Jun 1, 2016
Walmart boosts online business in China
Jun 1, 2016
Walmart, the world’s largest retailer, is stepping up its online efforts in China as a key to the future, but face a tall order to become a major player.
Walmart's Yihaodian e-commerce venture owns 250 hubs and operates in 200 cities, mostly concentrated in eight key cities like Shanghai and Beijing. These hubs offer quick delivery of groceries.
In some places deliveries are made within three hours for 100 to 150 items. Deliveries are made overnight for orders that extend to several hundred thousand grocery items.
Walmart has been trying hard to get a bigger share of the Chinese online market, which now has surpassed the US to become the world’s biggest. Four years after buying a minority stake, Walmart took full control over Yihaodian, founded in 2008.
Despite its ambitions to get a larger share of the business, Walmart's overall online share is tiny in China. It is going to be hard to close the gap with the big Chinese giants like Alibaba and JD.com, analysts say.
While Yihaodian has 250 hubs, Alibaba has 14,000 in rural China alone that act as pick-up stations. And as of late March, JD.com had a total of nearly 6,000 delivery and pickup stations in 2,493 counties and districts across China.
"It will be very difficult for Wal-Mart to catch up in e-commerce," says Jason Yu, general manager of Kantar Worldpanel China, which specialises in research on Chinese shopping habits.
Compared to Walmart, most of the Chinese retailers have been online for years, and they understand the nuances of Chinese shopping behavior. Walmart's online business has also been hobbled because it did not have full control over the Chinese venture.
Walmart has just 1.6 per cent share of China's overall online market, ranking it as number 6, a long way behind number top player Alibaba which has a market share of 46.9 per cent and second-ranked JD.com which has 20.1 per cent market share, according to Euromonitor International, a global research firm.
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