MAY,Edition # 26, 2001

We have all heard this question thrown around at pharmacy conferences, by new-age business gurus, “dot-com” companies that no longer exist, and our accountants.
It is very easy to dismiss e-commerce as being a fad or an unviable retail option for get rich quick merchants.
We can also enter the professional and ethical debate about dispensing medications via the internet and mail order.
The reality is that e-commerce as a pure play was always destined to fail. Demands of retail customers ensure that a physical presence must be available, as the market is still too immature to accept otherwise.
So how do we address the question?
Unfortunately the customer is not going to word it this way, but more probably like “ Can you match this price?” or “What is your best price on this product” or “ I bought this from Pharmacy Direct at $5, how much is your price?”
If you are getting asked these questions, consider yourself lucky, as the majority of our customers will not even approach us.
Unfortunately the current perception of the online shopper is that products are less expensive on the internet. Coupled with this is the market dominance of Pharmacy Direct which dictates the benchmark for pricing via mail order and internet.
We are now faced with the dilemna of deciding on price matching.
We must consider whether it is worth matching the price for the customer to ensure that we retain whatever business they may generate that is not price dependent. (i.e. NHS prescriptions etc)
If we say no, we will have lost their business.
Some may say that this type of customer is not worth having, as they will always be a problem.
If we match the price, do we open Pandora’s box?
Will this customer always expect prices to be matched and will he tell his mates? What if we continue to match these prices, will it cause our gross margins to slide and subsequently our net profit and more importantly, the value of our pharmacy? Does the wholesaler who secures your loan now become concerned that the margins are no longer 35%, but more like 30% but with no substantial increase in turnover to justify a lower percentage.
The solution is clouded.
Do we wait for our wholesaler to create the e-commerce solution we are looking for, or better still, the Pharmacy Guild may solve the magical question.
Do we expect a banner group to create a solution that in essence will take business away from the members who are already paying ever-increasing fees to fly their flag?
If they do not drive with price, it will be a wasted exercise.
If they do, how will we justify to our customers that have been walking through our door for 15 years that all new customers who shop online will get better prices.
The e-commerce solution to answer these problems is not on the horizon, but one must develop a definite strategy to answer this question in the near future.
Price advantage on the internet will not be sustained.
Eventually the internet will offer convenience and technology benefits to customers.
The bad news is that a lot of us may suffer until this shift occurs, and by then, it may be too late.
end

Previous Article

Next Article

The comments and views expressed in the above article are those of the author and no other. The author welcomes any comment and interaction that may result from this and future articles, and can be contacted directly at brett@epharmacy.com.au

* If you have found value in this newsletter, please share it with a friend, or alternatively, encourage a colleague to subscribe at neilj@computachem.com.au .
* Don't forget to advise of any change in your e-mail address so that your subscription may be continued without interruption.
* Letters to the editor are encouraged, or if you have material you would like published, please forward to the editor.
* You are invited to visit the Computachem web site at http://www.computachem.com.au .
* Any interested persons who would like to receive this free newsletter on their desktop each fortnight, please send a single word e-mail "Subscribe" to neilj@computachem.com.au .
* Looking for an organised reference site for medical or other references? Why not try (and bookmark) the Computachem Interweb Directory , for an easily accessed range of medical and pharmacy links, plus a host of pharmacy relevant links.
The directory also contains a very fast search engine for Internet enquiries

Back to Article Index
Article Archive 2000
Article Archive 2001
Home