Walmart may not be the first name that comes to mind when most consumers think about e-commerce, but the rapid rise of delivery services in China is pushing the U.S. retailer to new innovations in Asia's largest economy.
E-commerce accounts for more than 20 percent of retail sales in China, the highest and fastest growing penetration rate in the world, according to Mary Meeker's widely-followed 2018 internet trends report.
With that challenge in mind, the Arkansas-based company is trying an experiment: A smaller store, focus on Chinese lower-tier cities and a new sales model with Chinese logistics company Dada-JD Daojia. It's the latest move in Walmart's two-year partnership with the company.
Dada-JD Daojia is a merger between a network of 5 million registered delivery people and e-commerce company JD.com's two-hour supermarket delivery service. In August, Walmart and JD.com invested $500 million in the logistics company — JD.com had a nearly 50 percent stake in Dada-JD Daojia as of last December.
When Walmart reported fiscal third quarter earnings on Nov. 15, the company said more than 230 of its stores in China offer one-hour delivery through JD Daojia — that's more than half the number of Walmart stores in the country.
But it's a tough market as other retailers are also playing the delivery game, and some such as Carrefour have also partnered with Dada-JD Daojia.
JD.com's rival, the far bigger Alibaba, has opened more than 70 sleek Hema grocery stores in China that are known for delivery within an hour or two. They offer not only fresh produce but also made-to-order dishes such as sauteed spicy crayfish. In the quarter ended Sept. 30, online sales accounted for more than 60 percent of total sales for Hema locations open for more than 1 1/2 years.