Google is making big steps to sell more stuff to more people by spending $550 million to gain some footing in Asia, an always-growing market.
GQ reported earlier this week that the giant tech company has struck a deal with JD.com, China's second-largest e-commerce platform. This not only gives Google a way into Asia's market—which consists of billions of people—but gives JD.com an introduction into the markets in the United States and Europe.
The deal also resulted in Google receiving 27.1 million JD.com shares, as well as a 1 percent stake in the e-commerce website. The merger has already benefitted the, as JD.com's American shares went up by 0.4 percent on NASDAQ shortly after the announcement, helping it close at $43.76.
There is still plenty of speculation as to why Google would drop so much money to begin dabbling in e-commerce. Some believe that it has to do with consumers not thinking of them when it comes to their online shopping needs, choosing instead to use Google to search for places when shopping for items. Since this doesn't directly generate money, selling products from a store of their own will bring in the profits they've been missing out on.
While Google Shopping and Google Express already exist for consumers, they're merely aggregators that show off both Google and non-Google made items. So this deal with JD.com could give Google both the tools and support they need to finally open their own store of sorts — something along the lines of what Amazon has, presumably with a much heavier focus on Google products.
To oversimplify, Google is going to spend over half a million dollars to work with China's e-commerce platform JD.com so that they can eventually sell their tech toys on a similar platform. No timeline has been given on when this will happen, nor has anything else come out alongside the announcement. So no one knows whether this merger will flourish and give these companies copious profits or flop and cause them to lose vast amounts of money. While things seem to look good now, it really is anyone's guess as to what comes next for two companies who are huge in their respective markets.
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