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Walmart eyes China's booming online market with launch of O2O platform in Shenzhen

A Walmart store in China Photo: Bloomberg 

In a bid to seek new business growth opportunities in China's online retailing market where e-commerce giants like and Alibaba hold a dominant position, American retailer Walmart has launched a new e-commerce strategy by piloting an online-to-offline (O2O) mobile shopping platform in Shenzhen.

The new mobile shopping system includes a mobile shopping app named "Walmart To Go", "To Go Service Center" in stores for self-pickup service and multiple O2O mobile payment options. The mobile shopping service is currently available in 23 Walmart stores in Shenzhen selling 13,000 items ranging from fresh, frozen and dried food to health, beauty and household products, and will be gradually expanded nationwide after receiving feedback from the app's users.

The hypermarket app allows consumers to order goods anytime, anywhere they like. Besides choosing home delivery service, customers can also decide to pick up the goods at any nearby store whey want. Delivery will be free of charge for shoppers who spend over 188 yuan, a higher threshold than that offered by rival online retailing websites. At present, customers can complete payments via UnionPay, Alipay and electronic gift cards on the Walmart app.

Statistics from Walmart indicate that about 55 percent of Chinese consumers shop and pay through mobile devices while only 19 percent of consumers do so in the US.

Sean Clarke, president and chief executive of Walmart China, hailed the new mobile shopping solutions as a milestone in enhancing the retailer's bricks-and-mortar business in China. "We plan to integrate the physical and digital retail business seamlessly," Clarke said.

The Bentonville, Arkansas-based firm announced in its first-quarter report of fiscal 2015 a plan to increase investment in its e-commerce business to $300 million this year, which will be used for updating online stores, developing shopping apps and building consumer services centers in 10 countries including China.

As China has become one of the key strategic markets for Walmart, the world's largest retailer plans to open 115 new stores including supercenter and Sam's Club formats in the country in the next three years, and will combine its stores with innovative e-commerce solutions to reshape its business portfolio.

The new mobile shopping service is not the first attempt by Walmart to reinforce its e-commerce capability. In 2012, Walmart raised its shareholding in, one of China's biggest online supermarkets, to approximately 51 percent in a deal, which is seen as an iconic move by the American company to tap into the fast growing Chinese online retailing market.

However, Walmart has no plan for now to integrate the new mobile shopping service with the operation of, whose market share in China is still incommensurable with those of Alibaba's Tmall and Taobao and accounts for a tiny 1.4 percent of online transactions in China, while Alibaba secures a 61 percent market share, according to market-research firm iResearch.

Clarke said that the new mobile shopping system will not cannibalize sales from and that Walmart will look for additional growth in the online channel targeting its existing loyal consumer base and only selling products available in Walmart stores, a decision industry watchers said is not reasonable in view of the established shopper base held by

Small cities key for Walmart

At an event in Beijing in May, Walmart Chief Executive Doug McMillon said that the 115 new stores, which will be established from 2015 to 2017, will strengthen Walmart's penetration in mature markets such as Shanghai, Shenzhen and Changsha, but stressed that the company will also increase its investment in emerging cities amid the process of urbanization in China.

"In the future, the main battlefield for e-commerce companies will gradually turn to tier-3 and tier-4 cities from tier-1 and tier-2 cities where the distribution density of physical stores and their management abilities have stayed at high levels, leaving physical retailers in big cities primarily unchallenged by the shock wave from online stores," Ding Liguo, a senior retail expert, said.

Currently, Walmart is pushing forward the deployment of physical stores in China's small cities including Zhejiang province's Fuyang, Hebei province's Xingtai and Inner Mongolia's Chifeng in face of and Alibaba's efforts of revamping the mobile terminals.

Mobile shopping apps will be much more popular in tier-3 and tier-4 cities than in big cities, as consumers in small cities may not be well versed in shopping via computers, according to Ding. In addition, the utilization of mobile shopping app will help reduce operating costs in thickly populated cities.

The new 115 Walmart stores to be opened in the next three years in China will pave the way for the American retailer to connect its big hypermarkets with the efficient offline services in the future, Ding said, adding that the expansion plan will partly free the American company from the limitation of comparatively small number of stores and decentralized supply chain distribution in the country.

"Launching the new O2O mobile shopping strategy is a very advisable decision for Walmart," Ding said.

According to Walmart, more items sold in physical stores will be gradually added to the "Walmart To Go" app, and the app's users can also enjoy the same prices and after sales services as in physical stores.

Ding said that unifying the prices of products sold respectively in physical stores and the Walmart app is actually a very complicated process, which requires quick response for information change in the databank and an e-commerce system with accurate auto update capacity.

"It indicates that Walmart has done a great job in coordinating online shopping and offline services," Ding noted.

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