Amazon invests US$20m into a Chinese online grocery store

The American company's first Chinese investment is Yummy77, a fresh food e-store

PUBLISHED : Wednesday, 21 May, 2014, 4:41pm
UPDATED : Wednesday, 21 May, 2014, 4:43pm

Amazon.com funneled US$20 million into fresh food e-store Yummy77 last week, marking the first occasion that the American retail giant has invested in a Chinese company.

The Shanghai-based Yummy77, which was founded in February 2013 and boasts a user base of around one million, confirmed news of the investment on its official Sina Weibo page.

It announced that the company would use the money to expand its market while continuing to remain a separate entity from Amazon.

The company also hinted that the substantial investment would boost Amazon’s product selection in China - possibly allowing the American retailer to eventually make inroads into the mainland with something similar to its AmazonFresh grocery service.  

AmazonFresh, an Amazon subsidary launched in 2007, popularised a successful business model based on ordering groceries online for home delivery.

The service is currently only available in certain US cities in Washington and California. 

Amazon is not the only American company investing in Chinese online retailers. In 2012, Walmart purchased a majority stake in online supermarket Yihaodian, an e-store which earned an estimated US$1.9 billion in sales last year. 

Companies like Amazon and Walmart might dominate shopping in the United States, but they are relatively small players in China, a country where Amazon is more renowned for their Kindle tablets and e-book services.

Fierce competition from local corporations like Alibaba, owners of Taobao.com, has largely kept Amazon from achieving widespread success in China's booming e-commerce sector - an arena expected to deliver a revenue stream of roughly 2.8 trillion yuan (HK$4 trillion) by 2015.