Walmart increases stake in Chinese e-commerce giant JD.com

By

Kate Dingwall

Published
Feb 9, 2017

Looking to compete with Amazon’s market domination, Walmart is increasing its investment in JD.com.

Walmart has continued to increase its stake in the Chinese e-commerce giant, now owning 12.1% in comparison to 4.9% last June. 

JD.com is slated to grow exponentially, looking to increase revenue, merchandise volume, and expand its delivery methods in the future. Total net revenue has spiked 38% in the third quarter of 2016, while the gross merchandise value jumped 43% year-on-year in the same period. Currently, the retailer is poised to see customers spend over $6.4 trillion every year by the year 2025.

The company has been looking into drone delivery routes, moving outside strictly urban areas and expanding its drone reach to rural areas of China. Launched in November of 2016, JD.com was one of the first e-commerce platforms to launch a large-scale drone delivery service. The e-tailer told Bloomberg that it hopes to have over 100 routes operating by the end of 2017.

A spike in income and wages in China has also proved profitable for JD.com's future, with Forbes reporting an increase of 8-9% over the past few years. Because Chinese consumers are earning higher incomes, customers have more disposable income to spend. 

Amazon, one of Walmart’s biggest competitors, has been at the forefront of mobile e-commerce, tripling the number of unique visitors to its mobile site over the last two years while Walmart has shown virtually no increase.

Instead of attempting to replicate Amazon’s e-commerce presence, Walmart will act as an investor rather than an operator in the Chinese e-commerce market. To capitalize on JD.com’s success in China, Walmart plans to shut its e-commerce mobile app in China, instead directing customers to use JD.com to access its 20 local Chinese Walmart stores.