Since deregulation in Germany in 2004, pharmaceuticals count as one of the newest growth drivers of e-commerce. Growth was 22% for last year alone. In the first part of his guest post, Matthias Storch, founder and CEO of the medicine comparison engine Apomio, gave an overview on the current market developments. In this second part, he illustrates the various approaches and the optimization potential.
A large market with many participants and several types of approaches
Besides brick and mortar pharmacies, other competitors are also vying for market share. For a while now, contenders such as health and beauty retailers* are competing in the pharmaceutical space.
Case in point: The German health and beauty retail chain dm has been cooperating for a while with the Dutch pharmacy company Europa Apothek Venlo. Until just recently, the cooperation mainly involved the distribution of catalogues in the dm stores.
Since the summer of 2008 however, it has been possible in selected dm stores to order prescription-free products from a terminal and then pick up the order at that location. Minimal integration can be found on the dm web pages, which consists only of some web links to the Europa Apothek Venlo web site.
Besides dm, Schlecker, another German retail chain, has founded its own Dutch-based online pharmacy called vitalsana.
For some time already, the mail-order and retail heavyweights have also been fiddling around, trying to get some measure of integration with online pharmacies into their product palette. Along those lines, notable business arrangements have been closed already: Quelle with apotheke.biz, Netto with the Czech Republic’s mail-order firm volksversand.de, plus.de with kleinepreise.de and Neckermann with medpex.de.
The integration of online pharmacies in the various offerings of the firms are mostly bland and halfhearted.
Due to the several brick and mortar shops of the big retailers, a new pharmacy chain would be a logical consequence. However the European Court of Justice’s ruling in May of 2009 against Doc Morris will insure that such pharmacy chains remain forbidden in Germany.
Specialization of small pharmacies
There is going to be a consolidation in the next years amongst the many small retail mail-order pharmacies. Accompanying this, new concepts, processes and an improvement of existing models will be expected.
Already today mail-order pharmacies make a third of their revenues from just 100 popular products. Fixed location pharmacies need 200 different products for the same results.
Source (German): IMS Health (PDF)
The specialization of a pharmacy on a niche topic or a particular product group will play a critical role in its future survival chances.
Deployment and/or introduction of analysis tools
The introduction of analysis and optimization tools, as well as the simplification of processes, are important factors for the continued growth of a mail-order pharmaceutical company.
Even today, several pharmacies are not in the position to measure their conversion rates and as a result spend too much cash on senseless promotions and traffic drivers.
In addition, customer service and fast delivery are often foreign concepts - hotlines are either not manned or orders are only partially delivered.
The pharmacy market is still in its infancy. There is enormous potential just with the optimization of the shipping process and shop front-end, as well as the analysis of customer, product and order data.
More on this topic can be found in the first part of this guest post, where Apomio founder Matthias Storch describes the growing market for online pharmacies.
Current information on the acceptance of online pharmacies can be found in the German language in the Kundenmonitor Deutschland 2009, which has investigated the customer satisfaction of mail-order pharmacy companies (PDF) between March and July.
* Typical for the German market, the pharmaceutical portion of a US style drugstore would be a small, independent business, traditionally having no relation to other retailers who might specialize in generic health and beauty products.
Originally posted in German by Matthias Storch for excitingcommerce.de, adapted for excitingcommerce.com by Jason Soo.
The online pharmacy market is one of the fastest growing markets, which would probably explain why it the most targeted to exploit. Between horrible phishing schemes, bogus junk email, and taking advantage of search engine paid advertising, these rogue pharmacies have given a bad name to all the legitimate ones online.
Posted by: online foreign pharmacies | 08/31/2009 at 11:17 PM
Even today, several pharmacies are not in the position to measure their conversion rates and as a result spend too much cash on senseless promotions and traffic drivers.
Posted by: prescription drug | 09/12/2009 at 02:27 PM
Hundreds of prescription drugs are available to buy illegally over the internet, according to a report by monitoring company Envisional.
Posted by: PharmacyHealthMedical | 09/25/2009 at 06:26 AM
In future people will use only online pharmacies for buying drugs.
Posted by: UK pharmacy | 01/10/2010 at 11:00 AM