The Online Drugstore Industry

By

Kyriakos LeonidouLinda Moya

Jeff PanyJuan Pulgarin

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Major Players in Online Drugstores

PlanetRxhttp://www.planetrx.com

Drug Storehttp://www.drugstore.com

AARP http://www.rpspharmacy.com

Family Medshttp://www.familymeds.com

Advance Rxhttp://www.advancerx.com

Pharmacy Homehttp://www.homepharmacy.com/

Drug Emporiumhttps://www.drugemporium.com/

CVShttp://www.cvs.com http://www.soma.com

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Two Sample Front Pages

• Low price focus• Mass market• Product oriented

• Community focus• Targeted market• Relaxed presentation

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Online Drugstore Basics• For the most part online stores carry all the products

that customers would find at a brick and mortar drugstore or pharmacy

• Most drugstores demand registration before any purchase can be made– Home Pharmacy does not, however it does not sell

prescription drugs

• Consumer can shop at any time and any where as long as they have access to a web interface

• All online stores have virtual shopping carts, delivery options and support the use of credit cards

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Two Sample Signup Pages

• Address required at check-out

• Address required at registration

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Two Sample Drugstore Displays

• Minimal layout

• Extensive use of product images

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Online Drugstore Customers• Who are the targeted customers?

– Most online drugstores target the general public• e.g. Drugstore and DrugEmporium

– Some focus on a specific consumer profile• e.g. The AARP Pharmacy Service focuses on elderly/retired

people

– Other online drugstores target customers with very specific needs for specialized products

• e.g. Cyber Medical Group targets consumers of Viagra

• What is a general profile of the active market?– Affluent, upscale, married women who purchase

primarily healthcare products

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Customer Acquisition Strategies• How do they attract customers?

– Affiliate programs (DrugStore $5 - $20, PlanetRx $5 - $15, CVS 15% of the sales of selected products (not pharmaceuticals))

– Group affiliation (Rite-Aid, GNC and DrugStore)

– Physical presence (CVS, DrugEmporium)

– Maintain visibility on top search engines (all)

– Word of mouth (all)

– Direct mail (some)

– Promotions (e.g. $1000 giveaways (DrugEmporium))

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Online Appeal• Drugstore related products delivered without

having to leave home• 24-hour shopping• Discrete shopping (avoid the “embarrassment”

factor associated with certain products)• Higher product availability• Greater convenience

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Customer Retention Strategies• Customization/Personalization (e.g. PlanetRx)• Maintain customer profile

– Shopping history (e.g. PlanetRx, AdvanceRx)– Medical history (e.g. DrugEmporium)– Shipping information (e.g. Family Meds, AARP)– Credit card information (e.g. DrugStore)– Order status (e.g. PlanetRx)– Prescription refills (e.g. CVS)

• “1-click” shopping (e.g. DrugStore)• Reminders for purchases made on a regular basis

(e.g. DrugStore)

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Customer Retention Strategies• Online medical consulting (e.g. DrugEmporium)• Product recommendations based on diseases (e.g. Family

Meds)• Community chat room for health topics with periodic

special guests (e.g. PlanetRx)• E-mail subscription to health issue articles (e.g. PlanetRx,

AdvanceRx)• Customer choice – recommends product alternatives (e.g.

DrugEmporium)• Convincing privacy policy for personal information (e.g.

Home Pharmacy)

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Online Drugstore Issues

July 30, 1999 WASHINGTON - In a stunning testimony this morning before the Oversight

and Investigations Subcommittee, investigative TV journalists explained how a 7-year-old child, a man dead for 24 years, and a neutered cat ordered drugs over the

internet.

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Online Drugstore Issues• Ensuring a medical prescription submitted is valid!

• Impact of FDA proposed regulation policies – Proposal to require that each Internet pharmacy provide consumers with

information about the web site's operator and evidence of compliance with federal and state laws

• Ensuring confidential consumer health records • Correct, timely prescription drug order fulfillment • Crowded sector – shakeout likely to occur

– 400 and growing as of July, 1999

• Customers want to use their insurance to pay• Encroaching on turf of PBMs

– “middlemen” between drugstores and health insurers– PBMs handle mail-order prescriptions, view web as logical extension of

what has been exclusively their domain

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Online DrugStore Trends • Partner for power

– Amazon.com investment in DrugStore, permanent tab– Rite-Aid online presence solely through Drugstore– PlanetRx – exclusive online drugstore for managed-care provider CCN

• Partner with healthcare information sites– Healtheon and CVS – advertising, services for each other– CVS sole drugstore promoted on the WebMD site

• Partner with PBMs– “middlemen” between drugstores and health insurers– "The online pharmacies went ahead full steam and ran straight into a

wall," says Forrester Research analyst Evie Black Dykema. "That wall's name was insurance."

– CVS and Medco (#1 PBM)– PlanetRx and Express Scripts (#3 PBM)