Clicks drive bricks

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The need for pharmacy to have a successful digital offering is more important than ever thanks to COVID-19 say Bruce Annabel and Mal Scrymgeour

In 1989 Mike Sendall was a manager at CERN in Geneva. He managed a certain Tim Berners-Lee. Sendall rather understated things when he called Berners-Lee’s idea to create what became known as the World Wide Web “a vague, but exciting proposal”. In the history of understating things, this would be up there with Alexander Graham Bell claiming “I might possibly be onto something here” when he invented the telephone.

To say that consumers shop differently in December 2020 to what they did in March 2020 is another understatement. Australian eCommerce grew 80% in the eight weeks after the COVID-19 pandemic was declared by the World Health Organisation. Health & Beauty peaked briefly at 150% before falling back to the 80% average. If digital was not part of your world before March 2020, it needs to be now.

Recovery and change

Australia has begun the recovery phase, which is heavily encouraged by the federal government and now driven by the Victorian economy re-opening. The recovery process is expected to work its way through 2021 and 2022, with next year being incredibly dependent on the transition from Job Keeper, and other support measures, to business firing up by employing people quickly thus taking the load from government.

However, it’s likely to be a bumpy road, particularly in regard to consumer behaviour.
There are many positives such as the rapid adoption of telehealth, low interest rates, availability of labour, a greater vaccination role and adoption of digital technology, which for many consumers will remain permanent!

Digital technology as a tool

But that doesn’t mean everyone should pile on to build online eCommerce transaction web sites. The critical aspect for traditional community pharmacy is to decide what innovative digital technology solutions should be adopted that help hold and attract patients to their bricks and mortar/‘offline’ pharmacies.
Accordingly it is important that we understand the nomenclature and differentiation between eCommerce and digital for pharmacies.

eCommerce = transactions.

This is a website business model that is clearly designed to fulfil consumers’ orders, with Amazon and Alibaba being the two big pure play online global examples of eCommerce.

  1. Fulfilment of an eCommerce offer can come in multiple forms. Here are three of the most common:
    • Click and Collect (which we recommend to most community pharmacies as it accentuates access and convenience for existing patients thus reducing possibility of defecting and involves only modest logistics).
    • Deliver, which we do not recommend to community pharmacies because it requires investment, a delay between ordering and receipt by the patient and strong logistics to be done well. An arrangement with a commercial logistics operator such as Australia Post can solve that problem for a fee, although many pharmacists wish to maintain control from the pharmacy to the patient’s hands, particularly if it’s a medicine.
    • Direct delivery to customers from your supplier or wholesaler, a good option, but with some serious logistics issues to resolve.
    2. Some pharmacies operate independent online pure play direct-to-consumer sales sites aiming to grow and generate profits via throughput rather than leverage a bricks and mortar/‘offline’ pharmacy offer. Very difficult to achieve success in such a crowded market dominated by massive range and low price competition.

Digital = showroom.

This is where we show our current and potential customers we wish to attract what we have on offer; it allows them to make an informed decision on whether to consider your ‘offline’ business as being one that suits their needs. It forms a critical part of the consumer journey.

Digital also refers to your presence on the web including your own website, apps, booking system, patient script management, medication adherence, membership management systems, information storage, online training, virtual conferencing and consulting, plus social media platforms such as Instagram, Facebook and Twitter. It refers to your entire customer digital footprint and customer connection.

Engagement with the patient on their terms

Today, the number one KPI pharmacies must measure is patient visits and patient growth, not script numbers. Certainly scripts remain vitally important for obvious reasons. But that KPI alone is now secondary because if the patient may be attracted away by competitors or a brilliant online system communicating that another pharmacy has something they want, even though you may have that service or product.

Competing for the customer and believing patients will choose you over others can no longer be assumed.

The consumer journey needs to be understood. We’ve got a simple model. To us, the journey goes in six steps:

1. Consider: A consumer considers what they need or has that need triggered. Let’s say a headache; the need is clearly for an analgesic.

2. Evaluate: A consumer considers not only the different brands of analgesics, but how efficacious they might be and also where to purchase and the speed of delivery. Today, this is where digital plays such a crucial role.

3. Buy: Then the consumer buys the product through whatever mechanism they decide is their preference. It could be via eCommerce, or it might not. A consumer with an urgent need for an analgesic will search for location and opening hours first because of the convenience hence time saved. Once purchased, they will obviously consume the product. That should be the end. It’s not.

4. Experience: The consumer then experiences your service, advice, the convenience or not of getting the product, the price, the product range and whether the product solved their problem.

5. Advocate: This is where a consumer tells others that they advocate you, your pharmacy, a professional service pharmacist and or the brand they have purchased. Word of mouth marketing is a marketers dream—it’s cheap and more powerful than any other medium.

6. Bond: This is the ultimate in marketing—where the consumer ignores others in favour of you, your pharmacy and the brands you carry. Also known as loyalty, or better still, the relevance of your offer to their needs. When consumers get to this stage, they drop the ‘evaluate’ part and just go straight to you.

Of course ‘digital’ concepts are impacting many aspects of a pharmacy’s back-of-house operations, including grappling with how to handle the paperless script with all the surrounding issues and headaches, interaction with suppliers and banner head office, reporting, engaging with GPs, transactions with government and so on. In addition many pharmacies have web sites, most of which don’t do a great deal, and social media sites.

But in the meantime for pharmacies, having a digital offer (a showroom) is vital because of the fast growth in 2020 and future activity.

Global statistics gathering organisation reports the following for Australia:

  • eCommerce in 2020 = $37.3bn
  • Ranked 11th in the world by spend
  • User penetration of 71.7%
  • Average revenue per user (ARPU) is $1,490
  • Fashion is the biggest segment at US$5.2bn and Food and Personal Care is US$9.8bn

“The message is simple, if businesses want to grow they have to grow their digital offering. New research from KPMG finds that digital offerings and operations will be responsible for 80% of growth in business revenue in the next three years.”1

That’s because, according to McKinsey, “the COVID-19 crisis is likely to significantly accelerate the shift to digital and fundamentally shake up the business landscape”.

Digital doesn’t mean a physical store is redundant, quite the opposite. Regard it is a crucial part in the consumer journey, but it needs to be supported by digital. They are vital parts of the same equation. Without bricks and mortar your digital platform won’t be optimised.

Without a strong digital presence your pharmacy won’t work as well as it could either. Put simply, clicks drive bricks.

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1 Comment

  1. Paul Sapardanis

    During the Covid lockdowns of 2020 deliveries to patients increased significantly. A 6cpa payment was introduced and is still payable. This needs to be removed immediately!!! Deliveries will create a lesser need for an interaction with the local pharmacy as this service can be easily provided by a single centralized pharmacy. We quite rightly opposed 2 month supply I wonder if we do the same with delivery services.

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