Understanding Google’s Investment in JD.com

Google just made a move to rival Amazon by investing $0.55B in the Chinese online retailer, JD.COM (second largest chinese online retailer after Alibaba).

Why is it interesting? Because its Advertising (Google) + Retail (JD.com) coming together to form a mutually beneficial partnership. 

Partnership Benefits for Google and JD.com

This is how each party WINS:

“Relevant” advertising of Products

If Google know’s what JD.com customers like and buy, it can advertise relevant products to the mass population. Once the interest is generated, JD.com takes care of logistics – delivery, customer service etc. Think about a (possibly) more robust recommendation engine than Amazon’s product recommendations. 

Search Engine Exposure

JD.com’s product will be listed on Google’s product search engine – google shopping. This will expand JD’s reach outside of China. Customers search the web will be presented with the option to purchase the product from JD.com (and if they don’t, google can re-target them with relevant advertisements). 

Increased Competition Against Rivals

It is no secret that Walmart and Google have teamed up to compete with Amazon. Thus, alongside Google, Walmart is also invested in JD.com’s success alongside. Just like they both are in Flipkart of India. 

This deal gives google and Walmart a better attempt to compete with Amazon. Furthermore, it gives JD.com a better attempt to compete with Alibaba – the market share leader in china.

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