By Sarah Nassauer And Laurie Burkitt
Wal-Mart Stores Inc. said it has taken full ownership of
Yihaodian, its Chinese e-commerce venture, solidifying the online
retailer as a central part of its strategy in the region.
Earlier this month, the co-founders of Yihaodian announced their
departures, adding to speculation that Wal-Mart planned to add to
its then-51% stake in the online retailer.
"With full ownership of Yihaodian, Walmart plans to invest in
both accelerating e-commerce and creating a seamless experience for
customers across online, mobile and stores," the company said in a
statement.
Wal-Mart acquired the remaining Yihaodian shares from Ping An of
China, a financial services group, and the co-founders, former
Chairman Yu Gang and former CEO Lui Junling, who both left earlier
this month. Lu Wang, president and CEO of Walmart Global eCommerce
in Asia, will lead Yihaodian as part of his overall executive
responsibilities, Wal-Mart said in a statement.
Wal-Mart didn't disclose the terms of the deal. The company has
said in fiscal 2016 it plans to invest between $1.2 billion and
$1.5 billion in e-commerce efforts globally, as competition from
Amazon.com Inc. becomes more acute. The Yihoadian purchase is
included in that estimate, the company said.
Wal-Mart is trying to improve its Chinese operations in part by
moving away from expanding its brick-and-mortar presence to
focusing on China's online shopping boom. Its store operations in
China have been lackluster. 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. Still, the
company plans to open 115 new stores across China by 2017.
Now Wal-Mart is trying to link Yihaodian with its 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.
Expanding online in China is critical for Wal-Mart, as consumers
have been moving rapidly online and sales growth at
brick-and-mortar stores is slowing. China's e-commerce market
increased 49% last year--after gains in the prior three years of
59%, 51% and 70%, respectively. In 2013, China overtook the U.S. as
the world's biggest e-commerce market, and last year the country
rang up $453 billion in sales online, 11% of all retail sales.
The online grocery market is also gaining traction. Nearly half
of Chinese consumers are already buying groceries on the web,
compared with just a quarter of global consumers, according to a
Nielsen survey of 30,000 consumers. Last year, 42% of skin-care
sales were online, Nielsen said.
Yihaodian is a big part of Wal-Mart's plans for China, but it's
a tiny player in the country's e-commerce landscape, which is
dominated by e-commerce giants Alibaba Group Holding Ltd. and
second-largest player JD.com. Wal-Mart acquired a majority stake in
Yihaodian in 2012.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Laurie
Burkitt at laurie.burkitt@wsj.com
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