Walmart is injecting $50 million into an offshoot of one of China’s largest food delivery services, it said today, in a move that further aligns it with Alibaba’s biggest foe in the country.
This is part of Walmart’s strategy of joining with JD.com, which is gathering forces like America’s biggest retailer in order to fend off Alibaba’s intentions to expand its own food delivery business. If Alibaba (BABA) is similar to eBay (EBAY), with millions of small sellers, JD.com is like Amazon (AMZN), with dozens of warehouses and last-mile delivery logistics.
In April, JD (JD) merged its food delivery division with Dada, whose value has climbed above $1 billion after investments from Sequoia Capital and Yuri Milner’s DST Global. Since then, Dada and JD launched New Dada as a delivery service for JD.com’s grocery offerings.
The Walmart investment follows its announcement this week that, through JD.com’s app, customers can have groceries delivered within two hours from 20 Walmart stores around China; New Dada handles the delivery.
As in the U.S., Walmart (WMT) is trying to expand its online sales. But since China’s market is dominated by several giants, it has decided to partner to do so. It sold its China website—Yihaodian—to JD.com in June, trusting JD.com to help expand its sales into the parts of China its over 400 stores don’t reach. Walmart CEO Doug McMillion said in a release, “Our alliance with JD and cooperation with New Dada will enable seamless shopping to millions of customers across China.”
Walmart’s presence in China is infinitesimal compared to the U.S., where it has 4,600 stores. But it’s betting an alliance with China’s second biggest e-commerce giant can help change that.
