Wal-Mart takes major Yihaodian stake

PUBLISHED : Tuesday, 21 February, 2012, 12:00am
UPDATED : Tuesday, 21 February, 2012, 12:00am


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Wal-Mart Store, the world's largest retailer, is speeding up its expansion into China's lucrative e-commerce market by becoming a majority shareholder in a mainland online supermarket.

The American supermarket chain yesterday announced it had increased its holding in Shanghai- based online shop Yihaodian to about 51 per cent after buying an unspecified minority stake in the company last year.

Industry experts said the retailing giant, which has traditionally concentrated on brick-and-mortar retailing, intended to test the water in the e-commerce market through the deal before going online itself.

A source close to Wal-Mart said the company last year considered setting up a dozen data centres globally as part of a drive to run its own online shopping services, and the first data centre was planned for China. However, the project had been suspended this year since the change of its global e-commerce head.

'Wal-Mart may take some major changes for its e-commerce strategies,' the source said. 'As the investment to launch its own online shops would be substantial, the company may hope to draw some experience first by purchasing existing online business such as Yihaodian.'

Wal-Mart, with more than 370 supermarkets, hypermarkets and Sam's Clubs in mainland China, has in recent years been active in the e-commerce sector of the world's second-biggest economy. Last year, Wal-Mart started providing online shopping services to Sam's Club members in Beijing and Shenzhen.

'We are on track to create the next generation of e-commerce, offering the latest in online innovations to give our customers a unique shopping experience,' said Neil Ashe, president and chief executive of Walmart Global e-commerce.

Launched in 2008, Yihaodian, or 'No 1 shop' in Putonghua, is one of the leading shopping portals in China, offering more than 180,000 items from home appliances to baby formula for shoppers in 34 cities across the mainland.

A report by Boston Consulting Group said China's online market would exceed the current world-leader, the United States, in size in 2015, with an estimated 329 million online shoppers and more than two trillion yuan (HK$2.45 trillion) in annual sales in e-commerce trading.

Although online shopping portals on the mainland have been growing fast, most, including Yihaodian, have not been able to turn a profit.