With eCommerce and online delivery representing an opportunity in China, Walmart is testing a small store focused at the lower-tier cities as well as a new sales model that will include an expanded relationship with Dada-JD Daojia, the Chinese logistics company.
CNBC, citing Walmart, reported the retailer has had a two-year partnership with the Chinese logistics company, announcing in the summer that Walmart and JD.com invested $500 million in it. JD.com has a close to 50 percent stake in Dad-JD Daojia, reported CNBC.
The new store that Walmart is testing is located in the smaller city of Chengdu in Sichuan province and was opened earlier in December. It is about 5,000 square meters, which CNBC noted is close to half the size of a typical Walmart store. The amount of merchandise Walmart sells in the store is also about half of what it normally does so that it can focus on fresh produce. Customers check out via a mini-program with the WeChat messaging app. Customers can also get produce delivered within an hour if they live within 1.86 miles of the store. Walmart is also using a centralized warehouse management system so that Walmart can track the inventory and the entire checkout process. It also provides more shelf height and area for selected brands, noted CNCB.
“The Next Generation Store is one of our future strategic focuses, and we look forward to replicating the learnings across the country once the pilot is successful,” Bernardo Perloiro, senior vice president and chief operations officer for Walmart China Stores, said in a press release, according to CNBC.
While Walmart has been in China since 1996 and has 424 stores, its big store model has had a rough time in the country because consumers didn’t really buy in bulk because of a lack of large space and little in the way of a big car ownership at the time. But Sam’s Club changed all that when it starting testing delivery Dada-JD Daojia, reported CNBC. The order growth was so large that Sam’s Club is now launching the service in cities around China.