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Walgreens’s Digital Transformation Is Good News for Alibaba

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Walgreens is rolling out Alipay to more stores

Part of Walgreen’s (WBA) ongoing digital transformation involves making shopping more convenient for its customers. The drugstore chain in January partnered with Microsoft (MSFT) on a program to develop digital healthcare solutions with the goal of improving healthcare outcomes and reducing healthcare costs. Last month, Walgreens took its digital transformation a step further with the expansion of mobile payment options at its stores across the United States. The drugstore chain said it will roll out Alipay mobile payment option to more of its stores, thereby handing Alibaba (BABA) more business.

Alipay is currently available at 3,000 Walgreens stores. Walgreens wants to expand Alipay availability to more than 7,000 stores across the United States by April. Alipay is operated by Alibaba affiliate Ant Financial.

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Expanding Alipay’s footprint in the United States

For Alibaba and Ant Financial, the broader rollout of Alipay by Walgreens opens another avenue to increase awareness of the payment service in the United States. Ant Financial is on a global expansion drive, but its expansion efforts in the United States have sometimes hit speed bumps. Last year, the Trump administration blocked Ant Financial from acquiring MoneyGram (MGI), saying such a merger would be a national security risk.

Alibaba is expanding Alipay’s footprint in the United States at a time when Amazon (AMZN) is also exploring reaching out to more retailers with its Amazon Pay service.

Alibaba is entitled to a cut of Ant Financial’s profits, but it did not make any money from the arrangement in the December quarter.

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