drugstore.com: A Very Healthy Way to Shop
Brand Name: Drugstore.com
Product Type or Description: On-line drugstores
Category for this Entry: General Retail/Etail
In 1999, a wide range of competitors were converging on the online drugstore category. World-class brands like Wal-Mart, CVS, and Walgreens brought experience but lacked agility and technological expertise; VC-backed upstarts like drugstore.com, PlanetRx, and Mothernature.com joined the fray without any distinguishable advantages. The reason?
- Consumers spend $165 billion on drugstore items each year1
The goal was clear, but drugstore.com faced serious challenges.
- drugstore.com was barely up and running. We held no proprietary benefits: pricing, technology, distribution, even service were at parity. We couldn't focus on our pharmacy the core driver for traditional drugstores as it was barely functioning and took insurance from a mere 30% of the nation's providers. Attacking or lampooning industry giants wasn't an option because we had just cut a life-sustaining deal with Rite Aid. Perhaps worst of all, Forrester reported that 'replenishment' our core business was the third phase of adoption for web shoppers. The heart of our market wasn't expected to materialize for over three years2
- Our aggressive $3OMM marketing budget suddenly felt small. An annualized $7 billion had been spent on dot-corn advertising in 1999 creating unprecedented cross-category clutter3. The noise was deafening. In addition, our top competitors were dialing up spending at a rapid pace: PlanetRx was projected to outspend us by $2OMM; CVS added an incremental $1OMM to support its dot-corn property.4
- Despite our simple name, people didn't understand what drugstore.com did. Consumers understood the basics of buying books online, but the idea 'drugstore.com' raised more questions than it answered. What could they get there? Pens? Playtex? Prozac? Could they trust us? Would it come on time? We realized early on that marketing had some heavy lifting to do. Attention-getting antics would be no substitute for basic education.