Online And Offline Giant Lightning Alliance

In the early morning of June 21st, reporters received almost the same time. JD.COM and Wal-Mart News: Jingdong and WAL-MART announced a deep strategic cooperation. Jingdong in exchange for 5% stake in WAL-MART's e-commerce platform Shop 1 Most of the assets will also work closely together at the supply chain side, and will carry out comprehensive cooperation in online, offline and downstream integration, logistics and distribution.

5% of the shares accounted for WAL-MART's immediate ranking among Jingdong's top shareholders. Since last summer, Ali Suning married, Jingdong's life has not been very satisfactory. Under the asylum of Ali, Suning worked hard to play the role of a pawn. He used to be a high-profile Jingdong player. In the important promotion season of "double 11" and "6. 18", he went straight to the door of Jingdong. Today, Jingdong is turning to alliance with the largest retailers in the world. Insiders pointed out that if the future of Jing wo can be well integrated, the strategic cooperation between the two sides is expected to have a huge effect.

Online and offline giant lightning Alliance

Jingdong and WAL-MART also announced that the two sides reached a series of in-depth strategic cooperation in June 20th to provide better quality products and services for Chinese consumers by integrating their strong advantages in the field of electricity and retailing. The cooperation agreement between the two sides will cover a wide range of business areas and cover the online and offline retail market.

As part of the agreement, WAL-MART will receive more than 1.4 billion shares of class a common stock issued by Jingdong, about 5% of the total number of shares issued by Jingdong. At the same time, the parties will cooperate in a number of strategic areas, including:

Jingdong will own the main assets of mall 1, including the brand, website and APP of "No. 1 store". WAL-MART will continue to operate Shop No. 1 and operate in the 1 mall. WAL-MART will use its global supply chain advantage to provide consumers with more abundant commodities. "No. 1 store" will continue to maintain its brand name and market positioning, and Jingdong and WAL-MART will join hands to support "1 shop" to continuously strengthen its brand influence and business growth.

The Sam member store will open an official flagship store on the Jingdong platform, and the Sam member store will use Jingdong's warehousing and distribution integrated logistics service, which will be able to promote its high-quality imports in a wider range in China and provide the most efficient delivery service for all its customers in China.

Jingdong and WAL-MART will work together at the supply chain to provide more abundant product choices for Chinese consumers, including the expansion of the richness of imported products.

WAL-MART's physical stores in China will access Jingdong's largest crowdsourcing logistics platform "dada" and O2O e-commerce platform "Jingdong home" and become its key partner. Through online and offline integration, including attracting more online passenger flow to WAL-MART entity stores, and providing users with "Jingdong home", WAL-MART offers a very rich selection of fresh products for WAL-MART's physical stores. It provides users with more than 2 hours of fresh supermarket delivery service.

The official in charge of public relations affairs of WAL-MART China told reporters that in the evening of June 20th, Neil Ash, President and chief executive officer of WAL-MART global e-commerce, flew to Shanghai and signed the cooperation agreement with Jingdong mall CEO CEO. Compared with the grand and grand ceremony held by Ali and Suning in August last year, the signing ceremony of the two sides is too simple and low-key, and the personality of the company is obviously different.

It is said that Jingdong and WAL-MART reached the speed of deep cooperation involving equity level. At noon on June 7th, Jingdong Group Chairman and CEO Liu Qiangdong met at WAL-MART headquarters in Arkansas, USA, and WAL-MART CEO Wei Minglun. The two sides finalized the direction and content of cooperation in 2 hours, including transaction volume, shareholding ratio and cooperation mode. Less than half a month later, the two sides formally signed an agreement.

"In the field of Chinese electric business, only Jingdong and WAL-MART have the closest temperament, so it is reasonable for the two sides to reach such cooperation." Wang Hongbo, a consulting partner with Mr. Wang, told reporters that for the time being, the result of cooperation between Jingdong, WAL-MART and shop No. 1 was three 1+1+1>3.

How valuable is shop 1?

WAL-MART's No. 1 store is the first item in the Jingdong and WAL-MART cooperation agreement. Earlier, there were rumors that Jingdong would buy 1 stores at a price of 40 billion yuan, but the final fact is that the total consideration of a package of cooperation between the two sides, including shop 1, is about 10 billion yuan based on current Jingdong's stock price.

According to the agreement, Jingdong will own most of the assets of shop No. 1, including brand, website and APP, but the 1 shop will still be operated by WAL-MART. That is to say, in the future, Jingdong will only be responsible for the operation of the third party platform 1 shop No. 1, while the operation right of the core part of shop No. 1 is still in the hands of WAL-MART.

For such a puzzling arrangement, neither WAL-MART nor Jingdong have made much explanation. The head of the Department of public relations affairs only said that the 1 shop itself was doing well, so it was still operated by WAL-MART.

At present, the Jingdong occupies a strong position in the North China, northeast and other northern regional markets, but its strength in East China and Southern China is relatively weak. For shop No. 1, Liu Qiangdong said, "shop No. 1 has obvious advantages in important categories such as household products and groceries, as well as other key areas such as East China and Southern China. We are looking forward to further promoting the development of shop No. 1 through this joint effort. We will play an excellent Jingdong's material flow capability and abundant category strength to ensure that shop 1 will continue to provide better and better products and better services to its users."

In this regard, insiders believe that the role of Jingdong 1 itself is very limited. "If it's just shop 1, Jingdong won't want it." Shanghai Wan Qing Business Consulting Co., Ltd. CEO Lu Zhen Wang told reporters that the 1 shop itself has not much value, whether it is the category of operation or the regional limitations are too large, the advantages are not many, but the loss is continuous. For WAL-MART, which is very concerned about the profit, it is time to sell the 1 shop.

Shop No. 1 has been faced with the fate of being resale since its birth. In 2008, Yu Gang and another colleague, Liu Junling, once served as vice president of Amazon's global supply chain and vice president of DELL global sourcing, founded shop 1. In May 2010, China invested 80 million in Ping An and bought 80% stake in shop 1. After a year, Ping An sold 20% of its equity to 65 million dollars for sale to WAL-MART. In October 2012, WAL-MART announced that it had replaced Ping An as its controlling shareholder in the 1 store, holding about 51%. In July 2015, WAL-MART purchased the remaining shares of 1 shop and realized its wholly-owned holding. The founder of shop 1 left both Liu Junling and gang.

Shop No. 1 started with food products and used to be a benchmark in the field of e-commerce. With the increasingly fierce competition in the industry, the disadvantage of low profit and high cost of food business is becoming more and more serious and the loss is serious. To this end, shop No. 1 has tried to do health care products and 3C and other categories, but were not successful. With the frequent change of ownership and the instability of management, the operation of No. 1 store is difficult. After WAL-MART took over, the investment in shop No. 1 became more cautious, resulting in a further contraction in the market of No. 1 store.

Now Jingdong does not participate in all operations of shop No. 1, and has little effect on reversing the decline of the 1 shop. Lu Zhenwang said, in addition, compared with Jingdong's huge transaction volume, the revenue and transaction volume of shop No. 1 will not have much impact on Jingdong's overall operation. Therefore, Jingdong does not need to pay big price to change the 1 shop with equity.

"This is similar to the way Jingdong used to buy Yi soon." Liu Sijun, President of DAC group, told reporters that Jingdong and Ali's website has so far not been able to survive well with existing brands. The same is true of Jingdong's No. 1 store. In essence, shop No. 1 is WAL-MART's tying up bad assets to Jingdong.

　　 The key point is deep cooperation between the two sides.

Wang Hongbo believes that the deep cooperation with WAL-MART in logistics, supply chain, finance and information is the main purpose of Jingdong.

Liu Qiangdong is no stranger to WAL-MART. He wrote a preface to the Autobiography of WAL-MART founder Sam Walton. In the book "Jingdong," he said in his preface that WAL-MART is the yardstick of traditional retailing. He once said that WAL-MART's business philosophy had a great impact on his management of Jingdong.

Moreover, as early as 5 years ago, WAL-MART and Jingdong discussed the issue of equity cooperation. Liu Qiangdong once disclosed that in May 2011, WAL-MART acquired the 20% stake of No. 1 store in Ping An's hands, and actually negotiated with Jingdong, which lasted for more than half a year. The valuation has been settled. The only thing that can not be reached is WAL-MART's request to hold the Jingdong mall until the whole purchase. Liu Qiangdong's insistence enabled Jingdong to grow rapidly under his control. Today, WAL-MART has replaced Jingdong's 5% stake with No. 1 store and all-round cooperation, becoming one of Jingdong's shareholders. Liu Qiangdong also wants to get more Jingdong from WAL-MART through this deep cooperation.

Earlier this year, Liu Qiangdong said Jingdong mall, Jingdong finance and technology will be the three direction of Jingdong's future development. But there is no doubt that Jingdong has to face enormous pressure from its competitors.

Last summer, Ali Hao threw 28 billion 200 million yuan to bring down Suning's income. Suning was the pioneer of Jingdong's ASU challenge. Suning harassed Jingdong from its 3C of small volume, which made Jingdong based on 3C category rather uncomfortable. "In fact, it is deliberately disrupting." Wang Hongbo said that if Jingdong failed to grasp the strategy, it would probably suffer a lot, because Jingdong 3C had too much volume. In addition, Alibaba's layout in finance and cloud services is also one step ahead of Jingdong, making Jingdong at a disadvantage.

Model and Jingdong similar Amazon last year in cloud services even recorded billions of dollars of revenue, far ahead of China's peers, and Amazon's overall business to achieve profitability, which made the outside of the "China Amazon" Jingdong mode has been questioned.

Recently, an investment organization's short report accuses Jingdong of excessive pursuit of volume, long-term losses, improper foreign investment and so on. The fermentation of a series of factors led to a continuous decline in Jingdong's share price.

"Jingdong's business structure is single, and it is difficult to compete with rich competitors. This is one of the reasons why it has joined WAL-MART." Wang Hongbo said that WAL-MART has rich management category, obvious supply chain advantages and strong global sourcing resources, which can make up for the short board of Jingdong. "Jingdong has huge logistics potential to release, and WAL-MART's O2O business also needs strong logistics support."

Wang Hongbo believes that the most important part of the cooperation between Jingdong and WAL-MART should be finance and information. "WAL-MART is not only a retail companies, but also a financial and information company." Wang Hongbo told the China Commercial Daily reporter that the most valuable part of deep cooperation between the two sides is in terms of Finance and data and information. WAL-MART has 11527 stores under 63 brands in 28 countries, including more than 400 stores in China, with huge passenger flow. WAL-MART has already set up its own passenger flow data analysis system, and set up a professional data company to study various customer data. In the United States alone, WAL-MART has nearly 145 million American customer data, about 60% of American adults, which is a valuable resource for Jingdong. At the same time, WAL-MART's strong supply chain advantages also bring enormous opportunities for its supply chain finance. These are likely to produce greater benefits in the future strategic integration with Jingdong.

"The significance of deep cooperation between Jingdong and WAL-MART is far greater than that of assu's strategic cooperation last year." Liu Sijun disagrees with the prospect of cooperation between the two sides in finance and information, but he thinks WAL-MART's strength is in the B side, and Jingdong's strength is at the C side. Cooperation between the two sides is a very good choice. Through cooperation with WAL-MART, Jingdong has gained the strong supply chain advantage of WAL-MART. WAL-MART is also expected to rely on Jingdong in e-commerce, thus making up its short board in the Chinese market. More importantly, WAL-MART's strategy in China has changed from commodity management to strategic investment. This is a smarter and more effective option.

However, Liu Sijun said at the same time that the monopoly of the giants would bring about monopoly, which would have an impact on the industry ecology, and the survival space of the small and medium enterprises may be narrower.