Wal-Mart teams with Japan's Rakuten for e-books, groceries

[NEW YORK] Wal-Mart Stores has forged another alliance to counter Amazon.com, partnering with Japan's Rakuten to sell e-books in the US and improve its online grocery business in the Asian nation.

The collaboration will bring Rakuten's Kobo device and e-book catalog to Wal-Mart's US stores later this year, the companies said in a statement late on Thursday. The partnership also includes a revamp of Wal-Mart's online grocery service in Japan that will roll out in the third quarter.

The alliance with the so-called Amazon of Japan is Wal-Mart's latest step to team up with technology companies that can help it battle the Seattle e-commerce giant. Last year, it aligned with Google to let shoppers order by voice over Google Home devices, and it's also working with Uber Technologies Inc. to deliver groceries in some cities. The move could also goose sales at Seiyu, Wal-Mart's struggling Japanese unit.

"We are excited to collaborate with the top online shopping destination in Japan," Wal-Mart Chief Executive Officer Doug McMillon said in the statement.

Japanese shoppers can't escape Rakuten. About one in four online purchases take place on its marketplace, Ichiba, and the company has expanded into sports, credit cards and even family planning. But the 21-year-old company has little cachet outside its home market, so CEO Hiroshi Mikitani has made investments abroad, with moves including a US$1 billion deal for online coupon service Ebates and a stake in ride-sharing service Lyft.

For Kobo, the partnership could offer another shot at the US market. Founded in Canada, the e-book company initially entered the US through a partnership with Borders. That ended unceremoniously when the book chain went bankrupt in 2011, forcing Kobo to sell through its own website and a few hundred independent book stores. Soon after, Rakuten bought Kobo for US$315 million. The business currently has 30 million readers globally.

"It's been a while since we've been active in the US market," Rakuten Kobo CEO Michael Tamblyn said in an interview. Wal-Mart made for a good partner because it provides scale, operational prowess and access to a large group of book customers, he said.

Wal-Mart will become the exclusive retailer of the Kobo brand in the US, and will begin offering Kobo's nearly 6 million eBook and audio book titles later this year. The retailer will also sell digital book cards in stores, enabling them to carry a broader selection of titles. The companies will introduce a co-branded app to access e-book content. A spokeswoman for Wal-Mart declined to say at what price it would offer e-readers and e-books.

The US e-books market has slowed, with net revenue declining 5.3 per cent from January through August of last year, according to the Association of American Publishers. It's also getting more crowded as Apple is working on a redesigned version of its own e-book reading application for iPhones and iPads.

Amazon has fought a slump in tablet sales by introducing lower-cost versions, extending battery life and adding its voice-activated digital assistant Alexa to read books aloud. Amazon ranks No 3 in global tablet sales behind Apple and Samsung Electronics, according to industry researcher IDC.

The new online grocery delivery service, dubbed "Rakuten Seiyu Netsuper," will be more convenient for shoppers and offer an expanded assortment of items like meal kits and cut vegetables, the companies said. The business will also boost capacity by opening a dedicated grocery fulfillment center this year, they said. Right now, all online orders are fulfilled in Seiyu stores.

Wal-Mart entered Japan in 2002 with a small stake in Seiyu, and took majority control in 2005. Despite sluggish performance, Wal-Mart has remained in Japan, even as other global retailers like Carrefour and Tesco have pulled out.

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