Walmart, JD.com commit $500m to China grocery delivery business

The company was formed two years ago when JD.com agreed to merge its online-to-offline (O2O) business unit with Dada Nexus, an independent delivery player that had previously received more than $400 million from the likes of Sequoia Capital China and DST Global. In addition to contributing its O2O resources, JD.com committed $200 million in cash and took a 47.4% stake in Dada-JD Daojia.

The objective was to leverage the companies’ combined last-mile delivery infrastructure – comprising a crowdsourced fleet of drivers and a network of logistics facilities – so that JD.com would provide one-hour delivery of fresh produce and baked goods as well as health and beauty products to customers living in certain areas. Other customers include 7Fresh, JD.com’s chain of technology-enabled supermarkets; restaurant operators Real Kungfu and Country Style Cooking; and Weimob, a cloud-based mobile commerce services provider.

Dada claims to cover more than 400 cities, serving over 1.2 million merchants and 40 million individual users, with a peak daily delivery volume of 10 million packages. JD Daojia’s delivery network has a presence in nearly 40 cities, with 20 million monthly active users and daily volumes exceeding one million packages.

Walmart made an investment in Dada-JD Daojia in 2016 as part of a strategic partnership with JD.com. This initially involved enabling shoppers to buy goods directly from Walmart stores on the JD.com platform. The companies then integrated their inventory management in China, so that when a customer places an order on JD.com, the system will determine whether a JD.com warehouse or a Walmart store is closer to the delivery destination and then dispatch a courier. There are also offline JD Home stores within Walmart outlets.

“JD.com is working together with global retail partners including Walmart to promote an ‘unbounded retail’ alliance and serve all consumers and brands all the time. Consumer demand is ubiquitous, and this allows retail to become integrated with lifestyles, driving optimization of the industry in terms cost, efficiency, and experience,” said Jianwen Liao, chief strategy officer at JD Group, in a statement.

Earlier this year, JD.com raised approximately $2.5 billion for its logistics subsidiary, which holds the company’s stake in Dada-JD Daojia as well as other assets. Investors included Hillhouse Capital, Sequoia, China Merchants Group, Tencent Holdings, China Life Insurance, a fund-of-funds managed by China Development Bank Capital, China Structural Reform Fund, and ICBC International.

China Renaissance served as exclusive financial advisor for the investment in Dada-JD Daojia.

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• Topics
• Greater China
• Expansion
• Technology
• China
• JD.com
• Logistics
• Sequoia Capital
• DST Advisors
• TMT