Dive Brief:
- Google is investing $550 million in JD.com, China's No. 2 e-commerce player, in a deal which will give JD.com the ability to promote its offerings overseas through Google Shopping, and potentially give Google another foothold for its ongoing expansion in Asia, according to a Reuters report.
- Google will join other international giants that are already JD.com shareholders, including Walmart — already a major retail partner of Google's shopping service — and China's Tencent, as JD.com strengthens its competitive case against Alibaba, China's e-commerce leader.
- The Reuters report stated that the investment deal does not call for Google to expand its Internet search efforts in China. Those capabilities currently are blocked in China over Google's position that it would not agree to censor search results for native users there.
Dive Insight:
With Google's latest move, the plot is thickening around technology giants fighting for dominance in China and the U.S. — and the plot we're speaking of already has several different threads: JD.com's efforts to chase down Chinese rival and market leader Alibaba through e-commerce, mobile commerce, brick-and-mortar retail and digital payments; JD.com's strategy to gain a foothold in Europe and North America before Alibaba can; Google's attempts to close ground on Amazon in shopping search, voice-driven commerce and other areas; Walmart's battle to become a powerful brick-and-mortar presence in China by partnering with local giants like JD.com and Tencent Holdings; and even Tencent's effort to make its WeChat mobile messaging platform a force in shopping and payments.
Google's investment in JD.com directly furthers a number of those efforts. It gives JD.com an on-ramp to Google's shopping service that allows products to be promoted to shoppers outside of China. It also brings Google a financial interest in a massive market, while setting the tech giant up with a pipeline of customer data if it's ever in a position to do more in China.
In addition, it brings a quartet of global giants — Google, JD.com, Walmart and Tencent (the latter two also existing JD.com investors) — together in close quarters, notably separate from Amazon and Alibaba. While there is no formal alliance of these four companies, the success of JD.com may give them the best chance of leveraging one another's experience and knowledge to challenge the aforementioned competition.
Google and Walmart are of course already working together in the U.S., and partnered last summer to bring Google-powered voice shopping to Walmart customers. In China, Walmart has been integrating with JD.com on the data front, and also very recently formalized an effort with Tencent to work with the company on "smart retail" endeavors in China. Walmart China also adopted Tencent's WeChat Pay at its stores in Western China.
While these tech and retail giants are sealing partnerships over shared interests, things could get more challenging for any companies not named Google, JD.com, Walmart, Tencent, Amazon or Alibaba.
As Oliver Guy, senior vice president of retail at enterprise software firm Software AG, said in e-mailed comments to Retail Dive, Google's investment in JD.com "is an exciting move and a big win-win – offering Google the potential of addressing the dominance of Amazon, while giving JD.com the ability to launch their offerings in North America and Europe."
But, he added, "For existing retailers, it could create a significant new challenge with another big player entering the market. This is yet further evidence that traditional retailers need to accelerate their focus on digital transformation — enabling themselves to leverage new technologies to streamline, automate and ultimately differentiate by being able to support new ways [of] addressing customer needs."
