Walmart and JD.com Expand Strategic Partnership in China

Executive Summary

• Walmart and JD.com, China’s largest e-commerce company by revenues, announced that they are expanding the strategic partnership formed last year by further integrating their respective platforms, supply chains and customer resources.
• These new initiatives aim to leverage the two companies’ core competencies and offer Chinese shoppers faster and more convenient access to high-quality, authentic products.
• Walmart and JD.com will integrate their respective inventory management systems in a jointly developed supply-chain system. Once an order is placed, the system will determine whether to deliver from the closest JD warehouse or the closest Walmart store. To enhance the reach and efficiency of its logistics network, JD.com has established pick-up stations at select Walmart stores for those who choose to click and collect, as well, it has established the first JD Home store within a Walmart store in Shenzhen.
• We believe further integration of the two companies’ supply chains, which we view as a key point in this latest announcement, will widen Walmart’s reach in China and increase its online presence.
• In our view, the timing of these further strategic initiatives will be critical, and the upcoming 8.8 shopping festival the two companies will host on August 8 will serve as a good test case. The shopping festival will feature a livestream broadcast from Walmart’s first US store.