Every Few Decades, One Company Redefines Consumption. Now It's Alibaba and Amazon | 2018 Company of the Year

Sears – Walmart – Amazon/Alibaba

If the 19th-century world was made by producers, then the world after the 20th century was made by consumers. Consumption is the main engine that pushes a commercial civilization forward.

One person's spending is another person's income. As Bridgewater founder Ray Dalio puts it, the "economy" is nothing more than the sum of these billions upon billions of transactions. Last year, 70% of U.S. GDP came from household and business consumption — buying homes, cars, phones, meals. In China, that share also reached 44%, surpassing real estate's contribution.

Every few decades, a fresh crop of companies uses the newest technology of the day to reshape how an entire society consumes — redefining what people expect from price and choice, and stoking more growth.

These companies change more than the act of buying. Along the way, transportation, capital, employment, manufacturing, and even the global shift of industrial production all change with them.

Sears, which declared bankruptcy this year, is the original pioneer of this kind of reshaping. In the early 1900s, department stores led by Sears invented mail-order retail: using the national rail network and printed product catalogs, Sears pulled farmers into what was then a fast-growing consumer class. The company later rode America's urbanization to transform the department-store trade and build a retail empire of more than a thousand outlets.

Then came Walmart — still the world's highest-grossing company — and the superstore era it drove.

Now it is Alibaba and Amazon, each dominating e-commerce in China and worldwide, each remaking payments, logistics, and merchandise costs in its own way. It is no exaggeration to say they built e-commerce infrastructure from scratch.

Over the course of a year, roughly 552 million Chinese people bought something on Taobao or Tmall — an average of 85 purchases and 8,732 yuan in spending per person. By transaction volume, Alibaba holds 60% of China's e-commerce market; its biggest rival, JD.com, sits in second place with just 25%.

In the United States, two-thirds of households shop on Amazon. Of every $100 Americans spend online, $49 goes to Amazon. More than 60% of those shoppers pay $119 a year for Prime — all to get their orders a little faster.

Every day, Amazon sells more than $290 million worth of goods or services on average: books, media, clothing, household basics. Between May and July this year, Amazon's website drew 7.36 billion visits — more than ten companies combined, among them Samsung (2.8 billion), Apple (1.56 billion), Walmart (1.03 billion), and Best Buy (400 million).

QDaily names Alibaba and Amazon its 2018 Companies of the Year because over the past twelve months both proved they can break out of pure e-commerce and keep reshaping how people consume in far larger markets.

Across 2017, Alibaba made a string of investments and acquisitions in Intime Retail and Sun Art Retail; this year it used Freshippo (Hema Fresh) to truly enter the fresh-food and grocery market, with its nationwide store count expected to reach 100 by year-end.

Amazon made its own move in 2017 with the $13.7 billion acquisition of Whole Foods. Over the past year it has pushed prices down and, through the organic-food idea, worked its way into the American middle-class home.

What Freshippo and Whole Foods share is their format: the fresh-food and grocery store. This is the same format that once turned Walmart from a once-a-week supermarket trip into the dominant destination for mass retail — a position it holds to this day.

Now both e-commerce giants are not only going back to school under the companies they once beat — they intend to use the same playbook that reshaped retail last time to reshape a new retail format once again.

The first time retail became a mass business, it was thanks to railroads and Sears

Not long after the turn of the century, America's largest non-physical retailer — then known for selling a single category of goods — was working hard to remake itself into a store that carried everything: watches and jewelry, clothing and baby carriages, kitchen tools and farm implements. A warehouse of more than 278,700 square meters handled orders from across the country.

It was not the first company in the field, but it set the industry's benchmark for operational efficiency, ahead of its peers in technology and strategy. It was committed to low prices and good service, and promised no-questions-asked refunds. It grew into a microcosm of the American economy — not just retail, but warehousing, logistics, and marketing.

Is this Amazon in 2018, or Sears in 1918?

Both. And the New York Times, the Atlantic, the Washington Post, and the Chicago Tribune have all called them mirror images of each other, more than once.

In the 1870s, after the Civil War ended, the American economy rebounded. The adage "build roads first, get rich second" held for the United States as much as anywhere. Between 1869 and 1893, America completed five transcontinental rail lines. These trunk lines and their branches reached from the Eastern heartland into the Midwest, Southwest, and Far West, sharply cutting transportation costs, spurring freight and the growth of towns along the routes, and finally knitting the American continent into a single unified market.

Department stores were the main product of that era of urban prosperity. But they came with real limits: the American automobile industry was still in its infancy, the road network was thin, and more than 80% of Americans lived in isolated rural areas — cut off from the conveniences the department store offered.

Montgomery Ward solved part of that problem through mail order. In 1872 he mailed his printed product catalog to rural consumers and, on the strength of the orders and cash he received (cash only), bought goods in bulk straight from manufacturers to keep prices down.

Richard Sears got into the mail-order business nearly fourteen years later. Like Ward, he aimed at farmers — a vast population that bought only essential goods and daily necessities. These were the products easiest to standardize and best suited to mail order.

But Sears was a sharper marketer. Knowing, for instance, that farmers liked to stack catalogs on the small coffee tables on their porches, he deliberately made his catalog a size smaller so that Sears would always be picked up first.

The slogans and taglines he chose carry a ring that recalls today's Amazon: "The Cheapest Supply House on Earth" and "Our Trade Reaches Around the World."

On service, too, Sears was readier than Ward to take risks. Thanks to friendly agreements with railway station agents across the country, it could offer cash on delivery, a refund guarantee, and repair service — the boldest line in any catalog was "Satisfaction or Your Money Back."

After moving the company to Chicago, a hub of the rail network, in 1893, Sears and his partner Alvah Roebuck set up the far more complete Sears, Roebuck & Company. From eyeglasses to lawn mowers, from ready-made clothing to furniture, a single Sears catalog could meet all the needs of an ordinary farming family. It was hailed as the "Consumer's Bible," while the special Christmas edition earned a lovelier name: the Wish Book.

The growth in catalog circulation was staggering: 318,000 copies in 1897; 1 million for the spring 1904 edition; more than 2 million for the following year's spring edition. By 1927, Sears mailed out 75 million copies in all — general-merchandise, promotional, and special editions combined. As circulation grew, the catalogs grew thicker, richer in content, and easier to navigate.

Freelance writer Steve Bouser set down this memory of Sears on his personal blog: Growing up in the Midwest, kids of my generation would spend hours sitting on the couch or sprawled across the carpet, flipping through those dream catalogs, imagining splurging on a pile of things for ourselves and our families.

On the other hand, Sears had what we would now call a Pinduoduo problem.

Daniel Boorstin wrote in The Americans: The Democratic Experience that one Sears ad offered "sewing machines at a dollar apiece" — and customers received only a needle and thread. Sears also ran furniture clearance ads in a few rural weeklies: a sofa, two chairs, and a plush cushion for just 95 cents. No one noticed the word "miniature" in small print on the ad's first line. The buyers received a set of doll's furniture.

After cars and roads became common in the 1920s, people traveled more freely, urbanization quickened, and department stores could reach far more consumers again. Sears first opened stores inside its mail-order warehouses; then the company's new head, Robert Wood, used U.S. census data and statistical abstracts to follow the movement of population when choosing new locations. Wood was not content to compete only with urban department stores like Macy's — he moved the new Sears into the suburbs, where land was cheap and parking was plentiful.

As the Atlantic described it, Sears' pivot into physical retail was startlingly successful. At the start of 1925 there was not a single Sears department store in America. By 1929, there were 300. Montgomery Ward put 90% of its stores in rural areas or small cities; rival Woolworth focused on affluent urban zones; only Sears bet on everything — rural and urban, rich and poor, farmers and factory workers. Geographically it chose the South, Southwest, and West with no fixed pattern, following nothing but the numbers from the census bureau.

Sears was also not content to be a one-stop shop for durable goods. Like today's Amazon, it used its dominant position to push into adjacent businesses. To complement its huge business in cars and parts, Sears began selling auto insurance under the Allstate brand. As consumers grew used to installments and credit, Sears offered something similar — not credit cards but dedicated credit accounts, using debt to bind shoppers to the store. All of this ultimately served one aim: to become an inseparable part of consumers' lives.

This approach made Sears one of America's most successful companies for decades. In the 1950s, Sears' U.S. domestic revenue was worth $180 billion in today's money — roughly 1% of U.S. GDP. No single company has matched that share since.

Walmart's superstores overtook the department store and reshaped America

After Sears, Walmart is probably the retail company that best represents — and most shapes — the American economy.

In The Wal-Mart Effect, author Charles Fishman noted that on any ordinary day American media will run no fewer than 100 stories about Walmart. The company directly and indirectly affects the livelihoods of 4.6 million people, and its annual store footfall exceeds the entire world population. It has topped the global revenue rankings for years running, and in physical retail all its competitors combined do not match its scale.

Walmart was founded in the 1960s, in the post-World War II years, when America came out of a brief contraction into two decades of rapid growth and two-thirds of U.S. households reached middle income. Sears, Macy's, and other department stores were then at their peak. Walmart chose to open in towns its competitors thought too small to support a department store — a strategy that echoed Montgomery Ward's in the 1920s, except that Walmart's timing was better and its site selection more successful.

And even as consumers shifted from mass buying toward quality buying, demand stayed stratified in practice: a large share of spending still flowed to discount stores. That was the retail format Walmart built first. When the first Walmart opened in 1962, it sold everyday goods across 36 product categories under the slogan "Everyday Low Prices."

According to Walmart's 1985 annual report, before the 1980s the company's locations were mainly in or around metropolitan areas — towns of 5,000 to 25,000 people. At the same time, after Walmart built its first distribution center in 1970, it used each center as the hub of a region, clustering stores densely in the surrounding towns until that market was saturated, then moving on to the next area. This pattern repeated over and over: by saturating markets, Walmart amassed almost the largest single concentration of orders in any locality. That dominant position gave it the leverage to squeeze suppliers.

Technology, deployed at exactly the right moment, helped Walmart expand. In 1975, with more than 125 stores, Walmart leased an IBM 370/135 computer system to manage warehouse and distribution-center inventory. More than 100 Walmart locations tracked customers' card swipes to analyze shopping intent. In 1983, Walmart adopted the barcode scanners McKinsey had been urging on supermarkets, smoothing shelf-locating and checkout. Four years later, Walmart finished deploying what was then the largest private satellite communications system in the United States, linking every operating unit to headquarters by two-way voice and data and one-way video.

As Walmart rose, Sears was left completely behind — and the dynasty seemed to change in an instant. Walmart's sales leaped from $1 billion in 1980 to $32 billion in 1990, passing Sears to become the world's largest retailer. By 2001 its sales were six times those of Sears.

What let Walmart beat Sears and the rest was not technical complexity or sophistication — it was simply the ability to respond faster to shifting demand. Time magazine said Walmart's idea was this: when you walk in the front door, within 50 steps you can find a vast variety of goods, all cheaper than at any other store nearby.

The New York Times put it this way in 1984: Walmart's strategy was simple — low-cost operations, American brand-name products at discount prices. It used large orders to force suppliers to absorb rising costs on their own, and the "Everyday Low Prices" slogan sank deep into the culture.

But carrying it out was anything but simple.

"Volume purchasing" was Walmart's enormous advantage over every competitor. It took shape only after round after round of a virtuous cycle: offer cheap goods → win huge orders → push upstream supplier prices lower.

Suppliers who could not afford to lose Walmart's business had to absorb any cost pressure that might otherwise have raised their prices. And their hardship did not end there — direct rivals were almost certainly stocked on the same shelf. Facing Walmart's price-sensitive shoppers, the only way to stand out was to offer better value. That, in turn, gave Walmart's Everyday Low Prices strategy one more push.

When American manufacturers had compressed costs to the absolute limit, only a global supply chain could keep meeting Walmart's yearly demand for lower prices — and so many jobs moved to lower-wage countries in South America and Asia.

For example, between 1997 and 2002 Walmart's purchases from China doubled, rising to $12 billion, then grew another 50% over the following two years. In 2004, the wholesale value of Chinese goods sold in Walmart's U.S. stores reached $18 billion — 10% of all American imports from China. A single company was moving an entire manufacturing sector offshore.

The corporate culture and values that Walmart founder Sam Walton first championed — hard work, cost discipline — were carried through faithfully by the company's leadership. One ought to admire companies that honor diligence and thrift, but that admiration is harder to sustain for Walmart after the 1990s. The company faced dozens of lawsuits over forcing employees to work unpaid overtime, with workers complaining of being made to clock out and then return to their stations to keep working, without pay. On this point, Sears was the polar opposite — yet its overly generous employee benefits eventually became an operational burden that hastened its bankruptcy.

Earlier this year, Walmart — a beneficiary of the U.S. corporate tax cut — announced it would raise its minimum hourly wage to $11. At the same time it announced the closure of several stores and the layoff of thousands of workers. That only deepened public contempt for Sam Walton's legacy and Walmart's stated values. Ask Americans to name the ten most disliked companies in the country, and Walmart usually makes the list — and near the top.

Alibaba and Amazon built e-commerce infrastructure in entirely different ways, in entirely different countries

When Taobao was first getting off the ground, only 100 million Chinese people were online, and they lived mostly in cities. China's per-capita GDP then was roughly America's in the 1970s, and the main consumer base was almost entirely price-sensitive. For e-commerce to work at all, it had to be cheap — the internet marketplace became a natural discount store.

Taobao, founded in 2003, caught the emergence of China's middle class from nothing and the rise of consumption in China — then rode a series of stimulus tailwinds after the 2008 financial crisis, as China pivoted from a purely export-driven economy toward domestic demand.

At the same time, just as Sears in its early years brought farmers into an expanding consumer class, China's economic activity — retail included — was spread very unevenly. Large retailers were disproportionately concentrated in big cities; many smaller cities and vast rural areas went underserved, and e-commerce could, to some degree, ease that spatial inequality in consumption.

This was both an opportunity and a puzzle. China's e-commerce market had almost no ready-made operational template or infrastructure. Paying for a purchase once meant a trip to the post office to fill out a money-transfer form; the whole framework of transaction trust simply did not exist. Whether to pay first or ship first became a genuine problem. As for logistics — the dominant shipping method was ordinary post, which might take a week and still couldn't guarantee delivery from Beijing to Shanghai.

Everything that seems obvious today — open the app, tap a few times, authenticate with face or fingerprint, the money goes out, packing begins at the other end at that same moment, and delivery perhaps arrives as soon as the next day — looks, in hindsight, brutally hard at every step.

The market Amazon faced early on was somewhat friendlier than Alibaba's. The middle class had already become the mainstream of American society; credit-card and internet penetration were high; a crop of e-commerce companies had been founded on the back of venture capital. The catch was that only 25% of Americans believed their standard of living would improve over the next five years (as of 1996), and nearly 50% believed the next generation would be no better off than the current one.

So even though the middle class was already America's mainstream, that pessimism dampened its appetite for big spending. Consumers were more price-sensitive. Bezos's answer was to draw affluent, educated shoppers by selling books — priced near cost to maximize volume. From that base, Amazon would sell everything over the internet.

Both companies, each in its own way, then began to transform consumer retail from several angles: logistics, payments, and pricing.

Logistics

Taobao — and later Tmall and Xianyu — never built a complete logistics network in-house. Delivery ran through courier companies. China's labor surplus was Alibaba's advantage.

It brought massive order volumes to the couriers, set them competing with one another on service, and ultimately got goods to consumers at relatively low cost. The Tongda couriers (ZTO, YTO, STO, Yunda) became Taobao's most-used delivery services.

To some extent, this surge in business drove the 2005 reform that split administrative and commercial functions within China's postal system, opening a larger market to private courier and logistics companies.

From 1980 to 2000, it took China's courier industry twenty years to reach an annual volume of 100 million parcels; from 2000 to 2006, six years to break 1 billion; and then eight more years to climb from 1 billion to 10 billion.

In 2013, Alibaba founded the logistics subsidiary Cainiao to bring in partners and try to control the overall logistics picture — ZTO, YTO, Yunda, and other couriers all took equity stakes.

In practice, Cainiao's relationship with the couriers resembled that between a food-delivery platform and a chain restaurant: it could bring the couriers orders, but it could also seize the direct relationship between couriers and their customers. The couriers were reduced to a line-item service — ever more dependent on Alibaba's traffic for business, and ultimately pressured into either improving service or cutting prices. Either outcome helped Alibaba's logistics reputation.

In the process, the logistics efficiency of the broader economy improved, directly and indirectly.

Amazon calls its own fulfillment centers "factories" — the starting point of its reshaping of e-commerce logistics.

A factory implies a production process. When merchandise arrives at Amazon, workers push carts and slot items into any open space on the shelves — and as they do, Amazon's management system records the location of every single item. When it's time to ship, the system calculates the best picking route from the fulfillment center's staffing efficiency, each item's shelf life, and other factors. Pickers push carts through the aisles carrying what Amazon calls a "gun" — a handheld scanner.

The "gun" is the most important tool an ordinary Amazon warehouse worker touches. The hours spent working with it each shift are factored directly into performance reviews. The scanner's screen automatically shows the location of the next item to be picked and the name of the aisle to walk to.

Workers do not need to — and cannot possibly — memorize where each item is stored. Their job each day is to follow the route shown on the gun and dump everything into the cart. Then ship.

One production cycle, complete.

In an operation center run by algorithms and forecasts, the individual worker's experience and learned judgment — any influence they might have on warehouse management — is cut to near zero. The person becomes part of the machine.

Beyond that, all of the data serves more than the immediate shipment. The management system forecasts each "factory's" seasonal shipping volumes, and factory managers use that data to decide how many temporary workers to bring on.

Payments

Alibaba founded Alipay as a dedicated payments company in 2004, offering free transactions and transfers to consumers and merchants. China UnionPay had been founded only two years earlier.

Later, Alipay's express-payment feature let users pay directly with a linked bank card at checkout — no need to preload funds into an account.

But banks placed heavy restrictions on Alipay in its early years. In 2004, Alipay could not debit a linked bank card directly; users had to wire money from their bank account into Alipay first, then have the balance deducted at checkout. Setting up express payment meant bringing a national ID card, an online-banking USB key, and a bank card to a physical branch in person, with a 500-yuan limit per transaction.

Under pressure from China UnionPay and the central bank, express payments stalled for a time. Alipay went bank by bank to negotiate cooperation agreements and eventually achieved cross-bank transfers that could settle in just one to two business days.

Over the following years, as Taobao grew, Alipay connected to one bank after another, and linking a bank card gradually simplified to a single text message.

Amazon's transformation of payments was bundled into its One-Click checkout.

Placing and paying for a first Amazon order was cumbersome — no different from any other e-commerce site. But the convenience of every purchase after that was nearly impossible to beat: as long as the credit card stayed valid, the user just clicked the One-Click button in the top corner of the product page and waited for delivery.

Unlike other e-commerce platforms, which verify the three-digit security code on every credit-card charge, Amazon does ask users to enter it — but as long as the billing or shipping address hasn't changed, it doesn't actively check the code when processing the charge. That creates a security risk, but Amazon decided that pushing users to buy and buy again was the priority.

For low-income customers who couldn't get a credit card, Amazon offered gift cards and store credit. In March this year, Amazon planned with JPMorgan Chase to launch a product similar to a bank savings account, though it was still in early stages.

Amazon's main motive for such accounts was to attract younger consumers used to cashless payments, and those without bank accounts. According to a 2015 Goldman Sachs report, 30% of American post-2000 respondents said they had no intention of opening a bank account in the next five years; a CNBC report noted that 1 in 4 American households had no bank account, or only limited banking services.

Pricing

The idea Walmart transmitted to consumers was a disruptive pricing philosophy: Walmart's price never changes — always below regular retail, never far above sale price — and every year, that same item can be at least 5% cheaper still.

The method was to bring in competing suppliers and let them undercut one another. At Alibaba and Amazon, that competition is in theory even fiercer.

Because e-commerce erases geographic imbalances and pulls customers from across a country — or the globe — onto one platform, suppliers effectively find themselves in a national or global market.

Amazon also launched an automatic repricing tool in 2016. It lets sellers set repricing rules that adjust prices up or down around the clock, for different shipping methods, based on the current cart price.

Sellers simply configure the adjustment increment — say $0.01 or $0.10 — specify the product category and shipping type, and prices adjust by that increment each time until they hit a preset floor or ceiling.

For an Amazon seller, this automatic repricing tool sharpens price competition among rival listers, driving margins toward near zero.

Brand authorization

To lure brands onto their platforms, Alibaba and Amazon have — deliberately or not — tolerated counterfeit goods.

Forbes reported in 2015 that Alibaba had for years kept a procedure letting brand owners request the removal of fake listings, but brands said the process was deeply confusing, demanded too much documentation, and that Alibaba's response was too slow. Yet if a brand chose to open a Tmall storefront, any product deemed not authentic mainland-domestic stock was liable to be taken down.

Similarly, Elevation Lab founder Casey Hopkins wrote in a blog post in March this year that the Anchor headphones listed on Amazon were not products his company sold — they came from a knockoff maker. Hopkins said this was widespread on the platform. At the time, Amazon issued a statement saying it was working hard to fight counterfeits and had set up both prevention and after-the-fact reporting mechanisms.

In December last year, Birkenstock, Germany's largest sandal maker, announced it was cutting ties with Amazon, citing product-rights violations and counterfeit goods on the platform.

This repricing mechanism has also driven off brand partners. German knife brand Wüsthof left Amazon in 2006 after Amazon repeatedly ignored its minimum advertised price.

In Wüsthof's first few years on Amazon, the platform was relatively respectful of the German company's pricing. As traffic and order volumes grew, Amazon quickly became Wüsthof's most important online retailer and its second-largest U.S. seller. Then the relationship turned tense. Amazon's pricing robots were skilled at scanning the web for matching lower prices elsewhere, and Wüsthof accused Amazon of repeatedly violating its minimum pricing requirements — selling a Grand Prix chef's knife priced at $125 for just $109.

But Amazon's enormous traffic eventually brought Wüsthof back to the platform in 2009.

Membership

In 2005, Amazon's net income fell from $588 million the year before to $359 million, while capital expenditure rose from $6.9 billion to $8.4 billion. In February, Amazon launched the Prime membership program at $79 a year, with free two-day shipping.

People doubted Prime's take-up and worried it would hurt Amazon's margins — especially after Bezos said the customer-service program might not pay off for years.

More than a decade later, Prime generates billions of dollars in business for Amazon: free two-day shipping, free music streaming, a Netflix-style video service, free e-books, and more. Even as Prime's price rose from $79 to $119, the share of paid members climbed to 65%.

If a user subscribed purely for the free shipping, they would need to order at least 13 times a year just to break even — and in practice, that commitment to order is exactly what they end up making.

All of these add-on services share one goal: to keep users permanently tethered to Amazon.com and its affiliated services, so they shop at Amazon rather than anywhere else.

Offline

In August 2017, Amazon announced that its acquisition of Whole Foods was about to close.

On top of that, Amazon announced a move competitors dreaded: price cuts. Starting Monday, a selection of Whole Foods' best-sellers would go on sale — organic avocados, organic brown eggs, organic rotisserie chicken, and more. Amazon made clear this was only the start. Jeff Wilke, CEO of Amazon Worldwide Consumer, said: "We're determined to make healthy and organic food affordable for everyone."

When the announcement landed, shares of competing retailers fell in unison. Six major supermarket chains — Walmart, Kroger, Target, Costco, and others — saw a combined $11.6 billion wiped from their market caps on the day the news broke.

This year, Prime was also integrated with Whole Foods: the $119 annual fee now extends free delivery to yet another corner of life.

Amazon also began a trial run of its cashierless convenience store, Amazon Go, in downtown Seattle. The technology is its calling card — but just like Whole Foods, what matters more is that it brings Amazon into the neighborhoods and commercial districts where people live.

Fresh produce and fruit are services consumers use every day, yet few of them have formed the habit of buying them online. In both China and the United States, the major e-commerce platforms tried for years to avoid heavy direct investment by funding independent fresh-food startups. Capital went in, traffic was delivered, costly cold-chain logistics were built — and still, the user habit never formed.

To cut the losses perishables suffer in the sales process, cold-chain logistics is not the biggest challenge. The speed of sales — turnover — is. If merchandise sits for months before it moves, even the best cold chain does nothing.

Amazon chose to get closer to the customer. Alibaba took a different route: use physical fresh-food stores to change how people see buying fresh food online. Eighteen months before Amazon's Whole Foods acquisition, it had already incubated Freshippo.

Order a book or a phone, and what you see online is essentially what you'll pull out of the box. But whether it's seafood or the more everyday fruit, vegetables, and meat, what consumers see on an e-commerce page and what they actually receive are often quite different.

The solution these companies have now landed on is to use physical stores to draw in people who currently buy fresh food only offline. The stores are browseable, they serve prepared food, and at the end you have to download the app. But when those same people don't feel like going out, they can pick up their phone and order instead. In under two years, 60% of Freshippo's orders now come from online.

Although their online businesses are solid and both have made offline advances, Alibaba and Amazon still have to answer the question Bezos once posed: a company cannot age along with its customers, or it is finished.

Amazon, which took off with the middle class in the early 2000s, acquired Whole Foods — itself another symbol of the middle class. Its online shopping experience still requires users to work through a fairly complex set of settings, a key reason its expansion outside the United States has gone nowhere — it leans too heavily on a user base familiar with an earlier generation of the internet.

Taobao, now 15 years old, has a new rival in China: Pinduoduo. Taobao and Tmall, which inevitably extract ever more profit from their platform, have been pushing a wave of merchants who can no longer afford their traffic costs — along with bargain-hunting new users — toward a younger competitor that doesn't yet need to turn a profit.

Sears took roughly 80 years to rise and fall. Walmart's arc has been only 40. In this more volatile world — where suspicion of big companies and big tech runs high everywhere — two companies now both around 20 years old: how much further can they go?