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Google Strengthens E-commerce Presence With JD.com's Joybuy

Zacks Equity Research

Alphabet’s GOOGL Google continues to build momentum in the e-commerce market with the aid of partnerships with online as well as offline retailers across the world.

The search giant and JD.com JD, a Chinese e-commerce company, have strengthened their ties with JD.com opening an online store, Joybuy, on Google’s shopping site, Google Express. Notably, the new store stocks products within $100 from consumer electronics category like electric kettles, battery chargers, dashboard phone mounts to name a few.

We believe the latest move seems to a be a win-win situation for both the companies. JD.com with its new store is likely to get a direct exposure to U.S. online retail space which will enable it to expand market size.

Meanwhile, the store will surely expand Google’s presence in the e-commerce market. Further, it is likely to strengthen the company’s hold in China.

Growing E-commerce Initiatives

With this latest move, Google has provided a boost to its e-commerce initiatives.

Further, it is likely to aid the company in penetrating the growing U.S. e-commerce market which as per a report from Statista, is expected to reflect a CAGR of 7.8% in revenues generated from it over a period of 2019-2023. Further, revenues in this market are pegged at $547.7 billion for 2019 and anticipated to reach $740.4 billion by 2023.

Apart from the latest initiative, the company has already invested $550 million in JD.com in return for acquiring a minority stake of 27.1 million Class A shares of the latter.

Further, Google has teamed up with big retailers like Walmart and Target to make their products available  online purchase via Google Express.

Moreover, the company has joined forces with Carrefour, a French grocer. Per the deal, products of Carrefour will be sold online via Google’s shopping app.

Additionally, it is also considering acquiring a minority stake in Flipkart by teaming up with Walmart. This will aid the company’s market position in e-commerce market of India.

We believe the above-mentioned endeavors of Google will strengthen its footprint in the global e-commerce market. A report from Statista shows that the market is expected yield $2.03 trillion revenues in 2019. Further, revenues are likely to witness a CAGR of 8.9% between 2019 and 2023 to reach $2.85 trillion by 2023.

Alphabet Inc. Revenue (TTM)

 

Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

Strengthening Competition

Joybuy on Google Express is likely to strengthen the competitive positions of both Google and JD.com against other online retail companies like Amazon AMZN and Alibaba BABA.

Notably, Amazon remains the dominant player in the global e-commerce market while Alibaba is the largest e-commerce company in China.

In fact, Alibaba has partnered with Boca Raton, FL-based Office Depot to launch a dual website that would focus primarily on American customers in order to expand presence in the United States.

Nevertheless, Google’s deepening retail focus, and robust Google Express and Google Shopping, and JD.com’s strong efforts to expand beyond China will help the search giant to strengthen its market position even in the presence of Amazon.

Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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