Wal-Mart Stores Inc on Thursday took full control of Chinese e-commerce firm Yihaodian.com by purchasing the balance 49 percent stake that it did not already own to further accelerate its online presence in the country.
The company bought the stake from YHD founders Yu Gang and Liu Junling, as well as from Ping An Insurance Group.
Industry experts said the acquisition will give the US retail giant a clear edge over other brick-and-mortar retailers in China's fast-growing consumer market.
"The purchase will help strengthen Wal-Mart's position," said Jason Yu, general manager of Kantar Worldpanel China, a consumer analytics firm.
"YHD's rich big data assets will help build more shopper insights for Wal-Mart and enable it to have a successful online-and-offline strategy. Despite the fact that YHD is relatively small compared to the likes of Tmall (a business-to-consumer platform owned by Alibaba Group Holding Ltd) and JD.com Inc, it is still a key player in the online shopping for fast moving consumer goods. YHD is strong in the eastern parts and more popular with urban white collar females," he said.
Founded in 2008, YHD operates logistics centers in Shanghai, Wuhan and Chengdu, Beijing and Guangzhou, is able to offer same-day and next-day delivery services. However, it is still dwarfed in the country by e-commerce giants like Alibaba and JD.
After taking full control of YHD, the US retail giant said it will invest more in e-commerce to create what it called a seamless experience for customers across platforms like online, mobile and stores.
Neil Ashe, president and CEO of Wal-Mart Global e-Commerce, said: "YHD has excelled as one of China's top e-commerce businesses. We're excited about the team at YHD and their strong local e-commerce experience. This local experience, combined with Wal-Mart's global sourcing and our strong local retail presence and supply chain, will allow us to deliver low prices on the products customers need in new and exciting ways.
"Our investment in YHD is part of our long-term commitment to grow in China, and we look forward to continuing to play a positive role in the development of the e-commerce industry," he said.
Dong Guanghua, group account director of New York-based global market-research firm Millward Brown, said the acquisition is significant as it helps Wal-Mart to expand its online retail presence in China and reach out to more younger customers.
"The purchase will help weave together Wal-Mart's online-and-offline presence in the Chinese market, especially at a time when brick-and-mortar retailers in China are facing competition from online rivals amid a slowing economy," he said.
According to a statement by Wal-Mart, YHD will continue operating under its existing name and will maintain its focus on having strong local leadership with a clear understanding of the needs of online consumers in China.
Wang Lu, president and CEO of Wal-Mart Global e-Commerce in Asia, will lead YHD as part of his overall executive responsibilities.
The two co-founders, former chairman Yu Gang and former CEO Liu Junling, who announced earlier this month that they were leaving YHD, will continue to serve as chairman emeritus and strategic executive adviser, respectively, to ensure a smooth transition and contribute to the future success of YHD, said a company statement.
