The NDA government’s tweaks in the retail policy for electronic commerce (e-commerce) are to placate its largest constituency of dookandars, small traders and shop-owners who were badly bruised by the twin blows of demonetisation in 2016 and Goods and Services Tax (GST) in July 2017. So, the Department of Industrial Policy and Promotion (DIPP), meant to design policy and promote industrial development, including inviting foreign direct investment (FDI), unveiled a policy to restrict the activities of foreign mega retail giants such as Amazon and Flipkart and enable domestic retail outlets and the rest of the vast universe of mom-and-pop shops to breathe easier.

E-commerce is defined as the ‘production, distribution, marketing, sale or delivery of goods and services by electronic means’. An e-commerce transaction can be between enterprises, households, individuals, governments and other public or private bodies. The DIPP clarifications or amendments to the extant press note on the subject on December 23 focus on the provision that vendors with any stake owned by an e-commerce company cannot sell their products on the e-commerce company’s portal. 
 
This is meant to whittle down their competitive strength and aggressive marketing techniques that at times border on excessive bombardment of hapless consumers with tokenism like deep discounts, door delivery in amazing speed which a small shop-owner is at his wits end to match! This is particularly so as large e-commerce firms such as Flipkart and Amazon, not owing inventory themselves, have been extending a platform for their group companies such as WS Retail and CloudTail respectively. In a way, the new policy adjustment is to mollify the anguish and agony among offline retailers over massive discounts and the concomitant leap in e-commerce sales.

Yet another provision postulates any vendor which purchases 25 per cent or more of its inventory from an e-commerce group company is deemed to be controlled by that e-commerce company and thereby barred from selling on its portal. This is to put an end to anti-competitive practices in the absence of a domain regulator for e-commerce transactions, which the government conceded in a written response to a query in the Rajya Sabha on December 13 that “there is no proposal at present for setting up a regulator for e-commerce”.

What the DIPP amendments to extant rules seek to achieve is to deny control by such big retail behemoths as Amazon and Flipkart over vendors. The third principal provision clearly notes that the e-commerce firm must not sway the price of a product sold on its portal by extending spurs/freebies to particular vendors to keep them on or get them hooked permanently! Officials seeking anonymity maintain that these clarifications to the policy were designed to address “anti-competitive” proclivities by e-commerce players as these online market places were egregiously subsidizing products putting at a big disadvantage small retailers across the nation.

The other side of the argument is that India has become a huge playground for Amazon and Wal-Mart as they have committed a combined 21 billion US dollars to this middle-class and aspiring youthful populace using the purchase of goods services digitally. Amazon, for instance, has multiple joint ventures, including Cloudtail and Appario, that might be hit by the restrictions on sales by related parties. Flipkart has exclusive partnership with smartphone brands like Xiamoi and Oppo that could also encounter a formidable hurdle on exclusive deals for products by the latest tweak in policy. 
 
It is no brainer that both offer promotional schemes such as cash-backs and expeditious delivery which are now construed discriminatory/ predatory! Besides, as these companies come under the Foreign Exchange Management Act (FEMA) they must perforce have to provide minutiae to the RBI annually, adding yet another layer to compliance and monitoring of the e-commerce industry. This also attenuates India’s audacious claim that it has improved on the ease of doing business for investors, both domestic and overseas, the latter in particular for the FDI it brings in the form of best managerial practices, modern technology and opportunities of integration into global markets contributing to accelerated domestic growth and job creation in the country.

It is small wonder that the US-India Strategic Partnership Forum (USISPF) termed the tweaks in policy as regressive, taking the alibi of the move being detrimental to the welfare and interests of consumers who benefit by inexpensive goods American retailers have been providing ever since the FDI in e-commerce was allowed 100 per cent in single-brand retailing and other policy support placed from time to time.

Considering the fact that the country’s e-commerce market is now close to 39 billion US dollars, growing at a healthy double-digit rate, thanks to the demographic dividend of youthful populace splurging their income through digital-commerce by the click of a mouse, the government ought to have been wary of upsetting the apple-cart by taking part in the foreign versus domestic turf war. 
 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-a-breather-for-small-retailers-punched-hard-by-e-commerce-giants-2703511">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

The NDA government’s tweaks in the retail policy for electronic commerce (e-commerce) are to placate its largest constituency of dookandars, small traders and shop-owners who were badly bruised by the twin blows of demonetisation in 2016 and Goods and Services Tax (GST) in July 2017.

The NDA government’s tweaks in the retail policy for electronic commerce (e-commerce) are to placate its largest constituency of dookandars, small traders and shop-owners who were badly bruised by the twin blows of demonetisation in 2016 and Goods and Services Tax (GST) in July 2017. So, the Department of Industrial Policy and Promotion (DIPP), meant to design policy and promote industrial development, including inviting foreign direct investment (FDI), unveiled a policy to restrict the activities of foreign mega retail giants such as Amazon and Flipkart and enable domestic retail outlets and the rest of the vast universe of mom-and-pop shops to breathe easier. E-commerce is defined as the ‘production, distribution, marketing, sale or delivery of goods and services by electronic means’. An e-commerce transaction can be between enterprises, households, individuals, governments and other public or private bodies. The DIPP clarifications or amendments to the extant press note on the subject on December 23 focus on the provision that vendors with any stake owned by an e-commerce company cannot sell their products on the e-commerce company’s portal. This is meant to whittle down their competitive strength and aggressive marketing techniques that at times border on excessive bombardment of hapless consumers with tokenism like deep discounts, door delivery in amazing speed which a small shop-owner is at his wits end to match! This is particularly so as large e-commerce firms such as Flipkart and Amazon, not owing inventory themselves, have been extending a platform for their group companies such as WS Retail and CloudTail respectively. In a way, the new policy adjustment is to mollify the anguish and agony among offline retailers over massive discounts and the concomitant leap in e-commerce sales. Yet another provision postulates any vendor which purchases 25 per cent or more of its inventory from an e-commerce group company is deemed to be controlled by that e-commerce company and thereby barred from selling on its portal. This is to put an end to anti-competitive practices in the absence of a domain regulator for e-commerce transactions, which the government conceded in a written response to a query in the Rajya Sabha on December 13 that “there is no proposal at present for setting up a regulator for e-commerce”. What the DIPP amendments to extant rules seek to achieve is to deny control by such big retail behemoths as Amazon and Flipkart over vendors. The third principal provision clearly notes that the e-commerce firm must not sway the price of a product sold on its portal by extending spurs/freebies to particular vendors to keep them on or get them hooked permanently! Officials seeking anonymity maintain that these clarifications to the policy were designed to address “anti-competitive” proclivities by e-commerce players as these online market places were egregiously subsidizing products putting at a big disadvantage small retailers across the nation. The other side of the argument is that India has become a huge playground for Amazon and Wal-Mart as they have committed a combined 21 billion US dollars to this middle-class and aspiring youthful populace using the purchase of goods services digitally. Amazon, for instance, has multiple joint ventures, including Cloudtail and Appario, that might be hit by the restrictions on sales by related parties. Flipkart has exclusive partnership with smartphone brands like Xiamoi and Oppo that could also encounter a formidable hurdle on exclusive deals for products by the latest tweak in policy. It is no brainer that both offer promotional schemes such as cash-backs and expeditious delivery which are now construed discriminatory/ predatory! Besides, as these companies come under the Foreign Exchange Management Act (FEMA) they must perforce have to provide minutiae to the RBI annually, adding yet another layer to compliance and monitoring of the e-commerce industry. This also attenuates India’s audacious claim that it has improved on the ease of doing business for investors, both domestic and overseas, the latter in particular for the FDI it brings in the form of best managerial practices, modern technology and opportunities of integration into global markets contributing to accelerated domestic growth and job creation in the country. It is small wonder that the US-India Strategic Partnership Forum (USISPF) termed the tweaks in policy as regressive, taking the alibi of the move being detrimental to the welfare and interests of consumers who benefit by inexpensive goods American retailers have been providing ever since the FDI in e-commerce was allowed 100 per cent in single-brand retailing and other policy support placed from time to time. Considering the fact that the country’s e-commerce market is now close to 39 billion US dollars, growing at a healthy double-digit rate, thanks to the demographic dividend of youthful populace splurging their income through digital-commerce by the click of a mouse, the government ought to have been wary of upsetting the apple-cart by taking part in the foreign versus domestic turf war. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

A breather for small retailers punched hard by e-commerce giants

Wal-Mart Stores on Tuesday unveiled a $20 billion share buyback plan and forecast US online sales to increase by about 40 per cent in the fiscal year ending January 2019.

Wal-Mart&#39;s shares were up 1.6 per cent at $81.80 in premarket trading after the company also forecast overall net sales to increase by at least 3 per cent in the same period.

The company, locked in a battle for market share with ecommerce giant Amazon.com, has been doubling down on its online business and is leveraging its 4,700 plus stores to create a more hassle-free experience for its online shoppers.

Wal-Mart reported a 60 per cent jump in online sales in the United States in its latest quarter ended July.

&quot;It is clear that Wal-Mart intends to continue to turn up the heat online, with 40 per cent annual growth an impressive goal, especially on the heels of the 30 per cent outlined at the 2016 investor meeting, which at the time seemed aspirational in our view,&quot; Moody&#39;s Lead Retail Analyst Charlie O&#39;Shea said.

The largest US&nbsp;grocery retailer also said it expects to add 1,000 locations for shipping online grocery orders in the fiscal year 2019. It currently ships online orders from more than 900 US&nbsp;locations.

Competition in the grocery space has increased since Amazon bought Whole Foods and cut prices at the upmarket grocer in August.

The company forecast profit for the fiscal year 2019 to increase about 5 per cent over the expected adjusted earnings of $4.30 to $4.40 per share for the year ending January 2018.

The new two-year repurchase plan replaces a $20 billion buyback approved in October 2015.

Wal-Mart Stores on Tuesday unveiled a $20 billion share buyback plan and forecast US online sales to increase by about 40 per cent in the fiscal year ending January 2019

Wal-Mart Stores on Tuesday unveiled a $20 billion share buyback plan and forecast US online sales to increase by about 40 per cent in the fiscal year ending January 2019. Wal-Mart's shares were up 1.6 per cent at $81.80 in premarket trading after the company also forecast overall net sales to increase by at least 3 per cent in the same period. The company, locked in a battle for market share with ecommerce giant Amazon.com, has been doubling down on its online business and is leveraging its 4,700 plus stores to create a more hassle-free experience for its online shoppers. Wal-Mart reported a 60 per cent jump in online sales in the United States in its latest quarter ended July. "It is clear that Wal-Mart intends to continue to turn up the heat online, with 40 per cent annual growth an impressive goal, especially on the heels of the 30 per cent outlined at the 2016 investor meeting, which at the time seemed aspirational in our view," Moody's Lead Retail Analyst Charlie O'Shea said. The largest US grocery retailer also said it expects to add 1,000 locations for shipping online grocery orders in the fiscal year 2019. It currently ships online orders from more than 900 US locations. Competition in the grocery space has increased since Amazon bought Whole Foods and cut prices at the upmarket grocer in August. The company forecast profit for the fiscal year 2019 to increase about 5 per cent over the expected adjusted earnings of $4.30 to $4.40 per share for the year ending January 2018. The new two-year repurchase plan replaces a $20 billion buyback approved in October 2015.

Wal-Mart launches $20 billion buyback plan

Wal-Mart Stores Inc&nbsp;reported higher-than-expected quarterly earnings on Thursday, saying it benefited from cleaner and more efficient US stores, investments in technology that improved online shopping and higher employee wages that fostered better customer service. 
 
The world&#39;s largest retailer has been spending heavily to entice consumers back to its stores with better stocked shelves, and improving its e-commerce business by investing in new warehouses that can deliver online shipments faster. 
 
Last week, it announced the acquisition of online startup Jet.com for over $3 billion to better compete with Amazon.com Inc&nbsp;. 
 
Wal-Mart also increased entry level wages to $10 an hour earlier this year and said it will invest $2.7 billion in employee compensation and training over two years, a move it said contributed to improved service in its stores. 
 
These steps, analysts said, helped Wal-Mart to raise its fiscal-year forecast and buck a string of weak results from higher-end brick-and-mortar competitors like Target Corp, Macy&#39;s Inc&nbsp;and Kohls Corp&nbsp;. Target cut its fiscal-year profit outlook on Wednesday after quarterly sales fell more than expected. 
 
Wal-Mart US Chief Executive Officer Greg Foran said on a conference call that the company&#39;s customers were still cautious with their spending but were visiting stores more often and buying more items. Store visits increased 1.2 percent, and the average size of an order rose 0.4 percent during the second quarter ended on July 31.&nbsp; 
 
&quot;We are seeing a steady improvement in the US business, and it is responding favourably to the changes we are making,&quot; he said. 
 
The Bentonville, Arkansas-based company said sales were strong for grocery items and apparel but weak for electronics. 
 
&quot;Walmart&#39;s strategic investments are generating traction, which is especially meaningful, given a large portion of its customer base remains challenged,&quot; said Moody&#39;s analyst Charlie O`Shea.&nbsp; 
 
The retailer said it was difficult to quantify the effects of low gasoline prices and unseasonably warm weather, but those factors contributed to overall sales growth. 
 
Online sales growth accelerated sequentially for the first time in more than five quarters, rising 11.8 per cent from 7 per cent in the first quarter.&nbsp; 
 
Chief Financial Officer Brett Biggs said e-commerce growth was stronger in the United States than in major overseas markets, mainly because of its larger third-party seller business and the continued roll-out of online grocery pickup options. 
 
Wal-Mart has added 7 million items to its website this year, bringing the total to 15 million. This compares with 200 million on online rival Amazon.com Inc&nbsp;. 
 
The company raised its fiscal-year earnings outlook to between $4.15 and $4.35 a share, including an estimated hit of 5 cents from the Jet.com acquisition, from a previous range of $4 to $4.30. 
 
Second-quarter earnings per share of $1.07, excluding a gain from the sale of Wal-Mart&#39;s e-commerce business in China and other items, exceeded the analysts&#39; average estimate by 5 cents.&nbsp; 
 
Sales at US stores open at least a year rose 1.6 per cent, excluding fuel prices, to beat expectations in their eighth straight quarter of growth.&nbsp; 
 
International sales fell 6.6 pe rcent to $28.6 billion but increased 2.2 per cent on a currency-neutral basis. Total revenue rose 0.5 per cent to $120.9 billion.&nbsp; 
 
Wal-Mart&#39;s shares rose as much as 2.8 per cent earlier in the trading day. They were up 1.8 per cent at $74.23 in afternoon trade. 
 
(Reuters)

Improved online shopping was another factor behind the US retailer's higher-than-expected result

Wal-Mart Stores Inc reported higher-than-expected quarterly earnings on Thursday, saying it benefited from cleaner and more efficient US stores, investments in technology that improved online shopping and higher employee wages that fostered better customer service. The world's largest retailer has been spending heavily to entice consumers back to its stores with better stocked shelves, and improving its e-commerce business by investing in new warehouses that can deliver online shipments faster. Last week, it announced the acquisition of online startup Jet.com for over $3 billion to better compete with Amazon.com Inc . Wal-Mart also increased entry level wages to $10 an hour earlier this year and said it will invest $2.7 billion in employee compensation and training over two years, a move it said contributed to improved service in its stores. These steps, analysts said, helped Wal-Mart to raise its fiscal-year forecast and buck a string of weak results from higher-end brick-and-mortar competitors like Target Corp, Macy's Inc and Kohls Corp . Target cut its fiscal-year profit outlook on Wednesday after quarterly sales fell more than expected. Wal-Mart US Chief Executive Officer Greg Foran said on a conference call that the company's customers were still cautious with their spending but were visiting stores more often and buying more items. Store visits increased 1.2 percent, and the average size of an order rose 0.4 percent during the second quarter ended on July 31. "We are seeing a steady improvement in the US business, and it is responding favourably to the changes we are making," he said. The Bentonville, Arkansas-based company said sales were strong for grocery items and apparel but weak for electronics. "Walmart's strategic investments are generating traction, which is especially meaningful, given a large portion of its customer base remains challenged," said Moody's analyst Charlie O`Shea. The retailer said it was difficult to quantify the effects of low gasoline prices and unseasonably warm weather, but those factors contributed to overall sales growth. Online sales growth accelerated sequentially for the first time in more than five quarters, rising 11.8 per cent from 7 per cent in the first quarter. Chief Financial Officer Brett Biggs said e-commerce growth was stronger in the United States than in major overseas markets, mainly because of its larger third-party seller business and the continued roll-out of online grocery pickup options. Wal-Mart has added 7 million items to its website this year, bringing the total to 15 million. This compares with 200 million on online rival Amazon.com Inc . The company raised its fiscal-year earnings outlook to between $4.15 and $4.35 a share, including an estimated hit of 5 cents from the Jet.com acquisition, from a previous range of $4 to $4.30. Second-quarter earnings per share of $1.07, excluding a gain from the sale of Wal-Mart's e-commerce business in China and other items, exceeded the analysts' average estimate by 5 cents. Sales at US stores open at least a year rose 1.6 per cent, excluding fuel prices, to beat expectations in their eighth straight quarter of growth. International sales fell 6.6 pe rcent to $28.6 billion but increased 2.2 per cent on a currency-neutral basis. Total revenue rose 0.5 per cent to $120.9 billion. Wal-Mart's shares rose as much as 2.8 per cent earlier in the trading day. They were up 1.8 per cent at $74.23 in afternoon trade. (Reuters)

Wal-Mart rides on higher store visits to boost quarterly earnings

Wal-Mart Stores Inc , vying to better challenge Amazon.com Inc , will pay about $3 billion for internet retailer Jet.com and its innovative pricing software in the largest-ever deal for an e-commerce startup. 
 
The deal disclosed on Monday follows a five-year e-commerce acquisition spree in which Wal-Mart, the world&#39;s biggest traditional retailer, has already bought 15 startups, seeking the talent and technology to make it a dominant player online and narrow the massive gap with market leader Amazon. 
 
Wal-Mart&#39;s online division has underperformed against Amazon, posting its slowest growth in a year in the first quarter as it struggled to gain traction with consumers, especially millennials. 
 
Jet.com was launched by internet entrepreneur Marc Lore in July 2015 and includes software that can offer a customer lower prices as they add items to their shopping cart. 
 
Wal-Mart has said it would integrate that software into its main website while keeping Jet.com as a separate entity. 
 
&quot;One of the things we really like (about Jet) is that the customer is even more in-charge of the price that they pay,&quot; Chief Executive Doug McMillon said on a media call. 
 
McMillon said Wal-Mart will take time in getting the technology and design components from Jet and that they will grow both brands separately in the short-term. 
 
&quot;Over time, piece-by-piece, we will end up running a business that is simpler and not completely independent.&quot; 
 
McMillon said Lore would run its new US&nbsp;e-commerce business. Lore had cofounded Quidsi, the owner of sites like Diapers.com and Soap.com, which was sold to Amazon. 
 
&quot;Marc&#39;s e-commerce experience and success are obviously attractive,&quot; McMillon said. 
 
Wal-Mart&#39;s current head of global e-commerce Neil Ashe will leave the company at the end of the fiscal year. 
 
The decision to run Jet as an independent website is a good step because it can stay focused on growth, but the price Wal-Mart paid is high, UBS retail analyst Michael Lasser said in a note to clients. 
 
Wal-Mart said it would pay around $3 billion in cash and $300 million in shares for Jet, with some of that paid over time. Given Jet`s revenue of about $500 million, the cash purchase price represents six times Jet&#39;s revenue, according to analysts. 
 
Moody&#39;s retail analyst Charlie O`Shea said the acquisition gives Wal-Mart a leg-up on competitors in the race to be the No. 2 online retailer, citing the size of Jet.com`s online offerings and number of customers. Wal-Mart said Jet has added nearly 400,000 new shoppers monthly. 
 
&quot;The impact on Amazon will be fairly benign. However, this acquisition, in tandem with its joint-venture in China with JD.com, demonstrates that Walmart is attacking online retail with significant zeal,&quot; he said. 
 
In June, Wal-Mart said it sold its Chinese online grocery store in return for a stake in JD.com Inc, China&#39;s 2 e-commerce firm.&nbsp; 
 
Billions spent on online efforts 
 
Wal-Mart&#39;s first-quarter online sales grew 7 per cent, a weaker rate than any of the four quarters just before that. In 2015, Wal-Mart`s online sales rose 12.3 per cent to $13.7 billion, compared with a 16 per cent jump to $92.4 billion for Amazon.com. 
 
Wal-Mart has not said what it spent on acquisitions, but prior to the Jet.com deal it disclosed a total of $3.1 billion for e-commerce and digital projects, such as its platform and new warehouses, in the four fiscal years to January 2017. 
 
The deal should give Wal-Mart the scale to bolster its online presence, broaden its assortment of goods and offer the lowest prices at the same time, analysts said. 
 
Wal-Mart noted Jet has offered 12 million items in its first year of operation.&nbsp; 
 
Wal-Mart has said previously it wants to expand its online selection from around 10 million items to the tens of millions over the next few years. Rival Amazon has more than 200 million items for sale online. 
 
(Reuters)

Wal-Mart said it would pay around $3 billion in cash and $300 million in shares for Jet, with some of that paid over time

Wal-Mart Stores Inc , vying to better challenge Amazon.com Inc , will pay about $3 billion for internet retailer Jet.com and its innovative pricing software in the largest-ever deal for an e-commerce startup. The deal disclosed on Monday follows a five-year e-commerce acquisition spree in which Wal-Mart, the world's biggest traditional retailer, has already bought 15 startups, seeking the talent and technology to make it a dominant player online and narrow the massive gap with market leader Amazon. Wal-Mart's online division has underperformed against Amazon, posting its slowest growth in a year in the first quarter as it struggled to gain traction with consumers, especially millennials. Jet.com was launched by internet entrepreneur Marc Lore in July 2015 and includes software that can offer a customer lower prices as they add items to their shopping cart. Wal-Mart has said it would integrate that software into its main website while keeping Jet.com as a separate entity. "One of the things we really like (about Jet) is that the customer is even more in-charge of the price that they pay," Chief Executive Doug McMillon said on a media call. McMillon said Wal-Mart will take time in getting the technology and design components from Jet and that they will grow both brands separately in the short-term. "Over time, piece-by-piece, we will end up running a business that is simpler and not completely independent." McMillon said Lore would run its new US e-commerce business. Lore had cofounded Quidsi, the owner of sites like Diapers.com and Soap.com, which was sold to Amazon. "Marc's e-commerce experience and success are obviously attractive," McMillon said. Wal-Mart's current head of global e-commerce Neil Ashe will leave the company at the end of the fiscal year. The decision to run Jet as an independent website is a good step because it can stay focused on growth, but the price Wal-Mart paid is high, UBS retail analyst Michael Lasser said in a note to clients. Wal-Mart said it would pay around $3 billion in cash and $300 million in shares for Jet, with some of that paid over time. Given Jet`s revenue of about $500 million, the cash purchase price represents six times Jet's revenue, according to analysts. Moody's retail analyst Charlie O`Shea said the acquisition gives Wal-Mart a leg-up on competitors in the race to be the No. 2 online retailer, citing the size of Jet.com`s online offerings and number of customers. Wal-Mart said Jet has added nearly 400,000 new shoppers monthly. "The impact on Amazon will be fairly benign. However, this acquisition, in tandem with its joint-venture in China with JD.com, demonstrates that Walmart is attacking online retail with significant zeal," he said. In June, Wal-Mart said it sold its Chinese online grocery store in return for a stake in JD.com Inc, China's 2 e-commerce firm. Billions spent on online efforts Wal-Mart's first-quarter online sales grew 7 per cent, a weaker rate than any of the four quarters just before that. In 2015, Wal-Mart`s online sales rose 12.3 per cent to $13.7 billion, compared with a 16 per cent jump to $92.4 billion for Amazon.com. Wal-Mart has not said what it spent on acquisitions, but prior to the Jet.com deal it disclosed a total of $3.1 billion for e-commerce and digital projects, such as its platform and new warehouses, in the four fiscal years to January 2017. The deal should give Wal-Mart the scale to bolster its online presence, broaden its assortment of goods and offer the lowest prices at the same time, analysts said. Wal-Mart noted Jet has offered 12 million items in its first year of operation. Wal-Mart has said previously it wants to expand its online selection from around 10 million items to the tens of millions over the next few years. Rival Amazon has more than 200 million items for sale online. (Reuters)

Wal-Mart buying Jet.com to lift online sales, battle Amazon

Wal-Mart Stores Inc said on Monday it plans to sell its Chinese e-commerce business Yihaodian to Chinese online retailer JD.com Inc for a 5 per cent equity stake in JD.com, a strategic alliance that aims to expand WalMart&#39;s reach in China. 
 
Under the deal, JD.com will issue about 145 million new class A shares to Wal-Mart, worth about $1.5 billion at JD.com&#39;s current valuation. 
 
Shares of Wal-Mart rose 26 cents, or 0.4 per cent, to $71.21 in afternoon New York Stock Exchange trading. JD.com&#39;s ADRs were up nearly 8 per cent, or $1.56, at $21.58 
 
Wal-Mart took a stake in Yihaodian, which has focussed on online grocery sales and caters to affluent female customers, in 2011 before taking full ownership last July. 
 
That deal combined Yihaodian&#39;s local expertise with Wal-Mart&#39;s global sourcing and supply chain capabilities, but growth was hindered when Wal-Mart narrowed the number of sellers on the site, according to a note from Barclays issued on Monday. 
 
In the latest agreement, JD.Com, China&#39;s second-largest online retailer, will control the Yihaodian brand and website, while Walmart will continue to operate the Yihaodian direct sales business and will sell on the Yihaodian marketplace. 
 
The deal will give Walmart access to JD.Com&#39;s online traffic and expand its reach into the Chinese market. Sam&#39;s Club China will open a flagship store on JD.Com and utilise its delivery network, the companies said. Walmart&rsquo;s China stores will be listed as a preferred retailer on JD.com&rsquo;s crowd-sourced platform, O2O JV Dada. 
 
Brian Yarbrough, an analyst with Edward Jones, said the deal with JD.com was a more cost-effective way for Wal-Mart to get its products and name in the marketplace by partnering with a large, experienced player. 
 
&quot;It doesn&#39;t mean that they&#39;ve pulled away, but to me it tells me they are trying to make smarter investments,&quot; said Yarbrough. 
 
Walmart&rsquo;s financial adviser on the deal was Morgan Stanley &amp; Co. LLC and its legal advisor was Morrison &amp; Foerster LLP. JD.com&rsquo;s legal advisors were Orrick Herrington Sutcliffe LLP and Han Kun Law Offices. 
 
(Reuters)

The deal will give Walmart access to JD.Com's online traffic and expand its reach into the Chinese market

Wal-Mart Stores Inc said on Monday it plans to sell its Chinese e-commerce business Yihaodian to Chinese online retailer JD.com Inc for a 5 per cent equity stake in JD.com, a strategic alliance that aims to expand WalMart's reach in China. Under the deal, JD.com will issue about 145 million new class A shares to Wal-Mart, worth about $1.5 billion at JD.com's current valuation. Shares of Wal-Mart rose 26 cents, or 0.4 per cent, to $71.21 in afternoon New York Stock Exchange trading. JD.com's ADRs were up nearly 8 per cent, or $1.56, at $21.58 Wal-Mart took a stake in Yihaodian, which has focussed on online grocery sales and caters to affluent female customers, in 2011 before taking full ownership last July. That deal combined Yihaodian's local expertise with Wal-Mart's global sourcing and supply chain capabilities, but growth was hindered when Wal-Mart narrowed the number of sellers on the site, according to a note from Barclays issued on Monday. In the latest agreement, JD.Com, China's second-largest online retailer, will control the Yihaodian brand and website, while Walmart will continue to operate the Yihaodian direct sales business and will sell on the Yihaodian marketplace. The deal will give Walmart access to JD.Com's online traffic and expand its reach into the Chinese market. Sam's Club China will open a flagship store on JD.Com and utilise its delivery network, the companies said. Walmart’s China stores will be listed as a preferred retailer on JD.com’s crowd-sourced platform, O2O JV Dada. Brian Yarbrough, an analyst with Edward Jones, said the deal with JD.com was a more cost-effective way for Wal-Mart to get its products and name in the marketplace by partnering with a large, experienced player. "It doesn't mean that they've pulled away, but to me it tells me they are trying to make smarter investments," said Yarbrough. Walmart’s financial adviser on the deal was Morgan Stanley & Co. LLC and its legal advisor was Morrison & Foerster LLP. JD.com’s legal advisors were Orrick Herrington Sutcliffe LLP and Han Kun Law Offices. (Reuters)

Wal-Mart to sell its China e-biz to JD.com for 5% stake

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A breather for small retailers punched hard by e-commerce giants

Wal-Mart launches $20 billion buyback plan

Wal-Mart rides on higher store visits to boost quarterly earnings

Wal-Mart buying Jet.com to lift online sales, battle Amazon

Wal-Mart to sell its China e-biz to JD.com for 5% stake