Walmart Stores announced on Friday that it is going to invest $50 million in Chinese online grocery and delivery firm New Dada. With this move, the company is extending its tie-ups with local online players to help boost sales in the world’s second-largest economy.
Earlier this year, the retail giant shifted its strategy for the Chinese market when it sold its own online platform Yihaodian in exchange for a stake in local e-commerce giant JD.com. Interestingly, New Dada is a joint venture which is part-owned by JD.com.
The investment will help Walmart target Chinese shoppers with faster delivery times in a popular but fiercely competitive online grocery market. This investment in New Dada and JD.com means that Walmart can significantly expand its shopper reach and leverage the cost efficiency and convenience provided by the New Dada platform.
New Dada, which is a joint venture of JD.com 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. On the other hand, Walmart has 426 stores in around 170 cities and has recently spent $3 billion to acquire Jet.com and compete with Amazon in the United States.
Commenting on this, Walmart CEO Doug McMillon said,
All around the world, we’re creating seamless shopping experiences that bring together our stores, sites and apps to make shopping faster and easier. Our alliance with JD and cooperation with New Dada will provide seamless shopping to millions of customers across China.
Philip Kuai, CEO of New Dada, said,
Combining New Dada’s delivery network with Walmart Stores means consumers will enjoy convenient access to a wide range of high-quality goods delivered to their homes and offices in record time.
Currently, Walmart is offering e-commerce service in a limited number of cities. However, fresh food e-commerce is more challenging because Chinese shoppers are extremely sensitive to freshness and timely delivery as well as prices, said Philip. The company is also looking to enter the Indian e-commerce ecosystem in collaboration with Flipkart, by pumping a billion dollars into the venture.