The Online Drugstore Industry

1
The Online Drugstore Industry

• By
• Kyriakos Leonidou
• Linda Moya
• Jeff Pany
• Juan Pulgarin

2
Major Players in Online Drugstores
PlanetRx http//www.planetrx.com Drug Store http//www.drugstore.com
AARP http//www.rpspharmacy.com Family Meds http//www.familymeds.com
Advance Rx http//www.advancerx.com Pharmacy Home http//www.homepharmacy.com/
Drug Emporium https//www.drugemporium.com/ CVS http//www.cvs.com http//www.soma.com
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Two Sample Front Pages
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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
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Two Sample Drugstore Displays
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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

8
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

10
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)

12
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.

13
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)