Tuesday, June 21, 2016

Walmart Tries to Recover from China Wobble

By Jeongwen Chiang, CEIBS Professor of Marketing

“I’m not surprised that Walmart has sold its ecommerce arm to JD.com. When Walmart bought Yihaodian and forced out the founders, I asked one of my EMBA students (who was a senior manager at Yihaodian) about the future of that company.  He predicted that it would not last long because all the senior managers were thinking about leaving too.

Walmart’s wobble with Yihaodian was a combination of management culture issues plus an incompatible strategic direction. Walmart did not see the need to set up small but widespread community warehouses that would ensure quick deliveries, which is vital if you want to compete in China’s aggressive ecommerce market.  It only wanted Yihaodian to be integrated into its online-to-offline system as a support for its physical stores. 

Apparently my EMBA student was right about the outcome. The big winner from all this is JD.com. Yihaodian may overlap a bit with JD.com’s partner network but overall it will complement the existing structure and the deal makes a lot of sense."

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