Ian McGarrigle, chair of the World Retail Congress, moderated a pair of back-to-back interviews yesterday morning in “On Top Of The World: Commanding Today’s International Retail Markets.” Speaking with him were J. Michael Evans, president of Alibaba Group, and Alex Gourlay, co-COO of Walgreens Boots Alliance.
McGarrigle began by observing that Alibaba is frequently described as the “Amazon of China” and asked Evans if that description is accurate. No, said Evans, it is not, and noted some key differences between the two organizations. “We are a marketplace, not a retailer,” he said: Alibaba doesn’t compete with brands, small- to medium-sized enterprises and retailers who use the site. “In fact, we share data with them.”
A second differentiator, Evans explained, is the scale of Alibaba Group. “There are 600 million consumers on the platform,” he said, “and we’re at about $780 billion in sales. We deliver 70 million packages a day. We have more than 10 million SMEs on our platform, and more than 200,000 brands — over 10,000 of them from the U.S. Singles Day is something we hold on November 11 each year. Last year, a couple of months ago, we sold $31 billion in products and delivered over 1 billion packages.”
The age of Alibaba’s consumer base is another factor. Of those 600 million consumers, more than 85 percent are younger than 35; 40 percent are 28 or younger. “So, this is a young group of consumers, and nearly everything they do — more than 90 percent — is done over a mobile phone,” Evans said. “Lastly, when I listened to Kara Swisher this morning, she talked about the moats that Amazon had built. We’re not building moats, we’re building bridges. Specifically, we’re building bridges between our online business and the offline market in China. We believe the future of retail is all retail, online and offline.”
McGarrigle asked Evans to explain his own area of activity, Alibaba’s international operations. “The globalization strategy — that’s the way we refer to it internally — is based on taking the best of what we have at Alibaba, both in terms of tech and business expertise and execution, and basically applying it to the rest of the world. I like to think of it as relating to the retail world in three big buckets. One is global import. China is the biggest market in the world, and most of what they want to buy is, for the most part, not produced in China. So, we have tens of thousands of brands, many from the U.S., that sell their products directly to the consumer.”
At the same time, he noted, China is the manufacturer to the world, so both in business-to-business and business-to-consumer markets, there’s a huge amount of volume of product that is leaving China for over 200 countries all over the world.
Evans ended by giving snapshot profiles of the Chinese consumer and the Chinese economy. Consumers are young, curious and getting rich quick; there are now 300 million in the middle class, and 300 million more expected to get there in the next five years. It’s a market that requires patience; the Chinese do research and get to know brands at their own speed.
The economy, he said, is “growing slower,” though he notes that at $13 trillion some slowing down is expected, from 7 percent a year to 6 or 6 1/2. “I can’t tell you what it’s going to do in the next year,” Evans said. “I can tell you that in 10 years it will be the largest in the world.”
This was followed by a conversation with Alex Gourlay, co-COO of Walgreens Boots Alliance. This company was formed at the end of 2014 when Walgreens acquired the 55 percent it did not own of the U.K. and Switzerland-based Alliance Boots.
“We know what we’re good at,” Gourlay said, “and we know what we’re not good at. We think we’re okay in pharmacy, pretty good in healthcare and we’ve got some beauty capability. And we’ve got scale, particularly in logistics.” The company’s goal is to create a global pharmacy combining the neighborhood feel and trust of a local drugstore with the heft of a $131 billion company. A joint venture with FedEx, for example, promises 24-hour delivery of all medications, all over the United States.