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China technology

Walmart, JD.com invest US$500 million in Chinese logistics service

Investment in logistics provider Dada-JD Daojia intensifies ‘smart retail’ movement in China, where tech giants such as Alibaba and Tencent cut deals to combine shoppers’ online and offline experience

PUBLISHED : Thursday, 09 August, 2018, 2:58pm
UPDATED : Thursday, 09 August, 2018, 10:24pm

Logistics services company Dada-JD Daojia has raised US$500 million from existing backers JD.com and Walmart to quicken the growth of its delivery network across China.

The firm comprises two businesses and is partly owned by JD.com. Dada operates a network of 5 million delivery men, while JD Daojia partners with retail stores and provides one-hour delivery services of groceries and other items.

Walmart said it invested about US$320 million in the logistics services company’s latest fundraising. The Arkansas-based retail giant’s partnership with Dada-JD Daojia dates back to 2016 when it invested US$50 million, the company said.

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“We are confident that this deeper collaboration with Dada-JD Daojia will enhance our omnichannel footprint and deliver a better O2O (online to offline) customer experience,” said Tan Wern-yuen, the president and chief executive at Walmart China.

The global retail giant has been pushing to integrate its retail network in China with the country’s burgeoning “smart retail” movement, as retailers and tech giants such as Alibaba Group Holding and Tencent Holdings cut deals to combine shoppers’ online and offline experience.

Earlier this year, Walmart opened its first small-sized, hi-tech supermarket in the southern city of Shenzhen, which will stock products that customers will also be able to buy on the US retailer’s online store on the JD Daojia portal. The stores are competing with Alibaba’s Hema supermarket chain to provide fast delivery of grocery to customers.

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Dada-JD Daojia said it intends to use the funds to invest in supply chain technology and serve merchants on its platform, which connects scooter-riding drivers in about 400 cities with about 1.2 million online merchants and delivers everything from packages to groceries.

Formed when JD.com merged certain business assets with Dada Nexus, the company is distinct from the Beijing-based JD.com’s own logistics operations because it mostly relies on freelance couriers.

It is a key cog in a battle with Alibaba that sends millions of riders onto Chinese streets daily.

At peak times, Dada-JD Daojia said it delivers 1 million orders per day, and its platform also acts as a shopping portal that promises delivery within an hour of orders.

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“Dada-JD Daojia will deepen our partnership with leading retail partners and improve supply chain efficiency via technology,” chief executive Philip Kuai said in a statement.

It currently serves 200 Walmart stores in 30 major Chinese cities.

Alibaba, the parent company of the South China Morning Post, is the top e-commerce player on the mainland, while Tencent is strong in social media and gaming and has, along with Walmart, a considerable stake in number two online retailer JD.com.

Alibaba and Tencent have between them splashed over US$10 billion on retail-focused deals, boosting their reach offline and meaning few bricks-and-mortar sellers are left without an allegiance to one or the other.

With reporting from Bloomberg and Reuters