

JD.com is also pursuing innovative concepts like the unmanned convenience stores. These new stores have video cameras and computer vision devoices to monitor store traffic flow and inventory changes, as well as customers attitude and product preferences. JD.com also earlier this year announced an Internet of Things lab.

In making these moves, the Chinese company is looking to simply keep up with Alibaba, which itself recently has pursued the concept of unstaffed stores, and is getting into the business of brick-and-mortar malls.

The report in Nikkei Asian Review pointed out how much ground JD.com still has to gain against its bigger rival: Alibaba still held 57% market share for online sales through the first half of this year, and JD.com held 27%. About 15% of all retail sales in China were online last year, signifying a huge opportunity.