The future of retail is happening in the Far East, and Google wants $550 million of it.
That’s how much the Mountain View, Calif.-based company is investing in JD.com, the second-largest e-commerce player in China, in exchange for 27 million shares. As retail powers consolidate toward Amazon and Alibaba, Google’s recent moves point to the strengthening of a third alliance that features JD.com and Walmart—which has also invested in the Chinese e-commerce firm. Last year, Walmart announced it would sell to shoppers through Google Home smart speakers, in a seeming effort to level the playing field with Amazon and its popular Alexa-powered Echo and Dot devices that dominate the nascent voice-commerce market.
The JD.com deal further signals Google’s focus on shopping as it looks to boost its relevance in a world where retail innovation is happening in Asia and voice is poised to influence the future of how consumers buy. With the partnership, JD.com said it will make some of its products available through the Google Shopping service in multiple territories, giving it an inroads into markets like the U.S. and Europe where its limited footprint looks to be further hampered by threats of a trade war between America and China.
Jianwen Liao, chief strategy officer for JD.com, said in a statement that the Google tie-up represents a critical step toward the modernization of retail worldwide, especially in parts of Southeast Asia where retail infrastructure is lagging, and coincides with its anniversary sale celebrations. “This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” Liao added.
Google’s fresh funding could help JD.com close the gap with rival Alibaba, which dominates the e-commerce landscape in China. Both firms have been investing heavily in logistics to build out networks that can fulfill orders at lightning-fast speeds in China—and beyond. Alibaba notably has come under scrutiny for strong-arming brands into cooperation with its terms in an effort to solidify its No. 1 position in the market, allegations it roundly denies. Multi-billion-dollar internet services firm Tencent owns a minority 20 percent stake in JD.com.
JD.com said it would collaborate with Google to develop and deploy strategic retail solutions around the globe, blending its world-class supply chain capabilities with the search’s firm reach and prowess in data and analytics.
For now the companies have no plans for new initiatives in China, where Google has refused to cooperate with internet censorship. Through the partnership Google stands to gain access to a treasure trove of consumer data that could help to improve its Shopping offering in China and surrounding countries.
Global growth is the name of the game for big-time firms on the hunt for the “next billion users.” Google’s parent company Alphabet is rumored to be eyeing a $1 billion to $2 billion investment in FlipKart, the Indian e-commerce startup that Walmart took a $16-billion, 77 percent stake in last month. A minority stake could help Alphabet push Android phones as well as Google’s cloud services, which has the No. 3 position after Amazon and Microsoft.