Opinion

Tech titans: It’s all about the customers with Alibaba and Amazon

BY Ed Rowland

Whole Foods founder John Mackey once said, “It’s competition that forces companies to get out of their complacency.” For Whole Foods’ new owner, Amazon’s Jeff Bezos, and Alibaba’s Jack Ma, that’s not the case. For them, innovation starts with the customer. The impending struggle between these two global giants will directly impact consumer health care and most everything else.

Both companies are pleasing customers globally and will inevitably compete. Bezos, who acquired Whole Foods, observed, “If you’re customer-focused, and you’re already the leader, customers are never satisfied.” Ma is more direct, “Forget about your competitors, just focus on your customers. He also has been quoted saying, “Never ever compete on prices, instead compete on services and innovation.” In the HR realm, Ma is a maverick, “Don’t hire the most qualified, hire the craziest.”

Vision aside, the two companies were even named in a somewhat similar fashion. Ma, during a visit to San Francisco, liked Alibaba — founded in 1999— as a good name. He asked a waitress what Alibaba meant. She said, “Open Sesame,” and indeed, the company opens the world up for small-to-medium-sized companies. Meanwhile, Bezos initially thought about naming Amazon, founded in 1995, Cadabra, short for “abracadabra,” but the name was soon discarded as too similar to “cadaver.” Bezos then settled on Amazon, the world’s longest river, and was strategically helpful in the early Internet days when website listings were commonly alphabetical.

As a U.S. consumer healthcare brand owner, what do the missions of these retailers mean? Essentially, it means that any global aspirations and channel pricing discipline will be framed by one or both of these companies. Of the two, Alibaba is probably the longer-term one to watch. Interestingly, Amazon utilizes Alibaba as its infrastructure engine in China. Meanwhile, Alibaba is studying the U.S. market and how best to enter it. Of the two, Alibaba is the larger. Alibaba’s online sales and profits surpassed all U.S. retailers, including Walmart, Amazon and eBay, combined since 2015, and has operations in more than 200 countries. And some parts of Alibaba, notably its e-payment system Alipay, are not part of the traded stock. In short, if U.S. brand owners worry about the so-called Amazon effect, a bigger storm is on the horizon.

Alibaba, though, has a structural advantage. With TMall and Taobao — Amazon and eBay equivalents — as key interacting divisions, the company’s data, marketing clout, pricing insight and, ultimately control, capabilities, as well as the ability to create, shape and direct efficient logistics are unprecedented. China’s restrictions on the Internet also have sharpened Alibaba’s content. Chinese consumers look to TMall as one of the definitive consumer healthcare information sources. It could be argued that Alibaba, along with other Chinese e-commerce platforms, also serve as their markets’ WebMD.

Coinciding with Alibaba’s structural strengths, the Chinese consumer healthcare market is poised to overtake the United States as the world’s largest, sometime within the next 10 years. While it is difficult to measure the conventional market sizes, China’s traditional Chinese medicines market is both huge and difficult to measure. The Chinese market is larger than the legacy U.S. framework. In short, Alibaba has structural strengths, while leveraging its domestic soon-to-be largest consumer healthcare market.

As a U.S. consumer healthcare brand owner, what is a strategic response? To quote one of my inspirations, Yogi Berra, “The future ain’t what it used to be.” A long-term (what is long-term?) U.S. consumer healthcare strategist must both understand Amazon now and Alibaba very soon — and certainly before it’s too late. When will it be too late? It’s hard to say, but when you consider Alibaba is a teenager and Amazon is in its early 20s, the window is potentially closing fast. Or as Yogi once said, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.”

Ed Rowland is a Drug Store News Contributing Editor covering global issues. As the principal of Rowland Global LLC (rowland-global.com), he believes in the promise of global business and supports companies in their strategy, tactics and execution of international growth initiatives.

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Preparing for the next generation of independent community pharmacy

BY Charlie Le Bon

Independent pharmacies have positioned themselves as leaders in communities across the nation by offering personalized attention, education and healthcare services at a moment’s notice. This level of service has established a legacy of care that patients can rely on when they need it the most.

However, all independent pharmacy owners will reach a point when they must ultimately transition out of their businesses. The ever-shifting healthcare landscape, new competitors entering the market, changes in third-party payer plans, shrinking reimbursement and the health of an owner or their family members are all scenarios that could lead an owner to sell sooner than expected.

While it may be difficult to consider retirement or transitioning out of their business, independent pharmacy owners who start planning an exit strategy years in advance have a better chance of connecting with the right buyer and securing a more favorable deal. It can take a long time to find a qualified buyer who shares the same values and passion for independent pharmacy, which is critical to maintaining patient and staff continuity through the transition.

In my experience working with independent community pharmacy owners across the country, I’ve identified three ways owners can map out their exit strategy and ensure their legacy endures for future generations, even if they are no longer the ones behind the counter.

1. Surround the business with trusted experts

Independent pharmacy owners who engage experts with the skills needed to develop and execute a seamless exit strategy are better positioned to maximize the value of their business when they are ready to transition, especially if they do so at least two years in advance. Business coaches, acquisition advisors, accountants, financial planners and attorneys are vital resources that can help owners plan for their exit, while allowing them to keep their focus on what is most important — their patients. Pharmacy owners should spend time with these experts to give them a clear understanding of what they would like to accomplish through their ownership transition. By doing so, that trusted team could provide the guidance and support that will bring a seller together with a like-minded buyer, who will serve their community with the same level of dedication.

2. Determine the value of the pharmacy

Independent pharmacy owners should be able to gauge what their business is worth by having accurate, detailed and organized records. This information will help generate a realistic estimate for what the pharmacy might command in the marketplace, and ensure buyers feel confident that they are acquiring a reliable business. Having solid answers to questions about average prescription volumes, gross margins, etc., can quickly calm the most common concerns that a buyer might have. Without these details, the perceived value of the pharmacy is likely to decrease, jeopardizing the business’ true value and potential earnings upon the owner’s exit.

3. Improve issues for today and the future

Pharmacy owners should also work with their team to remedy any existing issues that could deter a prospective buyer from acquiring the business. From such superficial issues as outdated fixtures, bad lighting and worn carpeting to more serious problems as narrow profit margins, inaccurate financial statements and declining prescription counts, every detail is significant and can contribute to a declining business evaluation. However, with enough lead time, support and elbow grease, owners can make modest improvements now that have a big impact on the overall value of their business when they are ready to sell.

Community pharmacy owners have plenty of options when it comes to exiting on their own terms. If they take the initiative and plan wisely, it is possible to get the full value for their business and preserve their legacy of care in their community for decades to come.

Charlie Le Bon is the director of pharmacy ownership services at AmerisourceBergen.

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Omega-3 makers choose MSC certification to show commitment to sustainability

BY Emily Tripp

It’s widely known that omega-3 is good for your heart, brain and bones. For those who don’t regularly consume seafood, supplements are a great way to get these healthy nutrients. Not only are omega-3 supplements good for your body, but some can be good for the environment too. To showcase their commitment to the environment, many companies are choosing to enter their products into the Marine Stewardship Council certification program. Over the last few years, MSC certification of fish and krill oil products has grown at a rapid rate.

The Marine Stewardship Council is a global nonprofit organization dedicated to sustainable fisheries and healthy oceans. The MSC works with fisheries, grocery stores and other businesses to change the way the oceans are fished and to make it simple for consumers to purchase seafood and omega-3 supplements that are sustainable and traceable to a trusted and verified source. As more consumers want to know where their products come from, MSC certification provides that assurance.

According to the GlobeScan 2016 survey of U.S. seafood consumers, more than two-thirds of consumers want to know that their seafood products can be traced back to a known and trusted source. Additionally, 79% of consumers surveyed cited “sustainable sourcing” as an important purchase motivator. The MSC Standard for sustainable fishing is widely recognized as the most credible standard for sustainable seafood, and it’s not limited to whole fish.

The number of omega-3 supplements carrying the MSC label has grown from 11 to more than 500 in the last six years. Nowhere has this growth been greater than in the United States. The U.S. market now accounts for more than 65% of total sales of MSC-certified supplements by volume. The most popular of the MSC-certified supplements are krill (52%) and Alaska pollock (32%).

The MSC-certified krill fishery, Aker BioMarine Antarctic Krill, has been certified since June 2010, and was the first MSC-certified krill supplier. Krill are harvested with a unique, highly selective fishing method that virtually eliminates unwanted catch. The fishery also is highly transparent — operations are monitored by a combination of satellites and on-board observers.

Two MSC-certified Alaska pollock fisheries have been certified since 2005. Both achieved sustainability scores that were among the highest of any MSC-certified fishery. They continually innovate to further reduce their impact on the planet and gain efficiencies in their processes. Alaska pollock fisheries are committed to full utilization of fish harvested so nothing is wasted. In addition to fish oil, Alaska pollock is used to make fillets, surimi, fish meal and other fish products.

These fisheries, along with hake, cod and salmon, are making their way into more fish and krill oil supplements, in response to consumer demands. As this market expands, so too will the MSC’s long-standing commitment to work with fisheries, suppliers and retailers to encourage a more sustainable seafood market.

This year, the MSC celebrates 20 years of safeguarding the future of the world’s oceans. Over time, this has come to include every aspect of the fishing supply chain — from fishermen and processors to restaurants, supermarkets and consumers. And as more supplement producers are seeking sustainable certification, the MSC will continue to serve as the world’s leading standard and to support these efforts.

To find out how your business can support healthy oceans, email the MSC at [email protected] or visit msc.org.

Emily Tripp is the MSC marketing and communications manager, U.S.

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