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Wal-Mart Stores Inc. doesn’t sell online in China, but its Chinese partner is growing rapidly, with the help of the world’s largest retailer. Since Wal-Mart increased its stake in Yihaodian to 51% in 2012, the U.S. retailer has shared with Yihaodian its logistics infrastructure and helped the Chinese company connect with international suppliers.
Web-only retailer Yihaodian, which is 51% owned by Wal-Mart, increased its online sales 70% in 2013, to 11.54 billion yuan ($1.9 billion) from 6.8 billion yuan ($1.13 billion) in 2012, the company tells Internet Retailer. The Shanghai-based e-retailer, one of the largest online grocery retailers in China, increased its registered users 97% to 57 million in 2013 from 29 million a year earlier.
Since Wal-Mart increased its stake in Yihaodian to 51% in 2012, the U.S. retailer has shared with Yihaodian its logistics infrastructure and helped the Chinese company connect with international suppliers. That’s helped Yihaodian double the SKUs it offers to 3.4 million in the past year.
Yihaodian has particularly been able to offer more food from abroad, a hot area in China where many Chinese consumers worry about contamination of domestic products. Yihaodian, No. 42 in the Internet Retailer Asia 500, sold 250 million units of imported food products last year, says Yu Gang, founder and president of Yihaodian.
“The imported milk products we sold in 2013 account for 37.2% of the total imported milk of China,” Yu says. “It means of every 10 cases of imported milk sold in China, we sold four of them.”
Yu says Yihaodian has also taken steps to improve the quality of service on its e-commerce site, which last year switched its web address to yhd.com from yihaodian.com. Complaints about food being too near the expiration date declined to just two out of 100,000 purchases in 2013, while the rate of consumers calling about orders declined to 3.7% in 2013 from 13.9% in 2012.
Yihaodian can now turn over products more quickly because it has developed a system for analyzing customer demand to improve forecasting, and developed automated systems for sending purchases orders to suppliers. That reduced the time stock spends in Yihaodian’s warehouses by 41% on average in 2013, and reduced out-of-stocks by 59%, the e-retailer says.
The e-retailer says it also is monitoring competitors’ prices more closely. A “price intelligence system” it has built allows Yihaodian to monitor the price of 170 million products sold by 70 major Chinese web retailers and respond automatically to keep its prices competitive.
Yihaodian, is also building a highly automated warehouse in Guangdong Province in the south of China. The company already has warehouses in seven large cities. Yihaodian began testing in 2013 a delivery service that promises deliveries in Shanghai within a two-hour window. The company plans to expand the test to Beijing and Guangzhou this year.
Yu says consumers placing orders via mobile devices accounted for 15% of sales in 2013, compared with 6% in 2012. He expects that will reach 50% in the next several years.