JD JD com Inc

Wal-Mart Stores Inc. is in discussions to sell its online e-commerce platform in China to the country's No. 2 e-commerce company as part of a potential strategic tie-up, according to people familiar with the situation.

JD.com Inc., which is the second-largest online retailer in China after Alibaba Group Holding Ltd., is in talks to buy Yihaodian from Wal-Mart, according to the people. The exact terms of the deal were unclear and discussions remain fluid, but one of the people said it could include a broader partnership between Wal-Mart and JD.com.

The strategy of teaming up with JD.com could give Wal-Mart a better chance of competing in the cutthroat retail industry in China and boost sales in its physical retail locations. JD.com, which gained popularity from its reputation as a place to buy brand-name electronics, has tried to expand its offerings as it continues to compete with the larger Alibaba, which operates Taobao and Tmall.

Yihaodian's niche has been grocery sales, but competition in the groceries has heated up in the past year, as local Chinese retailers have gone online and many startups have entered the field to sell everything including imported avocados and dishwashing detergent.

JD.com has bolstered its food offerings, for example, through its investment in FruitDay, a Chinese online produce retailer, and is expanding imports, including inking deals with Australian milk companies and U.S. meat and vegetable producers.

In July last year, Wal-Mart announced that it had taken full control of venture from its minority partner. Wal-Mart has worked to link its physical operations to Yihaodian's online operations, which could continue in a bigger way after a partnership with JD.com. Yihaodian was started in July 2008.

Juro Osawa contributed to this article.

Write to Rick Carew at rick.carew@wsj.com and Alyssa Abkowitz at alyssa.abkowitz@wsj.com

(END) Dow Jones Newswires

June 20, 2016 08:25 ET (12:25 GMT)

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