The web is ‘live’ new location for world’s largest pharmacy
The web is live’ new location for world’s largest pharmacy
By DON LONG
Healthcare InfoTech Managing Editor
The world’s largest drugstore was launched Wednesday or rather, plugged in with a boost from what has become one of the world’s biggest booksellers.
Offering what it calls "a new source for health, beauty and wellness products," drugstore.com at www.drugstore.com initially will offer more than 15,000 healthcare products, personal services and educational resources and pharmaceutical sales, and do it 24 hours a day, seven days a week.
Plus, it gets the financial backing and e-commerce track record of Amazon.com (Seattle), which has taken a 46% stake in the new company.
"We’re excited about drugstore.com," said Amazon.com founder and CEO Jeff Bezos in a statement. "Drugstore.com shares our passion for empowering customers and giving them the best possible experience."
Drugstore.com is headed by Peter Neupert as president and CEO, and he echoed Bezos’ message of empowerment, saying the company’s mission "is to enable customers to educate themselves and to fulfill all their health, beauty and wellness needs online." By making the process of finding and purchasing products easier, he said, the site "gives time and control back to customers . . ."
The pharmacy side of the site will be headed by Andy Stergachis, RPh, PhD, former chair of the University of Washington Department of Pharmacy, and it will be staffed by licensed pharmacists who not only will fill orders but also will provide phone or e-mail counseling and utilization reviews.
The new company’s statement of marketing strategies emphasized its ensuring the privacy of transactions and other customer information via secure server technology, and the company will share or sell no personal data.
Customers can use the pharmacy service by mailing in their prescriptions or having them transferred or phoned in via a toll-free number.
Drugstore.com’s home page will provide interface tools to access five departments: Health, beauty, wellness, personal care and pharmacy.
Stephen Fitzgibbons, healthcare information services analyst for Hambrecht & Quist (San Francisco), was very positive about the alliance, calling it "a good synergistic relationship."
Drugstore. Com will get significant benefit from the e-commerce expertise developed by Amazon, he said. "The challenge will be to attract new customers," but with a presence on Amazon.com’s site, "the eyeballs on that that site will give [drugstore.com] plenty of traffic," he said. Conversely, Amazon will benefit from greater Amazon.com product breadth, Fitzgibbons told Healthcare InfoTech.
Drugstore.com is offering the kind of product information and pharmaceutical/beauty staff advice obtainable in a traditional drugstore, but it also will provide several features a shopper is unlikely to find there or, if available, not utilize. These include: a "shopping advisor" that uses key questions to interactively define a customer’s product needs; a "personal shopping list" that is automatically updated after each purchase or added to by the customer for future reference; a "shopping bag" that keeps a record of past purchases; and "buy" reminders flagging regular and periodic purchases.
Drugstore.com’s most popular feature is likely be its I-Click shopping system; that is, the ability to make a purchase with the click of an icon, thus circumventing check-out line frustrations. But that feature also may be the system's largest drawback: Will customers be willing to wait several days for product delivery?
"Obviously, there’s going to a challenge on that front," Fitzgibbon said. "Initially, their market won’t be those with same-day needs. But over time they may find ways to cater to the same-day acute market, and it will be interesting to see if that's something they can deal with."
Additionally, customers will have to pay a $4.95 shipping charge for orders of less than $75, but this will likely be more than offset by Amazon.com-like product discounts, sometimes as high as 40%.
Perhaps the major question to be answered is whether drugstore.com can negotiate this country’s convoluted insurance/payor systems. Neupert reported up to a dozen health plans already having approved reimbursements through the drugstore.com system, and he is pursuing many others. But the ultimate success of the venture may depend on how well these arrangements actually work for consumers.
In announcing his company’s large but minority stake in drugstore.com, Bezos did not reveal the value of the investment. Whatever the price, it is unlikely to put much of a dent in Amazon’s current capital. In late January, the company raised $1.25 billion in what the Wall Street Journal termed a "junk bond offering," and, at a press conference announcing this week’s deal, Bezos indicated that several similar consumer-oriented acquisitions loom just over the horizon for his company.
Meanwhile, drugstore.com has been busily filling its own cash pool estimated thus far at around $60 million with its investors, including Kleiner Perkins Caulfield & Byers, a venture capital firm that backed Amazon early on.
Besides its relationship with various healthcare payor systems and Amazon, drugstore.com reported additional strategic relationships with several Internet providers, including America Online, Yahoo! and Excite, via promotional offerings and site links.
Other relationships include those with OnHealth, and Women.com, health information networks focused on products and services for women; ThirdAge, a primary 45-and-older on-line community; and Medscape, a medical site focused on the professional community.
Following drugstore.com’s going live, BancBoston Robertson Stephens (San Francisco) upgraded Amazon.com from "Buy" to "Strong Buy." And the company issued a statement from two of its analysts, Keith Benjamin and Lauren Levitan, saying that the investment "represents Amazon’s first move into an exciting new product category and demonstrates its ability to secure prime new tenants.
"The growth potential for online sales of consumable products is tremendous," their statement went on. "We believe Amazon’s announcement points to a big opportunity to generate lead-fee revenues and shows the potential profitability of its business model."
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