Walmart to launch online grocery delivery in Japan in deal with Rakuten

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Walmart has struck a partnership with e-commerce firm Rakuten to launch an online grocery delivery service in Japan, its latest effort to forge an alliance with a popular homegrown chain to crack a competitive market.

The world’s largest retailer, Walmart Stores, said on Thursday the service will launch in the latter half of 2018.

Walmart’s leadership is looking for new ways to grow its international business, which is no longer the growth engine it once was, as it has grappled with economic woes in Brazil and competition from discount retailers in Britain.

In Japan, the new service will replace Walmart’s existing online grocery delivery offering and will be called “Rakuten Seiyu Netsuper.” Seiyu GK is the name of Walmart’s wholly-owned Japanese unit.

It will allow customers to place an order on Rakuten’s online marketplace platform, which will then be fulfilled by the Walmart-Rakuten joint venture. Walmart-Rakuten will open a warehouse to service these orders in addition to using Seiyu stores, the companies said.

Fresh food delivery has been around in Japan for decades but has lagged the growth seen in other areas of e-commerce. Amazon is trialing its “Fresh” service in parts of Tokyo and retailers are trying to beef up their online grocery services.

Seven and i, operator of Japan’s largest chain of convenience stores, last year announced it would cooperate on fresh food delivery with Askul.

File: People walk past the logo of Japan's electronic commerce and internet firm Rakuten outside the company headquarters in Tokyo, Japan, on November 17, 2016. /VCG Photo

Rakuten CEO Hiroshi Mikitani told reporters in Tokyo he hoped the joint effort could lead to cooperation in other areas.

“We would like to have an alliance in a broader sense, not just in Japan but for our global businesses,” he said.

Rakuten’s overseas operations include the United States and Europe. And last month it announced it was aiming to become Japan’s fourth major wireless carrier, potentially binding users to its wide range of services.

In 2016, Walmart applied a similar strategy in China that was announced on Friday after struggling to grow its e-commerce business by itself.

The US retailer sold its own website to JD, the second largest Chinese e-commerce company, and picked up a 5% stake in JD instead. JD is preparing to enter the United States by the end of this year, Bloomberg News reported on Thursday.

Investment into online grocery services are picking up steam, with Amazon.com Inc buying Whole Foods Market for 13.7 billion US dollars last year.

Alibaba and US grocer Kroger have had early discussions on working together, a source familiar with the matter said.

Walmart's online grocery delivery website /Reuters Photo

In South Korea, Shinsegae and affiliate E-Mart said they were set to gain 940 million US dollars in funding from private equity firms, helping to capitalize on a surge in supermarket chain E-Mart’s popularity due to its quick delivery of fresh products.

Walmart is trying to shake up its international business. It recently appointed a top executive to lead its overseas unit and is in talks to sell a stake in its Brazilian operations.

The Japanese deal builds on Walmart’s online grocery delivery efforts in the United States. The retailer is testing grocery home delivery with companies such as Uber, Lyft and Deliv and offers online grocery pick-up at more than 1,100 stores.

The partnership will allow Walmart to sell six million e-books and audio-books offered by Rakuten’s Kobo brand in the United States, giving the retailer a foothold into what has traditionally been a market dominated by Amazon.

“We are adding an entirely new category to our US assortment,” Scott Hilton, Walmart’s chief revenue officer for the US e-commerce business, said in a blog post.

The titles will include everything from New York Times best-sellers to children’s books and will be offered through a new Walmart-Kobo app, Michael Tamblyn, Rakuten Kobo Chief Executive Officer, told reporters in an interview.

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Source(s): Reuters