JD.com is launching a flagship online store via Google in the US (JD, GOOGL)
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JD.com will be launching a flagship online store on Google’s shopping platforms for the purpose of selling directly to American consumers before the end of the year, Bloomberg reports.
The initiative is the first to emerge from the strategic partnership between Google and JD.com, established when Google bought a $550 million stake in the Chinese e-tailer earlier this year. The products available from JD.com will be stored in US fulfillment centers — the e-tailer already operates facilities in Los Angeles — and Google will handle payment and order processing.
The creation of this new store could be a big step toward JD.com’s goal of making half of its revenue from foreign markets in 10 years. The e-tailer has ambitious expansion plans, including entering every Southeast Asian country by the end of the year and investing in the US, CEO Richard Liu said in January.
While JD.com already sells some products in the US through Walmart — another one of its strategic partners — storing products in the US and selling directly to US consumers via its own store, in collaboration with Google, is a significant step toward making the US a viable market for JD.com.
Becoming a player in the US e-commerce market would aid JD.com’s expansion goals, but the current trade tensions between the US and China complicate things. The US recently levied a 10% tariff on approximately $200 billion of Chinese imports, and this duty will rise to 25% at year end.
This could cause any product JD.com gets from China to be more expensive in the US, potentially making it harder for the company to gain popularity with US consumers. Moreover, the US e-commerce market is already bitterly competitive, with several well-established players like Amazon, Walmart, and eBay jockeying to offer the best prices and selections. This competitive landscape makes it even more improbable for a Chinese e-tailer charging higher prices to enter and find success in the US market.
Google’s e-commerce capabilities may be able to help strengthen JD.com’s efforts in the US. Google stepped up its e-commerce earlier this year with the introduction of Shopping Actions, an initiative that builds a universal shopping cart to connect a user’s carts across channels.
The company said that early partners like Target and Walmart found success with the program, sometimes seeing average basket size jump as much as 30%, and new partners Best Buy, Sephora, and Nike recently joined the program. JD.com could take advantage of this feature as well. Allowing potential customers to easily shop JD through their preferred channels may help along JD.com’s consumer adoption in the US.
In return, Google will benefit from any exclusive products the Chinese e-tailer offers that gain popularity with shoppers, because they will have to go to Google to get them.