JD.com’s Hong KongThe listed shares fell 10 percent to HK$101.10 as of 2:23 p.m. local time on Wednesday, triggering a broader sell-off in Chinese e-commerce and technology stocks.
Walmart is refining its strategy in the world’s second-largest economy, where its long-time e-commerce partner is struggling as are major competitors Alibaba Group Holding And PDD investmentsOwner of Pinduoduo And TemúAlibaba owns the South China Morning Post.
JD.com is in an escalating price war in China with major e-commerce competitors, including Alibaba Group Holding and the low-cost retailer Pinduoduo. Photo: Shutterstock
The U.S. company has built a mature e-commerce and delivery system in mainland China for both Sam’s Club and its hypermarket business and is now focusing on its own offerings, said a person familiar with the matter who spoke on condition of anonymity.
“I expect Walmart will be disappointed with the horse they backed,” said Mark Tanner, managing director of marketing agency China Skinny. “It doesn’t feel like the original ambitions at the time of the acquisition have worked out as planned.”
Representatives for Walmart, JD.com and Morgan Stanley did not immediately respond to requests for comment.
A group of shoppers from Hong Kong buy several shopping carts full of goods at a Sam’s Club hypermarket in Qianhai, Shenzhen. Photo: Eugene Lee
Walmart said the decision to reduce its stake will allow the company to focus on its own business in China and allocate funds to other priorities, according to a report published on Wednesday by Shanghai-based online media Cailian.
The US retailer Sam’s Club Franchise has been a bright spot for the company. It was the only hypermarket chain among the top five to report sales growth last year, according to the China Chain Store & Franchise Association. In mainland China, the unit offers premium goods using a membership model that is now being copied by rivals, while its basic hypermarkets have struggled along with their competitors.
Meanwhile, China’s largest Internet Companies are trying to reverse a decline as economic uncertainty and changing consumer shopping habits weigh on profits. Last week, Alibaba – long a barometer for the industry – surprised investors by announcing its The main trading business actually shrank in the June quarter.
A Walmart customer in Beijing looks at a promotion for the first JD-Walmart 8.8 omnichannel shopping festival across mainland China on August 8, 2017. Photo: Walmart
JD.com’s June quarter results exceed expectations – even though revenue grew by just 1.2 percent. This continued a string of single-digit quarters stretching back to 2022, a period of crisis that has halved the company’s market value since the beginning of last year.
The split between Walmart and JD also follows a pattern of online and offline retailers dissolving their partnerships as previous ambitions to seamlessly merge the physical and cyber customer experience failed to materialize. Earlier this year, Bloomberg reported that Alibaba was considering splitting its Intimate Department store branch.
Walmart’s sale of JD.com shares would mark the end of a partnership between the two companies that began when the U.S. retailer acquired a 5 percent stake in the Chinese company in 2016.
As part of this deal, JD.com also acquired Walmart’s Yihaodian The online marketplace focused on selling groceries to upscale female shoppers in major Chinese cities, the companies said at the time. Later that year, Walmart increased its stake in JD.com to 10.8 percent.
