Walmart looks to partner on e-commerce and expand Sam’s Club in China

by Kim Souza ([email protected]) 275 views 

Neil Ashe, CEO of Walmart Global eCommerce (right) shakes the hand of Richard Liu, CEO of (left) on the strategic alliance to help Walmart grow its overall sales revenue in China. is looking for some help to grow its e-commerce, retail footprint and scale in China. The retailer announced Monday (June 20) plans to partner with, a major online marketplace player in China. The deal involves a wide range of business initiatives involving online and in-store retail ventures of Walmart and Sam’s Club.

Walmart said would take ownership of the Yihaodian online marketplace, website, app and platform assets for a 5% stake in That stake involves 144,962,250 shares of Class A stock in with a street value of $3.1 billion as of Monday.

Walmart will continue to operate the Yihaodian direct sales business and will be a seller on the Yihaodian marketplace, leveraging its global supply chain to provide customers a wide range of products. and Walmart will work together on growing the Yihaodian brand and business under its current name and market position, the retailer noted in its press release and federal filing with the Securities and Exchange Commission.

Experts agreed that being the No. 2 largest player in terms of marketplace commerce in China will give Walmart access to its growing online customer base and same-day delivery services.

“We’re excited about teaming up with such a strong leader in, and the potential that this new relationship creates for customers in China, as well as for our businesses. We thank the Yihaodian associates for creating a strong brand and business that has helped lead to this opportunity with,” said Doug McMillon, president and CEO of Walmart.

“ shares similar values in making the lives of customers better. It also has a very complementary business and is an ideal partner that will help us offer compelling new experiences that can reach significantly more customers. We also look forward to offering customers a tremendous number of quality imported products not previously widely available in China through Walmart and Sam’s Club,” McMillon added.

Walmart said it will continue to operate its brick and mortar stores in China and will also become listed as a preferred retailer on’s O2O JV Dada, China’s largest crowd-sourced delivery platform. This is expected to drive online traffic to Walmart stores and it will allow customers to order fresh food and other items from Walmart stores for 2-hour home delivery, while significantly broadening the product selection available to Dada’s customers.

Walmart and will work together to leverage their supply chains to increase product selection for customers across China, including broadening the range of imported products.

“Top to bottom, it’s a good deal for Walmart,” said Keith Anderson, e-commerce expert with Boston-based Profitero.

He told Talk Business & Politics that the online commerce in China is far more mainstream than that in the U.S. Anderson said Walmart was limited in its scale with Yihaodian, a distant player in this large market and a grocery retailer. He said the early marketplace commerce companies in China have all but dominated the space, making it virtually impossible for an outside company like Walmart to build any meaningful scale on its own.

Anderson said and Taobao were the early online commerce marketplace sites like eBay and Amazon in the U.S. He said the first movers in the marketplace model are usually able to establish a winning marketshare which makes it very difficult for other companies to gain traction. Anderson explained that the marketplace model involves agents or suppliers and customers which is a two-sided market. He said the companies that sign up the best and most sales agents will have dibs on attracting the most customers.

“It’s hard for smaller competitors to out-execute on both of those metrics. It was almost impossible for Walmart to move the needle in China by itself at the scale it needs to operate,” Anderson said. “This alliance takes away the distraction of trying to build a competitive marketplace off the plate of Walmart executives this late in the game when little can be done.”

He said this deal also looks to drive sales to Walmart’s network of physical stores by integrating with JD’s online-to-offline JV Dada crowdsourced delivery platform which is imported for Walmart long-term.

Budd Bugatch, analyst with Raymond James & Associates, also likes the deal for Walmart. He said McMillon has spoke about some disappointment in the past two quarters with e-commerce expansion abroad. McMillon has been an advocate for expanding the online third-party marketplace for as a way to get more inventory with fewer overhead costs. Bugatch said this deal does just that. He expects it could help Walmart a fair amount in China, bringing more traffic to Walmart and Sam’s’ Club.

In the second quarter, Bugatch said Walmart will book a gain of about 16 cents to 19 cents per share of income from the sale of Yihaodian assets logged as a “discrete item,” which is between $500 million and $590 million.

Yan Deng, an analyst for e-commerce in China for Profitero, told Talk Business & Politics that is the No. 2 marketplace retailer in China for a wide range of general merchandise. She said Yihaodian will be a good fit for because of its grocery focus, something has not had in the past.

Deng said Walmart and Sam’s Club will benefit from being sellers on the marketplace and they will be able to sell products in high demand among the growing middle class in China. She agreed that the alliance looks good for both sides. She said is a growing company and Walmart now has a stake in that business.

“We are very happy to announce this landmark agreement between two leading retailers, which we are confident will help bring e-commerce in China to the next level and benefit millions of consumers,” said Richard Liu, CEO of “Walmart is synonymous with trusted-quality efficient retailing, and we believe that this tie up will increase both product selection and overall user experience.

Liu said his company plans on further developing Yihaodian, which has tremendous strength in important regions of eastern and southern China.

“Yihaodian will continue offering the outstanding user experience its customers have come to expect, which we will further augment by leveraging our unparalleled logistics capabilities and breadth of product categories,” he added.

Sam’s Club China, which has proven tremendously successful within the markets it operates in China, will open a flagship store on, vastly expanding the availability of Sam’s Club’s high-quality imported products across China. It will offer same- and next-day delivery through’s nationwide warehousing and delivery network, which covers a population of 600 million consumers.

Liu said was happy to welcome Sam’s Club into its platform. As a marketplace on, Sam’s Club will give Chinese consumers access to its luxury brands and high-tier products that have proven popular in China. Liu said this new business partnership will allow these products to be accessible for millions more customers in China.

Walmart International CEO David Cheesewright recently told the media that the retailer is committed in China, despite several recent management changes and an onslaught of competition in the market of more than one billion consumers. He said one of the hottest retailers in demand across China is Sam’s Club.

“Nearly every governmental meeting I go to across China, city leaders want to know when they are going to get a Sam’s Club,” Cheesewright told the media during an international briefing in Northwest Arkansas on June 2.

Walmart International runs Sam’s Club abroad and he said it’s the format that is resonating in China. He said Chinese consumers want to buy imported goods, luxury brands in fashion, electronics and otherwise. He said the Sam’s Club model that operates in the U.S. is precisely the format that consumers in China want and that’s what the retailer plans to give them. He also said Walmart’s growth in China has been slow and somewhat disappointing but that it is starting to change and there will be more investment in China in the coming years. Walmart’s plan over the past two years has been to correct the platform for sustainable growth in China and he’s pleased with progress there in light of the “tough economy,” Cheesewright said.

He said Walmart International has invested in centralized distribution centers for fresh and frozen foods in China which gives them control of the supply chain and it allows Walmart to give real confidence around food safety, an ongoing critical concern for Chinese consumers. One other area Walmart plans to invest heavily in the future is expanding the Sam’s Club footprint in China.

“It’s been a fairly good format for us and we will be aggressively expanding it,” Cheesewright said.

Scott Price, CEO of Walmart Asia, told the media on June 2, that Sam’s Club has previously been a challenged format in China, particularly around the physical format which has 30-feet ceilings. He said about two years ago the retailer began revamping its product assortment to include more direct imports from the U.S. Sam’s Club in an effort to simplify the supply chain. The response was that Chinese consumers wanted more. Price said the few Sam’s Clubs you will find in China now look very much like their sister properties in the U.S.

The problem with expanding the format is not lack of demand, it’s a real estate issue. He said mall developers could put three typical retailers in the space that one Sam’s Club would occupy. To combat the issue, Price said Walmart invested in three separate mall projects to work directly with developers to allow Sam’s Club to anchor the new shopping malls. He said the first one opened several months ago and is doing well.

Sam’s Club has more than 1.4 million members in China and the format is a strong part of Walmart’s expansion plans in the market over the next two years. Cheesewright said there really is no competition for Sam’s Club selling mostly branded imports of luxury and high-end goods.

Anderson said Costco entered a deal to sell its products in China on Alibaba’s Tmall site and on Single’s Day, China’s equivalent to Cyber Monday, Costco rung up more than $3.5 million in sales. He said Costco doesn’t have a physical footprint of its own in China but it’s gleaning healthy sales online. He was not surprised to hear that Sam’s Club is a popular shopping venue in China given it’s a house of brands (luxury and otherwise).

Deng said the new side of Sam’s Club in China as a house of luxury brands and imports from the U.S. and other desirable markets is exactly what many Chinese consumers would pay a premium to get. For instance, she said American Cheesecake that is frozen is something many Chinese consumers would want. She said there is opportunity for Sam’s Club to grow by selling imports, especially in food and general merchandise.

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