Wal­mart in $50 mil­lion deal with­NewDada

China Daily (USA) - - BUSINESS - ByWANG ZHUOQIONG wangzhuo­qiong@ chi­nadaily.com.cn

Wal­mart on Fri­day an­nounced a $50 mil­lion strate­gic in­vest­ment in New Dada, China’s largest lo­cal on-de­mand lo­gis­tics and gro­cery on­line-to-off­line e-com­merce plat­form.

The in­vest­ment is an ex­ten­sion of Wal­mart’s broader agree­ment with JD.com. As part of the co­op­er­a­tion, New Dada of­fers cus­tomers twohour de­liv­ery on gro­ceries or­dered from Wal­mart stores through the JD Dao­jia Dada ap­pli­ca­tion.

The two-hour de­liv­ery ser­vice is avail­able to cus­tomers within a 3 km ra­dius of more than 20 Wal­mart stores that are cur­rently part of the pro­gram. The num­ber of Wal­mart stores of­fer­ing two hour de­liv­ery is ex­pected to dou­ble by the end of the year.

NewDada, an in­de­pen­dent joint ven­ture of JD.com and

Ja­son Yu,

gen­eral man­ager of Kan­tarWorld­panel China Dada, has more than 25 mil­lion reg­is­tered cus­tomers and pro­vides lo­cal on-de­mand de­liv­ery ca­pa­bil­i­ties, with 2.5 mil­lion crowd­sourced de­liv­er­ers across more than 300 cities in China. Wal­mart has 426 stores in nearly 170 cities.

Wal­mart CEO DougMcMil­lon 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 high­qual­ity goods de­liv­ered to their homes and of­fices in record time.”

Fresh food is gen­er­ally seen as one of the key dif­fer­en­tia­tors in gro­cery re­tail­ing and lo­cal re­tail­ers. Shop­ping be­hav­iors ofChi­nese con­sumers are rapidly chang­ing in light of the ex­plo­sive growth of e-com­merce­and­more­time spent on leisure and en­ter­tain­ment, said Ja­son Yu, gen­eral man­ager of Kan­tar World­panel China.

At the mo­ment, Wal­mart of­fers e-com­merce ser­vice in a lim­ited num­ber of cities. How­ever, fresh food e-com­merce is more chal­leng­ing be­causeChi­nese shop­pers are ex­tremely sen­si­tive to fresh­ness and timely de­liv­ery as well as prices, he said, not­ing that’swhya num­ber of pure play fresh e-com­merce play­ers went bust and more will fol­low.

“The in­vest­ment in New Dada and JD means thatWal­mart can sig­nif­i­cantly ex­pand its shop­per reach and lever­age the cost ef­fi­ciency and con­ve­nience pro­vided by the NewDada plat­form,” he said.

“It is dif­fi­cult for Wal­mart alone to make prof­its on fresh food de­liv­ery without suf­fi­cient scale.” There­fore, the in­vest­ment-based strate­gic col­lab­o­ra­tion­makes sense, he said.

JD.com formed its part­ner­ship with­Wal­mart Stores Inc in June of this year. Wal­mart sold its e-com­merce op­er­a­tion in China to JD.com Inc in ex­change for a 5 per­cent stake in the Chi­nese e-com­merce ma­jor.

It is dif­fi­cult for Wal­mart alone to make prof­its on fresh food de­liv­ery without suf­fi­cient scale.”

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