Walgreens Boots Alliance is launching a major store presence on Alibaba's Tmall global e-commerce marketplace as the U.S.-based pharmacy giant looks to sell more of its beauty products into the massive Chinese market, according to a company press release.
The online flagship store will initially focus on the most popular products from its Boots' U.K. and U.S. beauty brands, including No7, Soap & Glory and Boots Cucumber, according to the release.
The Walgreens announcement quoted market numbers from Euromonitor suggesting that as of 2017, retail sales of skincare products in China showed a year-over–year growth rate of 10%, while retail sales of make-up products there achieved a 21% year-over-year increase.
The market for beauty products is growing rapidly in China and, like every other market opportunity in China, this one is already huge. Total combined retail sales of skincare and make-up products amounted to more than $27.3 billion in 2017, according to the Euromonitor figures referenced by Walgreens.
For brands wanting to sell into that market, Alibaba has been called the "gateway to China," according to Forbes. Retailers like Walgreens have other avenues to take into China as well. Last month, Walgreens closed a $416 million investment for a 40% stake in Chinese pharmacy giant GuoDa, which owns about 3,800 pharmacies throughout China. But, for an e-commerce play, the best route to maximum exposure for a retailer looking to engage in cross-border commerce with Chinese customers is working with Alibaba's e-commerce platforms.
It's particularly important for Walgreens to keep branching out into new markets amid some competitive upheaval in the pharmacy business. Walgreen's has had a rough ride since its Rite Aid stores acquisition, and the company has shown weakness in the beauty segment as more retailers have been investing in that market and its seeming immunity to broader retail sector woes.
Amazon's ongoing interest in the pharmacy market is also having an effect on traditional players. Amazon's relationship to that market in recent years may be best described as a flirtation surrounded my much speculation, but this past summer it acquired online pharmacy PillPack, one of its more concrete moves in this direction.
Getting deeper into China is one way for Walgreens to broaden its horizons amid these market changes. And aligning with Alibaba's Tmall is one of the quickest way to do that.