In its second-largest acquisition, Amazon buys the company for $970 million.
Remember the pre-chain drugstores with their soda fountain, colognes and toilet waters, warped wooden floors-and in the back, the high counter and stern-visaged guy in a smock? Drugstore.com has it all-with the exception of egg creams that squirt from your disk drive.
Unlike at some other drug sites, users can search by product name. So, remembering an article I read about kicky summery fragrances, I search on DKNY. Nothing. Donna Karan is apparently not a vendor, but the sellers of over 20,000 other items are.
My mind wanders to the quirky cosmetic company called Philosophy-one click takes me to an interview with the founder who extols her products that smell like cinnamon buns and caramel corn.
Following the bloodbath on the NASDAQ, some online beauty companies have been showing worry lines. Apparently, selling cosmetics only has proven a confining niche.
The problem for pharmacy sites, says Rachel Terrace, health analyst with Jupiter Communications, New York, is that they cannot sell via mail order at co-pay prices without involving a pharmacy benefit manager. Drugstore.com struck a deal with the second biggest pharmacy benefits manager-PCS-which had a deal with pharmacy chain Rite-Aid (Drugstore.com also has a deal with Rite-Aid). Now, after being swallowed by smaller Advance Paradigm, PCS takes its successful suitor’s name, which must decide whether to cut a deal with Drugstore.com. “Advance Paradigm would be smart to strike a deal with Drugstore.com,” Terrace says. “Their own online entity is not even close to Drugstore.com’s.”
As the site stands, customers can compare drug prices and submit written prescriptions by mail. Doctors can call in or fax orders. Drugstore.com’s operation is a Verified Internet Pharmacy Practice Site, which means that if you’re looking for a quick hit of Viagra, you can keep surfing. Pharmacists are available around the clock to answer questions.
Terrace points out that Drugstore.com is affiliated with Amazon.com and has inherited Amazon’s handy one-click technology. “Drugstore.com also has that great shopping cart that’s visible at all times,” she adds.
The cart, according to Judith McGarry, Drugstore.com’s vice president of strategy, partnerships and relationships, was part of a massive site design in March. Across the top of the homepage are clickables offering products for not only beauty and health, but wellness, personal care, and specialties.
“We wanted to make more strategic use of the real estate,” McGarry says. “People like certain items to be predictable and in the same place every time. Security information, for instance, is always on the left-hand side.”
The company also beefed up written content under its Get Smart buttons, which stay on the far right, but as you dive deeper, you get more detailed info, referring specifically to the part of the site being viewed. “If you go to cough medicine,” McGarry explains, “you get useful content about cough medicines, but if you go to the children’s cough medicine section and click on Get Smart, you get information about children’s flu shots.”
In light of recent findings that pure Internet plays might be at a disadvantage against clicks-and-bricks companies, McGarry promotes the company’s link to Rite-Aid. “You need to offer online ordering and local pickup,” she says.
She insists that online companies such as Drugstore.com offer more capabilities that help consumers than the corner store. “You may stroll the aisles, but you won’t find the information there you need to make a decision,” she says.
“They have so many SKUs,” says analyst Terrace. “Multiple times more than a store could hold.” (No DKNY, but why be mean?) People must appreciate the variety and the treatment they receive at a high-tech pharmacy. Despite the horrors of NASDAQ, traffic has doubled since January. “In the last quarter, half were repeat customers,” McGarry says.
Jean Lawrence is a feelance writer based in Chandler, Ariz.