Arrow-right Camera
News >  Business

Google to invest $550 million in China e-commerce site JD

 (Associated Press)
(Associated Press)

Google is investing $550 million in cash in China’s JD.com as the U.S. search giant pushes deeper into online commerce.

Alphabet Inc.’s Google will buy newly issued Class A shares at $20.29 per share, equivalent to $40.58 per ADS, the companies said in a joint statement Monday. The pair plan to explore joint development of retail solutions in regions, including Southeast Asia, the U.S. and Europe. The deal comes just a week after Google struck an alliance with Carrefour SA to sell groceries online in France through the U.S. company’s platforms including Home and Assistant.

The flurry of activity signals Google’s growing ambitions in e-commerce. The French partnership will allow consumers to order staples through Google services on their smartphones, tablets or other devices. The latest deal is aimed at combining JD’s expertise in logistics and supply chain with Google’s technology to experiment with changes in how people shop.

Google shares were little changed at $1,163.56 in New York at 10:19 a.m.. The American depository receipts of JD.com rose 2.4 percent to $44.63.

“We are excited to partner with JD.com and explore new solutions for retail ecosystems around the world to enable helpful, personalized and frictionless shopping experiences that give consumers the power to shop wherever and however they want,” Philipp Schindler, Google chief business officer, said in the statement.

One of the draws for Google is that JD.com has its own fulfillment and logistics network, similar to Amazon.com, said Bloomberg intelligence analyst Jitendra Waral. JD.com offers Google a more scalable infrastructure than that of other China-based e-commerce monoliths such as Alibaba Group Holding Ltd, which focus more on listings.

Retail is the biggest advertising area for Google, and the search giant’s spending on e-commerce is likely to increase, Waral said. The partnership with JD.com represents Google’s push to develop a long-term defense strategy against Amazon’s ad-market with two main goals: to retain their strength in retail advertising, and to expand into a bigger addressable market.

“It’s an offensive and defensive play,” Waral said.

The partnership with JD.com will likely serve as a benchmark for other retailers fighting against Amazon, as it will make it easier for Google to sell ad and cloud services and AI tools down the line, Waral said.

Google and JD have already teamed up elsewhere. They both participated in the latest funding round of Indonesia’s Go-Jek, a challenger in the ride-hailing business in Southeast Asia.

JD, which competes with giant Alibaba Group Holding, came under fire last month by a hedge-fund manager, who called China’s No. 2 e-commerce operator overvalued and criticized its “silly” investments. Kok Hoi Wong, chief investment officer for APS Asset Management, said his own internal valuation for the $63 billion company was “a tiny figure.”


Subscribe to the Morning Review newsletter

Get the day's top headlines delivered to your inbox every morning by subscribing to our newsletter

There was a problem subscribing you to the newsletter. Double check your email and try again, or email webteam@spokesman.com

You have been successfully subscribed!