Wal-Mart Steps Into China's E-commerce Market
Wal-Mart is testing the waters of China's e-commerce market by launching an online store for its Sam's Club warehouse chain in the country.
The online store is still in beta testing and is meant for Sam's Club members based in Shenzhen, a city of more than 8.9 million.
"We are currently making an effort to explore and develop an e-commerce platform that will better serve the emerging online shopping needs of our Chinese customers," Wal-Mart said by e-mail. "We do not have an exact timeline on national rollout."
Wal-Mart already has a large presence in China, with 78 Supercenter stores across the country, according to the company's website. The company also has three Sam's Club stores, located in Shenzhen, Beijing and Fujian. To buy from Sam's Club in China, a user has to pay for a one-year membership that costs 150 yuan (US$22).
In spite of its large presence, Wal-Mart has only started to tap China's booming e-commerce market, which is projected to reach US$61 billion at the end of the year, according to consulting group iResearch.
Other foreign companies such as Gap have also launched their own online stores in the country. But the online retail market is already firmly dominated by the Chinese company Taobao.com, which controls about a 75 percent market share, according to research firm Analysys International. Ebay's online platform in China at Eachnet.com only held a 0.8 percent market share, while Amazon's online store in the country has a 0.6 percent share.
Still, Wal-Mart's launch of the new online store represents a "good move," said Benjamin Joffe, CEO of Internet research firm Plus Eight Star. He points to how the "delivery costs are low and online users enjoy the larger variety of products online, and trust the Wal-Mart brand enough to buy," Joffe said. "It is a logical step for mature brands to create an online store, especially so for China," he added.
But Wal-Mart will face tough competition, especially with Taobao's dominance over the e-commerce market, said Mark Natkin, managing director of Beijing-based Marbridge Consulting. "I don't feel like Taobao should be looking at Wal-Mart and feel like they are a potential formidable opponent," he said. "Wal-Mart has the production line in place. But in terms of building a user base, tracking users' needs, offering all these features, there's a learning curve to all of that. And Taobao is already up that learning curve."