China is one of the world’s largest and fastest-growing e-commerce markets. JD.com (JD) and Alibaba (BABA) are two of China’s top e-commerce companies. Exactly one-and-a-half years ago today, Google (GOOGL) disclosed a sizable investment in JD. Google invested $550 million to purchase a small stake in JD. With that, Google got a piece of China’s booming e-commerce market through one of the strongest players there. Google stock has gained 14.5% since the JD investment.
Google stock jumped after JD deal
Investors cheered Google’s alliance with JD, resulting in Google stock jumping 2.1% on the day the deal was announced.
The JD deal did not only involve Google purchasing a stake in the Chinese e-commerce giant. It also involved the companies partnering on international programs that would benefit both of them.
Here’s what JD’s chief strategy officer said about the pact with Google:
“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world. This marks an important step in the process of modernizing global retail.”
Here’s what Google’s chief business officer said about the JD deal:
“We are excited to partner with JD.com and explore new solutions for retail ecosystems around the world…that give consumers the power to shop wherever and however they want.”
Google’s retail race against Amazon
Google and Amazon (AMZN) have competing business interests in many areas. Cloud computing is one of them. Advertising and retail are the others. Google and Amazon are trying to outdo each other in attracting ad spending from consumer brands. For Amazon, that is an attack on Google’s most important business, and Amazon poses a big threat to Google.
For its part, Google is attacking Amazon’s retail world. Google has created retail solutions that it’s offering to Amazon rivals to help them catch up with Amazon in online sales. Google has hired PayPal (PYPL) executive Bill Ready in an apparent bid to supercharge its retail solutions team. The JD partnership allows Google to learn retail insights it could leverage in its battle with Amazon.
As Google battles Amazon, JD is trying to settle a score with Alibaba, the current e-commerce market leader in China. JD and Alibaba not only compete in the retail space, but also in financial services, logistics, and advertising markets as well. The Google pact gives JD access to technology solutions it could bring to its war with Alibaba.
Google stock is up 30% in 2019. JD stock has gained 66% this year. Amazon and Alibaba stocks have gained 19% and 52% this year, respectively.