Google invests $550 million for China’s second-biggest e-commerce website JD.com, acquiring 27 million Class A ordinary shares at an issue price of $20.29 per share.
The two companies are looking to develop a new retail infrastructure to compete with Amazon’s e-commerce website. The focus being to provide users with a better personalized shopping experience and reduce friction of numbers in various marketing, including Southeast Asia.
JD.com is planning to give more availability for item sales in places like Europe and the U.S. through the Google Shopping service. The Google Shopping will also feature a price comparison tool to enable users to compare prices from different sellers, with retailers gaining more exposure through Google while providing a more convenient shopping service.
With trade tensions between the U.S. and Beijing still high, this partnership can provide means for JD.com to sell to customers outside of China. This can trigger a trade war could harm the credit of U.S. brands, with the uncertainty giving the company a pause with expansion plans for the U.S. There is also high competition with another Chinese e-commerce website, Alibaba.
JD.com is also working through testing drone delivery services for rural Chinese customers, keeping logistics cost low. The e-commerce website is also partnered with China’s tech giant, Tencent, that operates China’s largest social media messaging platform, WeChat. The partnership with Tencent will give JD.com access to sell directly to customers through the WeChat app.
Walmart has also previously partnered with Walmart.com when they opened a small high-tech supermarket in China, similar to the Amazon Go Store concept with customers being able to pay for their purchases through an app on their phone. Showing that there is possibility for Google to create a cashier-less store concept to compete with other e-commerce competition. Check out the video above for more details about Google investing in JD.com.
