Baidu searches for growth in deal with online grocer
Internet giant extends reach into e-commerce in tie-up with outlet backed by Wal-Mart
Baidu, the mainland's biggest internet search service provider, is set to work with a local online retailer backed by American supermarket giant Wal-Mart to tap the country's fast-growing e-commerce sector.
Baidu said yesterday it would implement a "joint business plan" with Yihaodian.com, a Shanghai-based online grocery store, and use its resources to send more shoppers to the retailing partner. Baidu will profit from the users it sends to Yihaodian.
The move shows Baidu, which has 500 million users, is trying to reach deeper into the country's booming e-commerce business. Last year, Baidu had 22 billion yuan (HK$27.18 billion) in total revenue. Most of the revenue came from advertising, with a significant part from online shopping portals.
"We are looking for a new business model to work with our partners," Baidu vice-president Wang Zhan said. "We'll work closely on management, marketing to research levels, set common goals and open up resources to each other."
He said the new business plan would involve an investment of at least 100 million yuan
Under the plan, Baidu will give its users' online search data to Yihaodian for consumer behaviour research and make the retailer's link more accessible to people looking for relevant products online. They will also explore opportunities on platforms like mobile phones.
The 1.3 trillion yuan mainland e-commerce market has become the most sought-after sector for retailers and investors. It's expected to reach 10 trillion yuan by 2020, according to industry estimates. Wal-Mart Stores raised its stake in Yihaodian to 51 per cent in February last year, aiming to expand its online channels in the country, in addition to its bricks-and-mortar stores.
Launched in 2008, Yihaodian, or "No 1 Shop" in Putonghua, is one of the country's leading shopping portals, offering more than 180,000 items from home appliances to baby formula in 34 cities across the mainland.
Yihaodian chairman Yu Gang said 2012 sales revenue was more than double that the previous year. Following Shanghai and Beijing, it plans to build warehouses in Xiamen, Shenyang, Jinan and Xian this year and triple the number of items it offers.