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Wal-Mart’s Chinese e-commerce affiliate doubles its product selection in 2014

January 13, 2015 11:59 AM
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Chinese retailer Yihaodian, or Yhd.com, says it is rapidly expanding its selection by bringing in more imported goods and getting more aggressive on price.

“2014 was a fruitful year for the whole Chinese e-commerce industry and for Yhd.com,” Chairman Yu Gang, said in a press conference last week in Beijing. The retailer, which says it has nearly 90 million registered users, added 4 million products last year, doubling its selection.

The fastest-growth for the Shanghai-based company came in imported foods, smartphones and cosmetics, Yu said. “We increased our imported food products from 14,000 in 2013 to 70,000 in 2014.” He claimed Yhd.com accounted for half of all the imported milk sold online in China last year, and that it’s among the top three online sellers of smartphones in the country.

Yu said he could not disclose Yhd.com’s sales because Wal-Mart Stores Inc., which owns a 51% share of the retailer, does not break them out. However, in 2013 the retailer sold $1.907 billion online, according to the Internet Retailer 2014 China 500, which ranks retailers by their web sales in China.

A Wal-Mart top executive provided some insight into the retailer’s sales last fall during Wal-Mart’s third quarter earnings call with analysts. “Yhd.com had strong sales growth,” Dave Cheesewright, president and CEO of Walmart International, said in November. “Traffic increased more than 40% and its average ticket improved as well.” He also said the e-retailer’s annual anniversary sales event in July boosted sales more than 50% over the prior year.

Yhd.com ranks No. 6 in the China 500 and Walmart.com is No. 4 in the Internet Retailer 2014 Top 500 Guide, which ranks North American retailers by online sales.

Yhd.com’s improved efficiency has helped drive growth, Yu said. For example, the e-retailer can deliver orders the same day a shopper places them in eight major cities and within two days to 166 cities. Yhd.com also has begun working with suppliers to drop-ship products directly to online shoppers.

“By improving our efficiency, now we can turn over our inventory in about 10 days, which is half that of 2013,” Yu said. “The industry average is about 50 days.”

Yhd.com is also competing more aggressively on price, offering 20 deals each day on popular products. On some electronics products, such as smartphones, Yhd.com promises to always sell at a price 50 yuan ($8) lower than its online competitors.  

Like other major e-commerce players in China, Yhd.com has taken advantage of the Chinese government’s move in recent years to make it easier for imported goods to enter China. That led Yhd.com in September to launch a program called “Yihao Haigou” that lets overseas brands and retailers without operating entities in China sell products via Yhd.com. Similar initiatives have been launched by Amazon.cn, the Amazon.com Inc. subsidiary that is No. 4 in the China 500, and by Alibaba, whose Taobao and Tmall online marketplaces account for about 80% of e-retail sales in China. Yhd.com says it sells about 12,000 imported products from about 100 companies through Yihao Haigou.

China has also allowed the sale of over-the-counter medications online in the past year, and Yu claims Yhd.com was the first to obtain a license to sell such products. Yhd.com now sells 25,000 medications and health care products.

Another new online business for Yhd.com, “Yihao Finance,” sells insurance to consumers and offers loans to merchants.

Yhd.com built a handful of bricks-and-mortar stores in Shanghai in 2014, which it calls “experience stores,” because they enable shoppers to touch and try out products.  Consumers can also pick up online orders at these stores. “The sales from surrounding residents doubled after we opened experience stores,” Yu said. “We are planning to open more offline stores in such cities as Beijing, Tianjin, Shenzhen and Guangzhou in this year.”

Yu said Yhd.com will work with Wal-Mart stores in China in the near future, though he did not provide details.

He also emphasized growth from mobile shoppers and promised more investments in this area. “In 2013, 15% of sales come from mobile; in 2014, the orders from mobile exceeded 40% of sales.” Yu said.

 

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