January 22, 2004, 12:00 AM

By mining its customers’ shopping behavior, drugstore figures how to expand

When drugstore.com CEO Kal Raman designed drugstore’s e-commerce platform in 1999, he built it to scale up to $1 billion in sales. With nearly $250 million in net sales last year, drugstore is using the platform’s site analytics to help drive growth.

When drugstore.com CEO and former Wal-Mart tech guru Kal Raman designed drugstore’s e-commerce platform inn 1999, he built it to scale up to $1 billion in sales. With nearly $250 million in net sales last year, drugstore is using that platform’s in-house site analytics to help drive steady growth, Randy Nargi, senior director of customer acquisition, tells Internet Retailer.

Drugstore is expanding both its customer base and its number of product categories. During the fourth quarter ended Dec. 31, it brought in 288,000 new customers. For the full year, it increased its average net sales per order by 7%, to $76 from $71. Drugstore attributed most of the increase in sales-per-order to non-pharmacy sales, including gifts and other items not traditionally among its strongest sellers.

Nargi says drugstore’s ability to analyze its customers’ shopping hsitory goes a long way toward expanding order size and luring new customers by increasing its ability to recommend additional products that shoppers might not normally think of finding at drugstore. "Our challenge is exposing customers who come in for some specific product to other products they might like," Nargi says. "We can’t read someone’s mind, but we can analyze other customers’ activity to see what they put in their shopping baskets."

For example, he adds, by analyzing what products customers purchased along with one of drugstore’s recent hot-sellers, the SonicCare electric toothbrush, it has been able to increase some orders by making product recommendations appear on the same page the SonicCare display. In turn, through marketing campaigns and word-of-mouth, more consumers are learning that drugstore offers more than pharmaceutical products, Nargi says.

He adds that drugstore is also integrating its in-house analytics system with a Coremetrics analytics system at its recently acquired VisionDirect.com. Among other things, the integrated analytics will help drugstore better understand how customers use both VisionDirect.com and drugstore.com, enabling it to make site improvements to improve the overall shopping experience.

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