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ECommerceTimes.com

Net Pharmacy Race Remains Tight

By Clare Saliba
Dec 8, 2000 11:48 AM PT

Online pharmacy Drugstore.com continues to narrowly outpace niche competitor PlanetRx (now XMediapartners.com) and retains the No. 1 spot among Internet health retailers, according to new rankings released by Forrester Research.

Net Pharmacy Race Remains Tight

Although researchers surveyed a number of e-tailers in the category, they concluded that the contest essentially boiled down to a "two-horse race."

Drugstore.com earned a 66.81 rating in Forrester's "PowerRankings" index, which measures company performance on a 100-point scale across a host of different categories, while PlanetRX.com came in a close second with a 64.46 rating.

By comparison, Forrester said, rivals VitaminShoppe.com and WebRX.com lagged far behind with scores of 57.94 and 51.63 respectively.

Amazon Boost

Bellvue, Washington-based Drugstore.com -- which offers health, beauty and pharmacy products -- has taken the strategy of building on alliances with well-known companies such as Amazon.com, Rite Aid Corp., General Nutrition Companies and WellPoint Health Networks.

Drugstore.com nearly swept all of Forrester's breakdowns by category. According to the research firm, Drugstore.com ranked first in cost, customer service, transaction efficiency and shopper-friendly features. The site got high marks for its customer reviews and allowing customers to cancel their unshipped orders online.

However, Forrester warned that the Drugstore.com Web site still has some "rough edges." The PowerRankings report commented on the site's confusing checkout process and the imposition of a fee for customers to order out-of-stock items.

PlanetRX.com Places

For its part, runner-up PlanetRX.com gained points for delivery and usability features. Forrester noted that the e-tailer offered the quickest customer service replies.

Like Drugstore.com, Forrester said that the PlanetRX.com site has some drawbacks, including the lack of a 24-hour call center.

Lagging Behind

The health retailers that lagged behind got low scores across the board.

"Slow checkout and inconsistent customer service did in VitaminShoppe.com, while WebRX.com no doubt is struggling as it tries to integrate a host of sites including More.com, Vitamins.com, and HealthCentralRX.com," said Forrester senior analyst Tom Rhinelander.

Power Play

To compile its PowerRankings of the top U.S.-based e-commerce sites, Forrester asks consumers about their online transactions and experiences, and also conducts independent Web shopping tests. Approximately 20,000 online buyers were polled for the latest health e-tailer survey.

Drugstore.com's top placement in the index should come as a welcome dose of good news for the e-tailer. In October, it laid off 60 employees, which amounted to roughly 10 percent of its workforce.

At the time, the company said the cutbacks were part of its plan to reduce operating expenses and achieve sustainable growth. In its recent, third-quarter financial report, the firm said its sales were US$26.5 million, representing a 118 percent increase over the same quarter last year.

In addition, Drugstore.com said it picked up 190,000 customers in the quarter and predicted fourth-quarter sales would meet with analysts' forecasts.

Sector Shakeout

The health and beauty sector has struggled to gain a foothold in the e-commerce arena. Just last month, cosmetics and beauty supply e-tailer Beautyjungle.com shuttered its operations. Other health and beauty firms that have closed include Eve.com, Beauty.com and Gloss.com.

Industry analysts say the shutdowns are not a surprise. In fact, a recent report from market research firm InsightExpress called Internet pharmacies a "prescription for failure."

The InsightExpress study found that 93 percent of online consumers had never made a purchase from an online drugstore and that over three-quarters had never even visited an online drugstore site. Researchers said the complicated and sensitive nature of buying pharmaceuticals precludes widespread consumer acceptance of making such purchases online.

On the positive side, a separate report issued by Forrester earlier this year said online pharmacies could improve sales by implementing interactive features, such as compliance programs that send customers e-mail reminders about their prescriptions. Forrester also predicted in that report that pure-play pharmacies will begin to partner with their physical counterparts in order to deepen their market reach.


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