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Walmart Sells Chinese E-Commerce Business to JD.com

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Walmart JD.com China e-commerce

Photo: Neil Ashe, president and CEO of Walmart Global eCommerce, and Haoyu Shen, CEO of JD Mall, sign strategic alliance between their companies.

The biggest retailer in the world still has its sights set on China.

Walmart has signed a strategic alliance with JD.com, China’s second-largest e-commerce company and Alibaba’s biggest homegrown rival, in a bid to better serve consumers across the up-and-coming economy.

The agreement, announced Monday, includes a wide range of business initiatives, covering both online and offline retail. According to a statement, the alliance will “greatly expand” Walmart’s opportunity in Chinese e-commerce, hopefully providing its stores and Sam’s Clubs with potential traffic from JD.com’s customer base and same-day delivery network.

Meanwhile, JD.com will leverage Yihaodian, Walmart’s Chinese e-commerce marketplace, in eastern and southern China and in key product categories such as grocery and household goods, “both of which complement its own geographical and product strengths.”

In addition, JD.com’s customers will gain access to a wide range of new and imported items from Walmart and Sam’s Club.

As part of the agreement, Walmart will receive almost 145 million newly issued JD.com Class A ordinary shares, amounting to roughly 5 percent of total shares outstanding.

“JD.com shares similar values in making the lives of customers better,” Doug McMillon, president and chief executive officer of Walmart, said. “It also has a very complementary business and is an ideal partner that will help us offer compelling new experiences that can reach significantly more customers. We also look forward to offering customers a tremendous number of quality imported products not previously widely available in China through Walmart and Sam’s Club.”

“Yihaodian will continue offering the outstanding user experience its customers have come to expect, which we will further augment by leveraging our unparalleled logistics capabilities and breadth of product categories,” Richard Liu, CEO of JD.com, explained, adding, “We are also delighted to welcome the Sam’s Club flagship store onto the JD.com platform. Sam’s Club’s unique, high-end product selection meets the demand from China’s increasing affluent consumers for high-quality, imported products and has already proven popular in the Chinese cities where it has stores.”

The companies will partner in several strategic areas, including:

• JD.com will take ownership of the Yihaodian marketplace platform assets, including the Yihaodian brand, website and app. Walmart will continue to operate the Yihaodian direct sales business and will be a seller on the Yihaodian marketplace, leveraging its global supply chain to provide customers a wide range of products. JD.com and Walmart will work together on growing the Yihaodian brand and business under its current name and market position.

• Sam’s Club China will open a flagship store on JD.com, vastly expanding the availability of Sam’s Club’s high-quality imported products across China. It will offer same- and next-day delivery through JD.com’s nationwide warehousing and delivery network, which covers a population of 600 million consumers.

• Walmart and JD.com will work together to leverage their supply chains to increase the product selection for customers across China, including broadening the range of imported products.

• Walmart’s Chinese stores will be listed as a preferred retailer on JD.com’s O2O JV Dada, China’s largest crowd-sourced delivery platform, driving online traffic to Walmart stores and allowing customers to order fresh food and other items from Walmart stores for two-hour home delivery, while significantly broadening the product selection available to Dada’s customers. Walmart will continue to operate its own physical stores.

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