Walmart's real plan is to increase its stake in JD.com again in half a year

In the past six months, Walmart's stake in JD.com has increased from 5% in June last year to more than 10%, with short and rapid increases. As for the cooperation between the two parties in the Chinese market, the most eye-catching Walmart hypermarkets entering JD.com's home delivery service has not yet been widely implemented. If the effect of this cooperation is significant, Walmart may increase its stake in JD.com again in the future.

According to the SEC documents submitted by JD.com recently, Walmart held a total of 2384,954,010 Class A common shares of JD.com as of December 31, 2016, accounting for 12.1% of JD.com's total Class A common shares. In June 2016, both parties announced that Walmart would receive 140 million newly issued Class A common shares of JD.com, which is about 5% of JD.com's total issued shares, and would cooperate in multiple strategic areas. Walmart also promised to increase its stake in JD.com.

In October 2016, Walmart announced its first increase in holdings, increasing its holdings of JD.com Class A common stock to 10.8% and obtaining the status of an observer on JD.com's board of directors. According to the SEC documents recently submitted by JD.com, Walmart has increased its holdings for the second time.

It is worth noting that after the first increase in holdings, Walmart made another strategic investment of US$50 million (about RMB 336 million) in New Dada, a new company that was just established in April last year through a merger. It owns the local instant logistics platform "Dada" and the fresh supermarket O2O platform "Jingdong Daojia". JD.com exchanged the "Jingdong Daojia" business for 47.4% of New Dada's shares and became the largest shareholder in one fell swoop. As of December 31, 2016, Walmart held a total of 10.1% of JD.com's shares.

Walmart and JD.com have been collaborating on a series of capital cooperation. Some of the actions that have been implemented so far include Walmart's Sam's Club entering JD.com exclusively; Walmart Global E-Shopping ceasing its independent App business and entering JD.com Global Shopping as Walmart's global official flagship store; and more than 20 Walmart shopping malls in Guangzhou, Shenzhen and other places being the first batch of stores to be connected to JD.com's home delivery platform.

Walmart's large-scale investment in e-commerce is not only happening in China. In August last year, Walmart announced the acquisition of e-commerce company Jet.com for about $3.3 billion, which was considered by the industry as its biggest move to challenge Amazon in the e-commerce field . At the end of September, India's largest e-commerce company Flipkart also entered Walmart's acquisition list. In China, even if Walmart increases its stake in JD.com to 10.1%, it only has the status of a board observer, without the right to propose or vote.

JD.com CEO Richard Liu holds 18.2% of the shares and 80.9% of the voting rights. This is because Richard Liu mainly holds Class B shares, which have 20 votes per share, while Class A shares have only 1 vote per share. This means that even if Walmart has significantly increased its holdings, Richard Liu still firmly controls JD.com. This is inconsistent with Walmart's strategic investment positioning and its e-commerce investment style in other countries around the world.

Walmart once gradually increased its holdings and fully controlled No.1 Store. Although it occupied a seat in advance, it did not make any breakthroughs in the e-commerce field. Walmart's high hopes for e-commerce prompted it to make another move. After the strategic cooperation with JD.com in June last year, Walmart bet almost all opportunities such as the development of e-commerce in China and the transformation of physical retail on JD.com. However, JD.com and No.1 Store are not comparable in size and are not easy to control. At the same time, Walmart dare not make a move easily before seeing the actual effect. On the one hand, the development of physical stores has not found a new development path. According to statistics, Walmart opened 23 new stores in China in 2015 and only closed 1 store. From January 1 to December 31, 2016, Walmart opened 24 new stores (including 3 Sam's Clubs) and closed 13 stores. On the other hand, the promotion of retail business by e-commerce is obvious to all around the world. Walmart China has clearly stated that it is "committed to becoming a true full-category O2O retail company."

Walmart launched the O2O platform "Walmart" (renamed from the original "Speed ​​Shopping") App in 2015, and first tried it out in Guangzhou, Shenzhen and other places, but it has not been widely rolled out. The first 20 Walmart stores to access JD.com's home delivery platform last year were also based on the O2O coverage of "Walmart". However, when the O2O drama of Walmart and JD.com just opened, the domestic O2O craze had already subsided, and most companies that provided home delivery services had stopped or reduced their businesses. Simply delivering the goods ordered by consumers on the O2O platform to their homes is not a viable model. Physical stores and O2O platforms need to operate in all aspects such as goods, inventory, and supply chain. In addition, the fresh goods in physical stores have standardization barriers that are currently difficult to overcome for O2O. All these determine that the O2O parties need to deeply bind cooperation and are willing to make changes and efforts for this. Walmart, which only has the status of a board observer, may need to continue to increase its holdings in order to promote the effective and in-depth cooperation between the two parties and "become a true full-category O2O retail company."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.