Wal-Mart Stores is to boost its ownership of fast-growing Chinese eCommerce website Yihaodian to a controlling stake.
While terms of the deal have been agreed, the takeover is still subject to Chinese government approval.
Launched in July 2008, Yihaodian offers more than 180,000 SKUs and has achieved a significant position in online grocery sales, as well as in categories such as baby and mothercare, consumer electronics and apparel. With 5400 employees and an existing logistics network based in Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, Yihaodian is serving a growing customer base with same-day and next-day delivery of essential daily items at competitive prices.
Neil Ashe, president and CEO of Walmart Global eCommerce, said the investment further enables Walmart to deliver “a superb customer experience” to Chinese consumers that are already connected to the world through smart phones and social media.
“We are on track to create the next generation of eCommerce, offering the latest in online innovations to give our customers a unique shopping experience.”
“We are very impressed with Yihaodian’s strong management team, solid competence in supply chain management and, like Walmart, they are committed to outstanding service to their customers,” Ashe continued.
Yihaodian has been attracting considerable attention for its rapid growth, as this article on Deloitte’s website shows, reflecting on a stunning 19,128 per cent growth rate in its first three years.
Ashe says Walmarts further investment in Yihaodian demonstrates that it is committed to investing in China in a key growth industry and developing all that goes with it: logistics, infrastructure, innovative talent and new technologies that will help China meet its development goals.
“In addition to contributing to China’s eCommerce goals, with our increased investment in Yihaodian, we are pleased to be able to further contribute to China’s domestic consumption, help stabilise prices, and advance expansion in the middle and western regions.”
Walmart is ramping up its focus on the Chinese market. After an embarrassing recent product tainting scandal leading to the departure of its top Chinese executive it recently appointed experienced Australian Woolworths veteran Greg Foran to head its Chinese business.
Gang Yu, co-founder and chairman of Yihaodian, said Walmart brought to the partnership not just nearly 50 years of retailing experience and history, “but also innovative technology and eCommerce solutions that will help us better meet our customers’ needs”.
“Their excellence in supply chain will enable us to improve our customer experience and operational efficiency.”
Junling Liu, co-founder and CEO of Yihaodian, said besides bringing funds, Walmart would share its knowledge and technology together with its best-in-class practices in retail and transfer them to Yihaodian’s existing organisation. These synergies would be leveraged with the local market expertise to deliver enhanced product offerings, lower prices and a better shopping experience for our customers.
Hong Kong-based Ping An Insurance (Group) of China remains a minority strategic shareholder in the business.