The pandemic years have changed the U.S. consumer health care products and services world. Evolution and revolution on a global scale confront U.S. chain drug stores and independent pharmacies alike. The rapper Tupac Shakur once said, “You either ride with us or collide with us.” Both are happening.

Ed Rowland

The consumer health care world is riding fast right now, and the collision with e-commerce, domestic and Asian, impacts retailers, brand owners and consumers. As Hermione Granger from Harry Potter said, “Nothing will be the same.”

E-commerce’s impact on brick-and-mortar is well documented. Not unlike the successive retail revolutions caused by Walmart, clubs and dollar stores, Amazon has changed how products find their way to consumers. Brand owners know the difference between Vendor Central and Seller Central. Meanwhile, legacy retail has played catch-up with varying success, with Walmart and Target leading the way. CVS.com and Walgreens.com still lag.

Alice Wang

By one measure, the global consumer health care market reached $362 billion in 2021. Nicholas Hall’s DB6 (which measures manufacturer’s value, not retail value) has the global number at $202.6 billion, with 2022 forecasted at $214.4 billion. E-commerce now accounts for 13.8% and will grow to 15.4% in 2022. In the U.S., the numbers are $55.0 billion and $9.9 billion (18.0% of the market). Statistica has pegged 2021 U.S. online health and personal care product sales growth at 30.8%. They fixed 2020 growth at 28.5% but forecast the next few years growth slowing to the 10% range.

Legacy North American retail and e-commerce — WBA, CVS, Amazon — will collide with their Asian counterparts especially in the e-commerce world. China, the second-largest over-the-counter products market, is not dominated by one e-commerce platform. Alibaba’s TMall and TaoBao have a worthy competitor: JD. There are distinct differences between Alibaba and JD which will inevitably impact the North American industry pillars. Indeed, both Alibaba and JD maintain fledging U.S. offices and offer Health Direct services to domestic brand owners to establish online Chinese business.

Alf Luo

There is also an interesting and fast-growing large player worth noting, Meituan. Meituan.com differs from Alibaba or JD.com as it provides a portfolio of life services such as food delivery, restaurant ranking/recommendations, nearby films/ticket booking and nearby pet care nearby. Based on its LBS (location-based service) functionality, Meituan also serves as an important health care player. The platform connects scores of offline pharmacies to consumers via the app. Once a consumer places an order through Meituan, the system assigns the order to the nearest offline store, and a contracted delivery service delivers to the consumer within hours. This user-friendly experience generates 10 million RMB ($1.48 million) per day for Meituan’s O2O drug delivery business.

So, how does the main Chinese e-commerce world work? Alibaba and JD differ in important ways. Alibaba is the bigger player with TMall and Taobao, Amazon and eBay equivalents. Alibaba helps brand owners create Flagship Platforms where consumer loyalty accrues to the brand owner.

JD on the other hand, strives to build JD brand loyalty and is strictly a B2C platform. There is no Taobao (eBay) equivalent on JD. With focus on higher-priced products and electronics, JD effectively runs the brands’ business and buys about 70% of the products that appear on their platform. One 30-something Chinese female consumer put it directly, “For health care and cell phones, I go to JD.”

JD’s logistics are better: half-day versus Alibaba’s two- to three-day delivery. JD is also generally regarded to have better overall coverage, especially in the expansive Chinese countryside. The consumer split is stark; 80% of Alibaba consumers are female, while JD’s mix is closer to 50/50.

TMall Global, the Amazon equivalent that caters to international brands, excels at cross-merchandising, especially the music platform. TMall Global generally provides better choice with more user-friendly page design.

The Amazon, Alibaba and JD worlds will compete at some point. The consumer health care world is driving forward at a rapid speed and at the same time they will collide. The North American retailers, e-retailers, brand owners and consumers have an interesting trip ahead.

Ed Rowland is the principal of Rowland Global LLC (www.rowland-global.com) and believes in the promise of global business and supports companies in their strategy, tactics and execution of international growth initiatives. Alice Wang is a consumer health care professional with deep knowledge of Chinese e-commerce, the world’s largest internet market. Her team provide clients up-to-the-minute information on the Chinese e-commerce market, and customized service to the world’s largest market. Alf Luo is an expert in the Chinese e-commerce sector with over 20 years’ experience in e-comm strategy planning, digital marketing and operation experience. Alf has deep knowledge of China’s e-commerce business models — e.g., B2C, O2O and B2B.