Wal-Mart Stores Inc. said Tuesday the co-founders of its Chinese
e-commerce venture have announced their departures, thrusting a
central part of the retailer's China strategy into transition.
Yihaodian Chairman Yu Gang and Chief Executive Liu Junling, both
veterans of Dell who launched the company in 2008, are leaving to
pursue their next venture, Wal-Mart spokesman Dan Toporek said in a
statement. Wal-Mart, which holds a 51% stake in the company, said
it will look for new leaders for the business.
"We are pleased with the success Yihaodian has had in China, and
will work to accelerate that growth," Mr. Toporek said.
The founders' departure may open a door for Wal-Mart to play a
larger role in Yihaodian's day-to-day operations, which it has long
aimed to do. Wal-Mart has for years tried to connect the two
companies' logistics so that they could work in sync. But there
have been integration challenges, with resistance within Yihaodian,
according to a person familiar with the two companies' partnership.
Over the years it has also pushed to increase its stake in the
business, according to people familiar with the matter, but hasn't
had success thus far. Wal-Mart declined to comment.
Wal-Mart is trying to improve its Chinese operations in part by
shifting its focus from expanding its brick-and-mortar presence to
China's online shopping boom. At a news conference in Beijing in
April, Chief Executive Doug McMillon emphasized the importance of
China to the retailer which derives more than a quarter of its
earnings outside of the U.S., but said he would rather see the
company move slowly than make mistakes growing fast.
Its store operations in China have been stumbling. Traffic in
its more than 400 Chinese stores has fallen over the past three
years and was down 8.9% in the most recent quarter though sales
rose slightly. Even at the slower pace, the company plans to open
115 new stores across China by 2017.
Shifting gears, Wal-Mart is now working to link Yihaodian with
its 400 stores to allow shoppers to order products on their mobile
devices and pick them up in its stores or have them delivered to
their homes.
Wal-Mart was one of the first retailers to set up online in
China, acquiring a majority stake in Yihaodian in 2012. However,
Yihaodian is still tiny compared with e-commerce giant Alibaba
Group Holding Ltd. and second-largest player JD.com.
Yihaodian's niche has been strong grocery sales, but competition
in the groceries has heated up in the past year, as local Chinese
retailers have gone online and many startups have entered the field
to sell everything from imported avocados to dishwashing
detergent.
Yihaodian, which means No. 1 Store, has begun expanding from
groceries to offer a wider array of products including consumer
products, appliances and apparel. It is one of the largest sellers
of shelf-stable milk in China, benefiting from the perceived safety
of U.S. food in the region. The site focuses on a "value conscious
female," who lives in large cities, Neil Ashe, Wal-Mart's head of
e-commerce, said in a June investor presentation.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Laurie
Burkitt at laurie.burkitt@wsj.com
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