Alibaba Group Holding (NYSE:BABA) acquired food delivery service Ele.me only seven months ago, but it's already expanding its services into drug delivery.
Shoppers in three Chinese cities -- Beijing, Guangzhou, and Shenzhen -- can now have over-the-counter drugs delivered in half an hour. The service is offered 24/7 by the partnership between Alibaba Health and Ele.me.
And this is just one of a nearly limitless number of ways that Alibaba can use Ele.me to tap into the local delivery markets across China.
Alibaba Health and Ele.me offer drug delivery day and night
The new drug delivery service is easy to access through Alibaba's Taobao mobile app. Users simply search for keywords like "drugstore delivery" or "cold medicine" on the app to find shops near them and select which of the store's products they need. The app also allows users to track their deliveries and receive compensation if the products are delivered late.
Besides the three cities offering half-hour delivery, the program offers one-hour delivery in 20 other cities, including Shanghai, Nanjing, and Suzhou. However, the service is available in these cities only during business hours. Lastly, in Hangzhou, the service offers half-hour deliveries for daytime orders and one-hour late-night deliveries.
Alibaba says it wants this to be the first of many steps in the healthcare industry. For example, the company has also started offering a service that allows users to talk with licensed pharmacists online rather than having to schedule in-person appointments. Alibaba believes it can use its data and technology to continue to make the healthcare industry in China more efficient.
And Alibaba had good reason to jump into the drug delivery market as soon as it acquired Ele.me. China was the world's second-largest national pharmaceutical market last year, with sales of $122.6 billion. But more importantly, it is the world's biggest emerging market for pharmaceuticals, which bodes well for the growth of Alibaba's Ele.me drug delivery service in the coming years.
Alibaba thinks New Retail plus healthcare is the perfect match
When Alibaba gained full control of Ele.me in April, it was already envisioning turning this food delivery company into an all-purpose delivery company. That's because Ele.me's Feng Niao Delivery network has 3 million employees who can help make deliveries for Koubei, Alibaba's local-services platform. This is a huge help to Alibaba's last-mile delivery network range and penetration.
And the local online market for services ranging from food delivery to housekeeping is on fire in China right now. Gross merchandise volume (GMV) for online-to-offline services in China has roughly quadrupled since 2014, according to an August report by consulting firm iResearch.
Allowing customers to order services or products online and have them quickly delivered is also helping Alibaba with its ongoing New Retail strategy. This refers to the company's efforts to use its data and technology to help blur the lines between offline and online shopping. The company thinks it can combine the best of offline and online shopping to provide a better shopping experience.
The power of New Retail and Ele.me can be seen in its recent Starbucks partnership, which made Ele.me the coffee giant's exclusive delivery partner in China. By the end of 2018, Starbucks hopes to offer this service in 2,000 stores across 30 cities in China. And Ele.me was also a big help during Alibaba's annual Singles' Day sales extravaganza on November 11. During the 24-hour sales event, Ele.me delivered food and drinks from Starbucks, McDonald's, and Yum! Brands' KFC.
Alibaba is just dipping its toes into the enormous local quick-delivery market opportunity. There's no limit on the types of services and products it can use Ele.me to deliver to the nearly 1.4 billion people in China.