Walmart forms strategic alliance with China’s largest e-commerce company
BENTONVILLE, Ark. - Walmart and JD.com, China’s largest e-commerce company by revenue, on Monday announced that they have formed a strategic alliance to better serve consumers across China through a combination of e-commerce and retail.
For Walmart, the alliance greatly expands its opportunity in China e-commerce and provides its stores and Sam’s Clubs with potential traffic from JD.com’s significant base of online customers and same-day delivery network to serve its customers.
JD.com will leverage Yihaodian’s brand and business in eastern and southern China and in key product categories such as high-quality 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 approximately 5% of total shares outstanding and 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, which has proven successful within the markets it operates in China, will open a flagship store on JD.com, expanding the availability of Sam’s Club’s 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; and
Walmart’s China 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 2-hour home delivery, while significantly broadening the product selection available to Dada’s customers.
Walmart will continue to operate its own physical stores.
“We’re excited about teaming up with such a strong leader in JD.com, and the potential that this new relationship creates for customers in China, as well as for our businesses," stated Doug McMillon, president and CEO Walmart. "We thank the Yihaodian associates for creating a strong brand and business that has helped lead to this opportunity with JD.com,” he said. “JD.com shares similar values in making the lives of customers better. 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.”
“We are very happy to announce this landmark agreement between two leading retailers, which we are confident will help bring e-commerce in China to the next level and benefit millions of consumers,” said Richard Liu, CEO of JD.com. “Walmart is synonymous with trusted-quality efficient retailing, and we believe that this tie up will increase both product selection and overall user experience," he said. “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. JD.com’s reputation for authentic products and superior customer experience make it an outstanding home for these iconic businesses to reach hundreds of millions more customers in China.”
Morgan Stanley & Co. acted as Walmart’s financial advisor and Morrison & Foerster acted as Walmart’s legal advisor on this transaction. Orrick Herrington Sutcliffe and Han Kun Law Offices acted as JD.com’s legal advisors on the transaction.