Walmart has invested $50 million in New Dada, China’s largest local on-demand logistics and grocery O2O ecommerce platform.
This strategical investment is an extension of Walmart’s broader agreement with JD.com and of the cooperation with New Dada, which includes using New Dada’s network to offer customers two-hour delivery on groceries ordered from Walmart stores through the JD Daojia Dada app.
The announcement made today comes a day after Walmart and JD.com unveiled their collaboration on three new services: exclusive Sam’s Club and Global Imports stores on JD.com, and two-hour grocery delivery through New Dada.
On 20th June this Year Walmart had purchased a 5% stake in Chinese e-commerce firm JD.com.
Taking a stake in the FMCG e-commerce rise in China
A continued FMCG (fast moving consumer goods) slowdown in sales combined with the growth of e-commerce in China has put pressure on brick and mortar retailers. Physical modern retailers need to finding new solutions to drive growth.
Walmart’s strategical movements in this field are just some of the made by other retailers. Vanguard’s strategic investment in the XinMeiDa (previously Meituan & Dianping) and Feiniu’s corporation deal with Shihui are also two good examples of the efforts brick and mortar retail chains are doing to take advantage of the online sales rise through a O2O strategy.
Kantar Worldpanel’s latest data, for the 52 weeks ending June 17th 2016, show that e-commerce penetration of total FMCG sales reached 49% with a 10% rise from last year.
Despite the pick up in 2nd Q, within the 12 weeks ending 22 April 2016, consumer spending on FMCG in China grew by 0.6% compared to the same period last year. The lowest rate of growth ever.
Taking into account the 52-weeks ending 20th May 2016, consumer spending on FMCG grew by 2.4% compared to the 5.1% last year.
Latest Kantar Worldpanel figures that consider the 12 weeks ending 12th Aug 2016 show consumer spending on FMCG grew by 3.8% compared to the same period last year, Modern trade sales went up by 1.4% while e-commerce grew by 60.1%.
International modern retailers recover market share in 2016
In 2016, international retailers started to show sign of recovery. Their market share fell to 13.2%, down only 0.3% from Q1 in 2015, the smallest decline in recent years.
Wal-Mart group was one of the more successful players with a share growth for a second consecutive month.
The US chain reached a quarterly share of the 5% of the market, considering the 12 weeks of 2016 (up 0.2% from 2015Q1). The recovery of Wal Mart was driven by the strong performance in West China, where the retailer holds 6.4% of the market (up 0.7% from 2015Q1).
The strategical investments in JD and New Dada may help to the US retailer market share recovery in this Asian country.
Despite the mentioned increase, the recovery is not complete, as Walmart’s market share in the grocery segment shrinked a 0.2% to the 4.8% within 52 weeks ending on 25th March 2016 compared to the share this multinational modern retailer heold in the same period time of 2015 (5%).
The partners in latest Wal Mart strategical investment
New Dada is an independent joint venture between JD.com and Dada. It serves more than 25 million registered customers and provides local on-demand delivery capabilities with 2.5M crowd-sourced deliverers across more than 300 cities in China. Walmart has 426 stores in nearly 170 cities.
The two-hour delivery service is available to customers within a 3km radius of more than 20 Walmart stores that are currently part of the program. The number of Walmart stores offering two hour delivery is expected to double by the end of the year.
Image over the headline.- Walmart CEO Doug McMillon announced a strategic investment in New Dada with Philip Kuai, CEO of New Dada. The investment is an extension of Walmart’s alliance with JD.com and will offer customers in China two-hour delivery on groceries ordered from Walmart stores through the JD Daojia Dada app. (Photo: Business Wire)
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