Multi-channel Pharmacy Shoppers targeted as Europe enters the Digital Battle Ground - Major new Market Study Shows
There are more consumers in Europe who shop in pharmacies who regularly switch between online shopping and visits to traditional pharmacies than use Internet pharmacies exclusively. Pharmacy shoppers are principally attracted to mail order and Internet pharmacies by discounts. Yet, convenience of ordering at home and wide ranges of available products from online pharmacies are among the other reasons given that stand out. Ordering online and 'picking up in store' is becoming a key growth driver in digital retailing across Europe's main healthcare markets and indeed is much favoured by Spanish pharmacy shoppers.
More women than men use Internet pharmacies in Europe and this is reflected in the products they buy. For example Spanish and British online pharmacy shoppers are twice as likely to purchase cosmetics or skincare as non-prescription medicines. In Belgium the leading online pharmacy claims 70% of its shoppers are female.
These are among the findings of a major study published this month - Mail Order and Internet Pharmacy in Europe - Entering the Digital Battleground from James Dudley Management.
356 million Internet users live in the 17 European countries covered in the Dudley report. There are around 7,000 authorised pharmacy e-commerce websites some of which operate as small scale independent pharmacy based Internet businesses, others are larger cross border 'pure play' mail order pharmacies and many are integrated into the multi-channel digital strategies of leading pharmacy chains. Yet among the major innovations challenging 'pure play' mail order and Internet pharmacies sweeping in from Drugstore chains in North America is the concept of a multi-channel seamless shopping experience. This they call omni-channel retailing and this is the new digital battle ground.
The new Dudley market report highlights a number of factors driving both change and growth of mail order and Internet pharmacy in Europe's main markets. These are listed as follows:
- The rapid growth of e-commerce in general as access to the Internet increases and consumers become increasingly more confident in making transactions online.
- Regulatory trends across the European region have had their impact on both the shape of the mail order and Internet environment and the speed of its development
- European measures to improve consumer safety, security and trust in mail order and Internet Pharmacies are now largely in place
- Consolidation of 'pure play' mail order and Internet pharmacy ownership in Germany and Austria
- The response of retail pharmacy chains and other organised retail groupings to the challenges posed by 'pure play' mail order and Internet pharmacies
- The growth of pharmacy e-commerce in newly regulated European States since 2012 i.e. Austria, France, and Spain
- The switch of the new retail pharmacy chains into e-commerce in Sweden - based on published intentions it is expected that most pharmacy chains will be multi channel entities by the end of 2015.
In Europe mail order pharmacies are permitted to offer non-prescription medicines in all EU member States, Norway and to a limited extent in Switzerland. Distance selling of prescription medicines is permitted in Denmark, Germany, Netherlands, Norway, Sweden and the United Kingdom and under limited conditions in Finland and Switzerland.
The development of 'pure play' mail order and Internet pharmacies in Germany is down to the absence of large wholly owned chains of pharmacies. Such enterprises are not permitted in Germany. Yet, the major e-pharmacy players have entered partnerships with the leading mass market druggist and grocery chains to provide pharmacy services.
The Swiss company Zur Rose for example is Europe's largest 'pure-play' mail order pharmacy operator with mail order businesses in Germany, Switzerland and Austria. Today the company has over 40% share of the Swiss mail order pharmacy market. As a result of the company's acquisition of DocMorris in 2012 from Celesio it added 29% market share to an existing share of 5% in Germany. Zur Rose is one of several 'pure play' mail order pharmacy companies that operate 'pickup pharmacy services' in partnership with mass market retailers in Germany and Austria. This includes a deal with Germany's largest drug-market chain dm in both Germany and Austria.
'Pure play' e-commerce vendors have built market share through competitive pricing and 'big data'. They use their data capture resources and analytical skills to construct an in depth knowledge of their loyal customers. This they use to meet and respond to their customers' demands in terms of product and service experiences and in tailoring communications to their shoppers. These elements have not been lost on the major drugstore chains in the USA and Britain.
"Those retailers at the front edge of implementing the omni-channel concept, such as Boots the Chemist in the United Kingdom, recognise that consumer demand and expectations have to be fully met by the retail offer, a seamless shopping experience and match these to effective logistics. Hence information about their customers, their expectations and needs is seen as critical to success", says James Dudley author of the report.
The Dudley report finds that consumers who either shop exclusively or mix online shopping with traditional pharmacies are principally attracted by discounts. For example 46% of British online pharmacy shoppers gave cheaper prices as a main reason to buy online, as did 51% in Germany, 59% in Austria and 51% in Spain.
Convenience of ordering at home and wide ranges of available products from online pharmacies are among the other reasons given that stand out.
Hence 'pure play' pharmacies make discounting, ordering convenience and large ranges of available products their strengths. However, these strengths are relatively fragile in markets where, as well as integrating e-commerce into multi-channel strategies, the major retail chains can easily match discounts offered by the digital players. Furthermore, multi-channel pharmacy retailers can provide in store counselling and advice as well giving customers shopping online the options of home delivery or 'pick up in store'.
The response of retail pharmacy chains and other organised retail groupings to the challenges posed by 'pure play' mail order and Internet pharmacies is a factor influencing the development of the digital sector. Indeed, the slowdown in 'pure play' mail order pharmacies in the USA, Australia and United Kingdom is due at least in part to multi-channel strategies being adopted by major retail drugstore and pharmacy chains.
By integrating digital elements into its traditional 'bricks and mortar' into its offer a pharmacy chain it not only competes with the strengths of its 'pure pay' rivals, it can attack their weaknesses. What is more, the combination of traditional pharmacy and online services reaches out to consumers who use both traditional 'bricks and mortar' outlets and online services - the so called multi-channel shopper segments.
In conclusion the gap between 'pure play' and 'bricks and mortar' businesses is closing in favour of retail chains that are integrating both e-commerce and traditional retailing into a multi-channel strategy. This will disadvantage 'pure play mail order and Internet pharmacies in markets where retail chains are dominant. These markets currently include the United Kingdom, the Netherlands, Norway and Poland. In the next couple of years Belgium, Czech Republic and Sweden could also be included.
Information for Editors
Mail Order and Internet Pharmacy in Europe - the 2015 edition - Entering the Digital Battle Ground is the third edition a major study covering 17 European States plus a chapter describing the progress of online pharmacy in the USA - markets studied include Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Slovak Republic, Spain, Sweden, Switzerland and the United Kingdom
Publication Date November 2014
In this market report: Internet pharmacy, mail order, cosmetics, skincare, pharmaceutical distribution channels, drugstore chains, Europe, distance selling regulations, omni-channel retailing, trends, multi-channel pharmacy, Chemist shops in Britain, e-commerce, online healthcare, market report. Pharmacy shoppers, source of purchase, buying loyalties.