After Walmart fully acquires No.1 Store, can it still expand offline?

Yesterday was the general meeting of all employees of No.1 Store to celebrate its 7th anniversary. Just 2 hours before the anniversary celebration, Walmart sent an internal email to No.1 Store, officially announcing that Walmart has acquired No.1 Store in full. Part of the management responsibilities of Wang Lu, President and CEO of Global e-Commerce Asia, will include leading No.1 Store. The two founders, Yu Gang and Liu Junling, will serve as honorary chairman and consultant respectively, responsible for the handover during the transition period.

There are already 3 e-commerce brands in China

After the full acquisition of No.1 Store, Walmart now has three wholly-owned e-commerce brands in China: Sam's Club, Walmart "Quick Buy" and No.1 Store. Sam's Club and Walmart "Quick Buy" are affiliated with Walmart China and report to Walmart International Department; No.1 Store is affiliated with Walmart E-commerce Division and reports directly to Walmart E-commerce Division in the United States, and has no overlap with Walmart China. More importantly, the main categories of "Quick Buy" when it first went online were fresh food and oil, grain and dry goods, which accounted for more than 50% of the total SKUs, while No.1 Store also focuses on food.

Will this cause a conflict? On May 26, when Walmart launched its O2O integration strategy in Shenzhen and took the lead in launching the "Quick Buy" APP, a reporter from Nandu asked this question to Walmart China CEO Ke Junxian. He believed that Quick Buy is not a simple third-party platform, but an extension of the original structure. "The two channels do not conflict, but complement each other. We focus on users' one-stop shopping. For example, the large basket of goods they buy includes many categories, while No. 1 Store focuses more on B2C online business. Their customers are more concerned about 1-2 single products. The shopping structures of the two are different. In addition, in the upstream supply chain, we can do more integration in the future, so there is no conflict."

Although Ke Junxian defines No.1 Store as an e-commerce company that "focuses on 1-2 items" and "Sugou" as a one-stop service for multiple categories, in fact, Sugou only had 13,000 items when it first went online, while No.1 Store, because of its open platform "No.1 Mall", has 8 million SKUs and 150,000 self-operated products.

Yihaodian is mainly B2C

The O2O plan announced at the general meeting last year did not go smoothly. In September last year, No.1 Store opened three community experience stores in Shanghai, similar to SF Express 's Heike stores, but there was no expansion after the first three stores. At the beginning of this year, No.1 Store launched "Community Thunder Purchase" in Shanghai and Beijing, but according to an insider of No.1 Store, since JD.com launched JD.com Home Delivery, the community thunder purchase was basically sold out. No one mentions this project now.

The failure of two O2O trials also became the straw that led to the founder of No.1 Store's resignation. After becoming a wholly-owned shareholder, Walmart has its own supermarkets. Does No.1 Store still have a chance to go offline? Retail expert Ding Liguo believes that this is a must. Walmart acquired No.1 Store because it was attracted by its food-based SKUs. "The ultimate way out for No.1 Store will definitely be cross-border e-commerce based on the international supply chain, and the outstanding performance will definitely be food. In the future, No.1 Store will open small offline stores mainly focusing on food to open up the O2O closed loop. This is the differentiated competitive advantage that distinguishes it from Tmall and JD."

However, according to insiders, it is unlikely that Yihaodian will go offline in the short term. "It is affiliated with the e-commerce department, not the department in charge of offline operations within Walmart." From Ke Junxian's words, it can be seen that the main task of O2O is not Yihaodian, "Quick purchase will be the core business of Walmart O2O, while Yihaodian is more of a B2C Internet e-commerce."

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.