As part of its commitment to grow online sales globally, Walmart has reached an agreement to acquire a minority stake in Yihaodian, an online supermarket in China.

As part of its commitment to grow online sales globally, Walmart has reached an agreement to acquire a minority stake in Yihaodian, an online supermarket in China. The move follows an ecommerce launch for Walmart China’s Sam’s Club operations and a $500m (£309.1m) investment in 360buy Jingdong Mall, the country’s largest online electronics store.

Yihaodian, which was founded by two former Dell executives, has expanded considerably since its July 2008 launch. Within two years, sales rocketed from Yn4.17m (£396,693m) to Yn805m (£76.6m) in 2010, a reflection of the fast-growing online appetite among Chinese consumers. 

Yihaodian distinguishes itself from its bricks-and-mortar competition by offering a wide assortment of 75,000 SKUs compared with the 20,000 found in a typical Chinese supermarket.
It also maintains a strong value proposition, with prices between 3% and 5% below that of its bricks-and-mortar competition, making it an attractive fit for Walmart.

“Online sales in China are growing rapidly and are projected to match US online sales in the next few years. By investing in Yihaodian, we’re continuing to establish a presence in this important ecommerce market,” said Eduardo Castro-Wright, vice chairman, Walmart Stores and chief executive of Walmart global ecommerce and global sourcing.

While most of China’s ecommerce operators focus on a single product line, Yihaodian has found success selling across a multitude of categories. Its core lines make up the broader grocery category, although products in the babycare, consumer electronics and apparel categories are also featured. Nonetheless, achieving economies of scale in the supply chain will continue to be Yihaodian’s biggest challenge.

Acquiring a minority stake in Yihaodian is complementary with Walmart’s strategy of growing two key business areas – online and international. In its home market, where Walmart will face saturation with its core Supercenter concept within the next decade, the retailer is making a big ecommerce push through initiatives such as Pick Up Today, FedEx Site to Store, the launch of a beta grocery ecommerce site and acquisition of social media company Kosmix. In Japan, Walmart plans to grow online sales twentyfold by 2016. This follows on from quiet ecommerce launches throughout Latin America as Walmart looks to leverage its global store network to support ecommerce growth.

  • Natalie Berg, global research director, Planet Retail.
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