Digital Healthcare | Digital Commerce 360 https://www.digitalcommerce360.com/topic/digital-healthcare/ Your source for ecommerce news, analysis and research Mon, 16 Oct 2023 21:01:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.3.2 https://www.digitalcommerce360.com/wp-content/uploads/2022/10/cropped-2022-DC360-favicon-d-32x32.png Digital Healthcare | Digital Commerce 360 https://www.digitalcommerce360.com/topic/digital-healthcare/ 32 32 Walgreens slashes outlook as pandemic-driven demand fades https://www.digitalcommerce360.com/2023/06/27/walgreens-slashes-outlook-as-pandemic-driven-demand-fades/ Tue, 27 Jun 2023 15:06:17 +0000 https://www.digitalcommerce360.com/?p=1047428 Walgreens Boots Alliance Inc. slashed its fiscal-year earnings forecast, hurt by fading pandemic demand and a slow transition deeper into health care. Annual adjusted earnings will be $4 to $4.05 a share, the Deerfield, Illinois-based company said Tuesday in a statement, down from the earlier range of $4.45 to $4.65. Adjusted earnings for the third-quarter […]

The post Walgreens slashes outlook as pandemic-driven demand fades appeared first on Digital Commerce 360.

]]>
Walgreens Boots Alliance Inc. slashed its fiscal-year earnings forecast, hurt by fading pandemic demand and a slow transition deeper into health care.

Annual adjusted earnings will be $4 to $4.05 a share, the Deerfield, Illinois-based company said Tuesday in a statement, down from the earlier range of $4.45 to $4.65. Adjusted earnings for the third-quarter were $1 a share, short of analysts’ average estimate of $1.06.

Walgreens is facing a rapidly changing competitive environment. On Nov. 17, 2020, online retail giant Amazon.com Inc. said it would expand its push into US prescription drug sales.

Walgreens Boots is ranked #19 in Digital Commerce 360’s Top 1000, which ranks retailers by annual web sales.

“We have seen changing market trends that have consumers prioritizing value in response to a more uncertain and challenging economic environment,” Chief Executive Officer Roz Brewer said on an earnings call. “There has been a steep drop-off in Covid vaccines and testing, and with the end of the public-health emergency we are also experiencing a slower profit ramp for US health care.”

After the pandemic pulled people into drugstores for vaccines and tests, cracks are starting to reappear in the business model that depends on pharmacy-driven foot traffic to sell higher-margin items like toothpaste and over-the-counter therapies. The end of the pandemic emergency has also seen states drop residents from the rolls of Medicaid, the health program for low-income people.

Savings Target

And while Walgreens is betting on an expansion into the wider health world —adding primary-care centers to US locations, partnering with insurers and moving into clinical trial recruitment — the transition hasn’t been simple.

“The health-care services segment is taking longer to stand up,” Bloomberg Intelligence analyst Jonathan Palmer said in a note, “which isn’t a huge surprise and at the same time, Walgreens’ ability to catalyze the unit by deploying capital is slowly drying up.”

Quarterly revenue in the US health-care business matched analysts’ average estimate of $2 billion.

Walgreens raised the target for savings from a cost-cutting program to $4.1 billion from $3.5 billion, and expects savings of $800 million in fiscal 2024. The company said in May that it would cut 10% of its corporate workforce, or about 504 employees, as it seeks to restructure to align better with a focus on patient care. Those job cuts were completed in about four months, Chief Financial Officer James Kehoe said on the call, saving more than $100 million.

Favorite

The post Walgreens slashes outlook as pandemic-driven demand fades appeared first on Digital Commerce 360.

]]>
How Chewy used its large customer base to become the largest online pet pharmacy https://www.digitalcommerce360.com/2023/05/25/chewy-health-care-largest-online-pet-pharmacy/ Thu, 25 May 2023 14:53:51 +0000 https://www.digitalcommerce360.com/?p=1045227 Chewy has sold pet products online for 11 years, and now it sees pet health care as the future of the industry. The ecommerce pet company launched its pharmacy in 2018 and added a compounding pharmacy, which can mix custom medications needed for patients, in 2020. Chewy has since launched its “Connect with a Vet” telehealth […]

The post How Chewy used its large customer base to become the largest online pet pharmacy appeared first on Digital Commerce 360.

]]>
Chewy has sold pet products online for 11 years, and now it sees pet health care as the future of the industry. The ecommerce pet company launched its pharmacy in 2018 and added a compounding pharmacy, which can mix custom medications needed for patients, in 2020. Chewy has since launched its “Connect with a Vet” telehealth service and pet insurance. It also owns and publishes PetMD, averaging over 5 million unique visits per month, according to analysis from SimilarWeb.

Chewy ranks No. 13 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest online retailers by web sales.

Customers requested health care from Chewy

Chewy primarily focuses on food and supplies in the $130 billion pet industry, but about one-third of that market is health spending, president of Chewy Health Mita Malhotra said. In 2022, Chewy had 20.4 million active customers, the retailer  said.

Before the pharmacy launch, Chewy heard feedback from customers that they wanted to buy medical supplies from the company. 

“We buy everything else from you … why don’t you carry medical? Why don’t you sell pharmaceuticals?” customers asked Chewy, per Malhotra. 

Chewy first ventured into health care as a pharmacy because it made sense with the existing ecommerce platform, Malhotra told Digital Commerce 360. The biggest opportunity was in medications for “chronic conditions and preventative care,” she said. They make up about 70% of medications Chewy sells.

Consumers showed a preference for buying those products, with examples like insulin and prescription food, as subscriptions. The strategy was a massive success, and autoship orders made up 73% of sales in the most recent fiscal quarter, accounting for $1.98 billion of revenue.

However, fewer than 5% of Chewy customers buy all their pet health care products from the ecommerce retailer, CNBC reported. The retailer hopes to make health care 30% of its business in the near future.

Building trust

Consumers’ willingness to pay for their pets’ health care has been profitable for Chewy, but it first had to convince them it was a trustworthy provider.

“Trust is rooted in how you really take care of customers. Are you listening to them? Are you taking care of them?” Malhotra said.

For Chewy, that’s an outgrowth of the retailer’s customer service, which has made headlines for how it treats pet owners in difficult times. Some customers told Entrepreneur in 2022 about receiving flowers, sympathy cards, and even portraits when their pets died.

Customer service representatives have leeway to have these interactions with customers, Malhotra said. Currently only about 20% of Chewy customers are buying pharmaceuticals, but she believes the number will grow thanks to the emphasis on customer service. Chewy declined to share specific statistics around its pharmaceutical sales. 

Pet health is resilient

The pet category is “resilient,” even in times of economic downturns, Malhotra said, and that’s even more true of pet health care. She cited a 2021 Metlife study of 2,000 dog and cat owners, which found that 58% said they worried more about their pets’ health than their own. 52% of respondents also said they spend more money on their pets’ health care each year than on their own. 

Malhotra said this trend is clear in Chewy’s sales.

“Food, pharmacy, wellness regiments: People are not pulling back on spending,” she said. Those categories are “durable,” while consumers might pull back on more discretionary items like toys if they have less to spend.

Better medical care and nutrition are also helping pets live longer. This leads to further spending on pet health care, and increasingly expensive care as they age, according to a report from Bloomberg Intelligence.

“We’re seeing a profound increase in consumer spending on pets and expect to see this continue through 2030,” co-author of the Bloomberg report Diana Rosero-Pena said. “Consumers are willing to pay more for items for their pets, with the pet food market having the potential to grow more than 50% from current levels by the end of the decade.”

Do you rank in our database?

Submit your data with this quick survey and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedInTwitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

Favorite

The post How Chewy used its large customer base to become the largest online pet pharmacy appeared first on Digital Commerce 360.

]]>
Amazon drug subscription service for Prime members begins https://www.digitalcommerce360.com/2023/01/24/amazon-drug-subscription-service-for-prime-members-begins/ Tue, 24 Jan 2023 23:49:24 +0000 https://www.digitalcommerce360.com/?p=1036562 Amazon.com Inc. has started a $5-per-month drug subscription service for Prime members, the ecommerce giant’s latest foray into health care. Called RxPass, the service lets patients order generic medications that treat more than 80 common health conditions, the company said in a Jan. 24 statement. Customers need to be members of Amazon’s $139-a-year Prime service […]

The post Amazon drug subscription service for Prime members begins appeared first on Digital Commerce 360.

]]>
Amazon.com Inc. has started a $5-per-month drug subscription service for Prime members, the ecommerce giant’s latest foray into health care.

Called RxPass, the service lets patients order generic medications that treat more than 80 common health conditions, the company said in a Jan. 24 statement. Customers need to be members of Amazon’s $139-a-year Prime service to join and will be entitled to free delivery.

The Amazon drug subscription service is available in most U.S. states. For now, RxPass excludes a number of heavily populated ones, including California, Pennsylvania and Texas. The program’s web page lists a menu of 53 available medications.

“We are excited to offer our customers surprisingly simple, low pricing on the eligible medications they need each month,” said John Love, vice president of Amazon Pharmacy.

Timing of Amazon drug subscription service RxPass

Amazon for years has been trying to break into the health care industry. It purchased mail-order pharmacy PillPack Inc. in 2018 and joined a health care venture with JPMorgan Chase & Co. and Berkshire Hathaway Inc. that fizzled out after three years.

The company also developed a telehealth and home health service, called Amazon Care, that wound down after operating for a little more than a year. Amazon is now trying to purchase the parent of the One Medical line of medical clinics for $3.49 billion.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedInTwitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

Favorite

The post Amazon drug subscription service for Prime members begins appeared first on Digital Commerce 360.

]]>
Warby Parker reports higher revenue and losses in Q2 https://www.digitalcommerce360.com/2022/08/12/warby-parker-reports-higher-revenue-and-losses-in-q2/ Fri, 12 Aug 2022 17:02:08 +0000 https://www.digitalcommerce360.com/?p=1026207 Warby Parker Inc. (No. 315 in the 2021 Digital Commerce 360 Top 1000) reported significant revenue year-over-year increases for the quarter and six months ended June 30. However, its losses grew even faster. The vision care merchant reported revenue for the quarter rose 13.7%, to $149.6 million, from $131.6 million in Q2 2021. For the six months […]

The post Warby Parker reports higher revenue and losses in Q2 appeared first on Digital Commerce 360.

]]>
Warby Parker Inc. (No. 315 in the 2021 Digital Commerce 360 Top 1000) reported significant revenue year-over-year increases for the quarter and six months ended June 30. However, its losses grew even faster.

The vision care merchant reported revenue for the quarter rose 13.7%, to $149.6 million, from $131.6 million in Q2 2021. For the six months ended June 30, revenue was $302.8 million, up 11.9% from $207.5 million for the comparable period in 2021.

The net loss for the quarter ended June 30 was $32.2 million. That was up more than three-fold from $10.3 million a year earlier. For the six months, Warby Parker’s net loss was $66.3 million. The loss was more than triple the loss of $20.4 million during the first half of 2021.

While the quarter started strong, Warby Parker saw a shift in its productivity and overall demand starting in late May, Dave Gilboa, co-founder and co-CEO, told analysts during an Aug. 11 conference call.

“We believe this weakness in demand is industry-wide driven by lingering pandemic effects, inflation and shift in how consumers are spending their money,” Gilboa said, according to a Seeking Alpha transcript.

Despite the macroeconomic trends, the average revenue per customer grew 8.2% and reached a new high of $234 in Q2. The retailer also reported an 8.7% year-over-year increase in active customers to 2.26 million.

During the quarter, Warby Parker also streamlined its corporate team. It eliminated 63 roles, roughly 15% of its corporate headcount.

Lower margins, higher costs

The retailer attributed the second-quarter results to greater penetration of contact lens sales — which have lower profit margins than eyeglasses — and rising costs. The retailer says the increased contact lens sales contributed to a decline in its gross margin to 57.7%, down from 59.3% in Q2 2021.

Other factors affecting second-quarter results included store-count growth and increased salary and benefit costs associated with optometrists as the retailer hired them to boost its eye-exam business. Warby Parker says selling higher-margin progressive lenses and savings gleaned from using its in-house optical laboratory network partially offset those costs.

Warby Parker says its selling, general and administrative expenses increased from $31.6 million to $118.4 million. Reasons included an increase of $16.2 million in stock-based compensation costs and payroll taxes. Also contributing was a $3.3 million stock donation to the Warby Parker Impact Foundation.

Warby Parker offers revised guidance 

Warby Parker is revising its 2022 full-year outlook to the following:

  • Net revenue of $584 million to $595 million, representing 8% to 10% growth versus the full year 2021. The retailer’s prior 2022 guidance projected revenue growth of 20% to 22% over 2021, or $650 million to $660 million.
  • Adjusted earnings before interest, taxes, and depreciation (EBITDA) margin of approximately 3.8% to 4.4%. Adjusted EBITDA of about $22 million to $26 million, which includes an estimated impact of about $7.5 million related to the pandemic.
  • 40 new store openings bringing the total store count to 201.

During the quarter ended June 30, Warby Parker reported:

  • Revenue of $149.6 million, up 13.7%, compared to $131.6 million in the second quarter of 2021.
  • A net loss of $32.2 million, up more than three-fold from $10.3 million a year earlier.
  • An 8.7% year-over-year increase to 2.26 million active customers.
  • An 8.2% increase in average revenue per customer increased to $254.
  • The opening of nine new stores during the quarter, ending the quarter with 178 stores.

For the six months ended June 30, Warby Parker reported:

  • Revenue of $302.8 million, up 11.9% from $207.5 million for the comparable period in 2021.
  • A net loss of $66.3 million, more than triple the loss of $20.4 million during the first half of 2021.

Percentage changes may not align exactly with dollar figures due to rounding.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedInTwitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

Favorite

The post Warby Parker reports higher revenue and losses in Q2 appeared first on Digital Commerce 360.

]]>
Stores aren’t going away, but their role keeps evolving https://www.digitalcommerce360.com/2022/06/23/stores-arent-going-away-but-their-role-keeps-evolving/ Thu, 23 Jun 2022 16:23:10 +0000 https://www.digitalcommerce360.com/?p=1023310 Fine jewelry brand Blue Nile Inc. built its business selling diamond engagement rings online. But buying an engagement ring on the web isn’t for everyone, says David Olsen, Blue Nile’s senior vice president of strategy, analytics and retail. In late 2020, Blue Nile shifted its business model, opening showrooms in California, Colorado and Illinois. As […]

The post Stores aren’t going away, but their role keeps evolving appeared first on Digital Commerce 360.

]]>

The post Stores aren’t going away, but their role keeps evolving appeared first on Digital Commerce 360.

]]>
Warby Parker to expand store footprint and hold the line in prices https://www.digitalcommerce360.com/2022/03/31/warby-parker-to-expand-store-footprint-and-hold-the-line-in-prices/ Thu, 31 Mar 2022 16:17:59 +0000 https://www.digitalcommerce360.com/?p=1018848 Eyeglass brand Warby Parker Inc. will keep offering $95 eyeglasses and continue opening stores, co-CEO Dave Gilboa said at a retail industry event in Las Vegas. Launched as an online-only retailer in 2010, Warby Parker (No. 315 in the 2021 Digital Commerce 360 Top 1000)  ended 2021 with 161 stores, including 35 that opened that […]

The post Warby Parker to expand store footprint and hold the line in prices appeared first on Digital Commerce 360.

]]>
Eyeglass brand Warby Parker Inc. will keep offering $95 eyeglasses and continue opening stores, co-CEO Dave Gilboa said at a retail industry event in Las Vegas.

Launched as an online-only retailer in 2010, Warby Parker (No. 315 in the 2021 Digital Commerce 360 Top 1000)  ended 2021 with 161 stores, including 35 that opened that year. It plans to grow to more than 200 in 2022.

Speaking at the Shoptalk conference in Las Vegas on Tuesday, Gilboa said the retailer has no plans to raise the price of its entry-level eyeglasses, which it has sold at the same price since launching in 2010. Even though U.S. inflation hit a 40-year high of 7.9% in February, Warby Parker’s control over its supply chain will allow it to hold the line on prices.

“We started Warby Parker because we were frustrated consumers — frustrated by the high price of glasses,” Gilboa said.

So, the brand wants to continue competing on price and has invested in vertical integration to help it maintain control of its costs and manufacturing process.

A recent example of its commitment to vertical integration was the brand’s opening of a 69,000-square-foot optical lab — its second — in Las Vegas. The retailer also operates a lab in Sloatsburg, New York.

Gilboa said other factors help Warby Parker keep selling $95 eyeglasses. They include long-term contracts with shipping carriers — which insulated it from rising fuel prices and fuel-related surcharges — and sales of higher-priced products such as progressive lenses.

Gilboa said the ability to make glasses with complicated prescriptions allows Warby Parker to serve all demographics. He said customers over 45 — those most likely to need reading glasses or progressive lenses — are the retailer’s fastest-growing demographic. In 2019, the brand also started selling contact lenses.

Values-based marketing

In addition to keeping prices low, Gilboa said he wants to keep connecting with consumers by living up to a set of values. The retailer, organized as a public benefit corporation, announced earlier this month that it distributed more than 10 million pairs of eyeglasses via its Buy a Pair, Give a Pair program.

Through its program, the retailer works with partners worldwide to ensure it distributes a pair of glasses to someone in need for every pair of Warby Parker glasses purchased.

“We think offering glasses for $95 makes them much more accessible. But there are billions of people around the globe who can’t afford $95 glasses,” Gilboa said. “And so, we try to — when possible — to go into those local communities and understand the best way to solve problems for them, whether that’s in rural Guatemala or in our backyard in New York.”

The retailer also operates the Warby Parker Impact Foundation, a public charity dedicated to helping people overcome the barriers to vision care.

As an example of how it tries to make its products more sustainable, Gilboa said, Warby Parker developed packaging for its private-label Scout contact lens brand that uses almost 80% less packaging than a traditional blister pack.

A public benefit corporation is formed to generate social and public good, and to operate responsibly and sustainably.

Opening more stores

Gilboa said the stores allow Warby Parker to offer services, including in-person eye exams. That’s important, he said, because U.S. consumers buy about 70% of their eyeglasses at the place where they get an exam from an optometrist.

While stores can generate new customers, they also introduce risks. Gilboa said sales at its stores took a hit during the pandemic, but he is optimistic about the long-term value of opening physical locations.

“We are expecting that at the end of this year, all of our stores across the country will be back at pre-pandemic levels,” Gilboa said.

In a March 17 conference call with analysts, Gilboa said the omicron variant of the virus that causes COVID-19 resulted in nearly $5 million of lost sales in Q4 and lost sales would total more than $15 million in Q1 — stemming from fewer people shopping Warby Parker stores.

Telemedicine investments

Even while opening stores, Warby Parker continues to invest in telemedicine, Gilboa said. Last year, it rolled out its Virtual Vision Test app that allows users to renew their eyeglasses or contacts prescription in 10 minutes.

A licensed doctor evaluates each exam and patients get results within 48 hours. The service costs $15, but the customer pays only if the current prescription is renewable.

Financial results

For the fiscal year ended Dec. 31, 2021, Warby Parker reported a net loss of $144.3 million, 158% more than the $55.9 million loss for the previous year. In Q4 alone, the loss was $44.9 million, a more than ten-fold increase from the compatible quarter a year earlier.

The primary reason for the increased loss was a sharp increase in selling, general and administrative expenses (SG&A), which increased $51.9 million compared with 2020, year, reaching $122.1 million.  Warby Parker reported that the primary causes of the SG&A increase were $31.6 million in stock-based compensation expense and related employer payroll taxes.

In 2022, Warby Parker expects net revenue of $650 million to $660 million, representing growth of 20% to 22% versus the full year of 2021. This outlook includes the impact of approximately $15 million in lost sales, or 3 percentage points of growth, related to the disruption omicron caused at the beginning of the year.

On the plus side, the eyeglasses brand reported that total 2021 revenue was $540.8 million, up 37.4% from $393.7 million a year earlier.

The retailer also reported the following for the year ended Dec. 31:

  • Active customers increased 390,000, or 21.5%, to 2.2 million.
  • Gross profit dollars increased 37.0% to $317.7 million.
  • Q4’s average revenue per customer increased 13% year over year to $246.

Percentage changes may not align exactly with dollar figures due to rounding.

Favorite

The post Warby Parker to expand store footprint and hold the line in prices appeared first on Digital Commerce 360.

]]>
CVS limits purchases of rapid COVID tests amid demand https://www.digitalcommerce360.com/2021/08/27/cvs-limits-purchases-of-rapid-covid-tests-amid-demand/ Fri, 27 Aug 2021 17:33:48 +0000 https://www.digitalcommerce360.com/?p=1005437 (Bloomberg)—CVS Health Corp. is limiting customers’ purchases of rapid, over-the-counter COVID-19 tests, with a maximum of six packages available online and four in its pharmacies, as the spread of the delta variant spurs demand. Put in place this week, the limits apply to Abbott Laboratories’s BinaxNOW along with a test from the startup Ellume, according to […]

The post CVS limits purchases of rapid COVID tests amid demand appeared first on Digital Commerce 360.

]]>
(Bloomberg)—CVS Health Corp. is limiting customers’ purchases of rapid, over-the-counter COVID-19 tests, with a maximum of six packages available online and four in its pharmacies, as the spread of the delta variant spurs demand.

Put in place this week, the limits apply to Abbott Laboratories’s BinaxNOW along with a test from the startup Ellume, according to an email from a CVS spokesperson. Both tests are available without a prescription.

Surging interest in rapid virus tests has made the products a scarce commodity at some online retailers and in certain stores. The renewed demand for testing has arisen just as the highly contagious delta variant threatens many people’s plans to return to work and school this fall.

Online availability of rapid COVID-19 tests can shift based on demand, and the company is working with its suppliers to meet testing needs, the CVS spokesperson said.

The change was made this week “in order to serve our customers’ OTC testing needs, and due to high demand,” according to the email.

Supplies of the tests will be constrained in the coming weeks as manufacturing ramps back up, Abbott said in a statement

“Just as we have done throughout the pandemic, Abbott is deploying our resources and expertise from all over the company to help quickly meet rising demand,” the company said.

Ellume is scaling production and working with retailers to ensure consumer access to its tests, which are in stock at CVS, Walmart, Target and Everlywell stores, a spokesperson for the Australia-based company said in an email.

CVS is No. 116 in the 2021 Digital Commerce 360 Top 1000.

Favorite

The post CVS limits purchases of rapid COVID tests amid demand appeared first on Digital Commerce 360.

]]>
Amazon Pharmacy to offer 6-month prescriptions starting at $6 https://www.digitalcommerce360.com/2021/06/08/amazon-pharmacy-to-offer-6-month-prescriptions-starting-at-6/ Tue, 08 Jun 2021 15:33:12 +0000 https://www.digitalcommerce360.com/?p=1000184 (Bloomberg)—Amazon.com Inc., No. 1 in the 2021 Digital Commerce 360 Top 1000, is offering six-month prescriptions starting at $6 for medications for common ailments, the company’s latest effort to entice more people to buy drugs online rather than at a pharmacy or supermarket. Most insurance companies don’t cover six-month prescriptions, so the offering targets both […]

The post Amazon Pharmacy to offer 6-month prescriptions starting at $6 appeared first on Digital Commerce 360.

]]>
(Bloomberg)—Amazon.com Inc., No. 1 in the 2021 Digital Commerce 360 Top 1000, is offering six-month prescriptions starting at $6 for medications for common ailments, the company’s latest effort to entice more people to buy drugs online rather than at a pharmacy or supermarket.

Most insurance companies don’t cover six-month prescriptions, so the offering targets both the uninsured and those who are insured but still pay cash due to high out-of-pocket prescription costs associated with their plans.

Amazon has been trying to make headway in the $360 billion U.S. prescription drug market since acquiring online pharmacy PillPack in 2018, threatening industry incumbents CVS Health Corp. and Walgreens Boots Alliance Inc. PillPack targeted consumers who take multiple medications, simplifying their regimen by sending the drugs in daily packets.

The new offering from Amazon Pharmacy is aimed at consumers who take just one or two daily pills to manage common ailments such as high blood pressure and diabetes. Amazon Prime subscribers, who pay for delivery discounts and other perks, will be able to get six-month prescriptions for $6 on such medications as amlodipine for high blood pressure and simvastatin for high cholesterol.

Amazon can buy the medication in bulk at a discount and make two annual deliveries to the customer, using the savings to reduce costs, said Amazon Pharmacy Vice President TJ Parker. “We want to make filling a prescription just as easy as shopping on Amazon,” he said.

The company’s push into prescription drugs follows retailers Walmart Inc., Kroger Co. and Costco Wholesale Corp., which use discount drugs to keep customers coming to their stores where they’re likely to make other purchases. On Monday, Walmart said it would offer members of its online delivery service discounts for commonly prescribed medications.

Favorite

The post Amazon Pharmacy to offer 6-month prescriptions starting at $6 appeared first on Digital Commerce 360.

]]>
Hims, a men’s wellness brand selling direct to consumers, is going public https://www.digitalcommerce360.com/2020/10/02/hims-a-mens-wellness-brand-selling-direct-to-consumers-is-going-public/ Fri, 02 Oct 2020 21:43:27 +0000 https://www.digitalcommerce360.com/?p=981052 A few years ago, men’s hair care products were mostly limited to 2-liter containers of five-in-one, multi-purpose formulas that were meant to serve as shampoo, conditioner, body wash, face wash and deodorizer. Bottles were relegated to a forgotten corner of store shelves. Packaging was red or black, and messaging was hyper-traditional and masculine. For Hilary […]

The post Hims, a men’s wellness brand selling direct to consumers, is going public appeared first on Digital Commerce 360.

]]>
A few years ago, men’s hair care products were mostly limited to 2-liter containers of five-in-one, multi-purpose formulas that were meant to serve as shampoo, conditioner, body wash, face wash and deodorizer. Bottles were relegated to a forgotten corner of store shelves. Packaging was red or black, and messaging was hyper-traditional and masculine.

For Hilary Coles’ fiancé, her coworker Andrew Dudum and all of their friends, none of it gelled with their self-image or lifestyle. Coles and Dudum realized there was an opportunity there, and market research has continually confirmed their suspicions that existing men’s products weren’t catering to everyone. In fact, Coles points to a survey from research firm Kantar Group in which 9% of men in Generation Z recently described themselves as “very” or “somewhat feminine” compared with an average 2% of men across the previous four generations.

“That’s an unbelievable seismic shift,” says Coles, who co-founded men’s beauty brand Hims with Dudum after connecting over wellness topics while working at another consumer startup. “We wanted to establish a spectrum of options. There are men who are ready for a Vitamin C serum and reading up on it to try to optimize their skin, and then there are men who don’t really know where to start, but they aren’t happy with the way their hairline looks.”

Launched as a digitally native brand in November 2017, Hims gave guys a modern, nuanced alternative to drug store products typically geared toward men of the lumberjack variety and bad, embarrassing Rogaine commercials. Coles and Dudum set out to debunk the myth that men aren’t interested in self-care regimens and sought to normalize issues like hair loss and erectile dysfunction, or ED, that often are uncomfortable to discuss. ForHims.com publicizes statistics aimed at destigmatizing touchy topics: “You’re not alone. Hair loss affects 50 million men in the U.S.” and “40% of men by age 40 struggle with ED.”

The brand’s strategies allowed Hims, ranked No. 450 in the 2020 Digital Commerce 360 Top 1000, to more than triple its sales in 2019 versus the prior year and snag placement in Target Corp. stores. This week, the company announced it will merge with a special purpose acquisition company (SPAC)—an accelerated alternative to an initial public offering—sponsored by Oaktree Acquisition Corp. The combined company, valued at $1.6 billion, will go public once the transaction is completed.

Coles, who now serves as vice president of merchandising, says the brand’s success stems from its ability to create a culture that grants permission for men to consider their personal wellness needs beyond just regular trips to the gym. Caring for their bodies also includes addressing stubborn acne or adding preventative anti-aging measures.

Hilary Coles, co-founder and vice president of merchandising at Hims

Hilary Coles, co-founder and vice president of merchandising at Hims

Although Hims also sells over-the-counter items, the “vast majority” of its consumers buy products that require a prescription, Coles says, and a doctor’s green light lends the brand credibility. As a telehealth company, Hims has a network of licensed medical providers in each state and facilitates a virtual evaluation—either in real time or asynchronously—for men shopping for prescription-strength shampoos, creams and pills. Hims takes the friction out of the purchase process by removing the need for a doctor’s office visit and the associated annoyances of waitlists, copays and other deterrents, and offering remote appointments that help guys understand the safest and most effective options for them, Coles says. The company has facilitated more than two million remote consultations to date.

Market research suggests men also tend to be particularly brand loyal and don’t explore as much as women once they find something that works for them, Coles adds.

Within skin care, women try new items every one to three months while men check out different products every three to six months, according to focus groups and consumer surveys, a company spokesperson says. Overall, men are less adventurous within the beauty, grooming and wellness space while women enjoy shopping across a lot of different brands.

“Even if women have a few tried-and-true products that they are loyal to, they will still continue to experiment,” the spokesperson says. “Men tend to like a one-stop shop where they can get a variety of products from one brand due to convenience.”

That paired with the replenishable nature of the products means a recurring revenue stream for Hims. 90% of the brand’s consumers also set up recurring deliveries, and as of June, the company boasted roughly 260,000 subscriptions.

Redesigning men’s products and marketing with humor

Another key move was redesigning the look and feel of men’s products. When Coles’ fiancé ordered items online from other retailers, the delivery was typically one “sad” box rattling around in a bigger box.

“When I order a [women’s self-care] product, it looks beautiful. Everything is placed intentionally, I have samples, I practically have rose petals in there,” Coles says. “It feels purposeful and considered. That’s one of the pieces we thought was missing in the men’s space.”

To combat the lackluster unboxing experience for many men’s products in this category, Hims didn’t skimp on anything. The brand uses high-end New Zealand craft paper for the boxes, items are packed so they don’t roll around when boxes are opened, and the retailer’s third-party logistics company sprays every order with perfume before it ships. The reds and blacks of stereotypical men’s packaging were replaced with shades of neutral tans, and even the products themselves were formulated to give a softer finish in the shower.Hims, a men's wellness brand selling direct to consumers, is going public - product

“We made these products that historically have been so hard to talk about, something that you didn’t need or want to hide in the back of your cupboard but rather were proud to showcase,” Coles says. “We strongly believed that there was that flywheel there, and it paid off.”

Within weeks of launching, the startup’s Instagram account was flooded with men sharing unboxing videos of them opening Hims’ hair kit, talking about the results, and sending before-and-after photos. This sparked a viral, organic marketing campaign that relied on word of mouth, Coles says.

Hims’ tongue-in-cheek voice also has served the company well from a marketing perspective, she adds. The brand found humorous messaging allows Hims to break the ice on subjects men are self-conscious about, making them more willing to talk, shop and even share those before-and-after photos or other user-generated content.

Perhaps the company’s most memorable campaign featured phallic cacti ads plastered over New York City subways and other areas—a nod to erectile dysfunction. Hims also orchestrated a “urinal domination,” or a takeover of toilets at Oracle Park (formerly AT&T Park) in San Francisco, triggering social media posts from baseball fans. Additionally, the brand hired rapper Snoop Dogg to narrate an animated commercial naming Hims as a way out of erectile dysfunction. There is even a fair share of suggestive eggplant emojis sprinkled throughout messaging on ForHims.com.

“We’re willing to go there to break through and let people know we don’t have to take it so seriously,” Coles says. “No one in the history of ballparks ever wanted to advertise in a urinal, but we looked at it as a creative marketing channel that let us have a captive audience for 90 seconds. And images like the cacti are these instantly recognizable symbols for the health topics we’re addressing.”

Strategies for growth

The startup has built a cult following, and it’s showing in the financials. Hims grew web sales by 222.6% in 2019, reaching a Digital Commerce 360-estimated $100 million in annual revenue in just over two years in business. The brand was the second-fastest-growing online retailer among 55 merchants tracked by Digital Commerce 360 that sell cosmetics, skin care and hair care to U.S. consumers.

Hims says its compound annual growth over the last two years passed 100%, and that it more than doubled gross margins to more than 70%. According to an investor presentation viewed by CNBC in late 2019, Hims expected to hit $250 million in recurring revenue by the end of 2020. And that was before COVID-19 boosted sales for personal care products.

Of the 55 cosmetics/skin care/hair care retailers studied, just three are devoted to the male demographic: Hims; Thirty Madison (No. 1277 in the 2020 rankings of the Next 1000), the parent company of hair-loss treatment brand Keeps; and Tiege Hanley (No. 1677), which bills itself as “uncomplicated” skin care for men. Collectively, these men’s brands represent just 1.0% of the total 2019 ecommerce revenue from the group of 55 beauty retailers. But the three men’s brands increased collective online sales by 153.1% in the same year, with Hims pulling up the group’s results, compared with 30.7% growth for the remaining 52 retailers outside of the men’s space. Even when Hims’ outsized growth is less heavily weighted by looking at median year-over-year jumps, the group of men’s brands still outperformed the other 52 retailers analyzed: 34.5% versus 23.1%.

The recent success of men’s brands signals a major opportunity for a relatively untapped market, says Eric Roth, managing director at investment firm MidOcean Partners.

“There are interesting personal care/beauty businesses totally focused on men with a higher price point and premium product, and that’s a trend people have been waiting for and watching,” he says. “From our perspective, it’s starting to really take off. There’s some pretty good scale there.”Hims, a men's wellness brand selling direct to consumers, is going public - logo

There are no signs of slowing down particularly for Hims, which added a women’s line called Hers to its inventory in October 2018. In late March 2020, the brand launched both lines at Target (No. 12), selling hair care, skin care and supplements in all stores. By September, Hims expanded its Target offerings to include sexual wellness products as well, and consumers can now find lubricant, urinary tract powder, collagen powder and other items.

Gaining a store presence has been imperative for Coles since before the company even launched. The brand’s goal of democratizing affordable health and beauty products requires some sort of brick-and-mortar footprint, she says, and Target was the perfect “front door” for introducing the brand to new audiences.

Hims is one of 20 digitally native vertical brands, or DNVBs, among the 55 retailers analyzed, and its entry into Target makes it the twelfth personal wellness DNVB to branch out into other retailers’ stores. With more than half (60.0%) of these DNVBs opting to sell wholesale through big retail chains, this group largely still understands the power of physical stores in a world where more than 90% of purchases in the subcategory happen offline.

The COVID-19 impact

Yet, during a time when in-store shopping is less than ideal, DNVBs have benefitted from more consumers turning to the web, and Coles says the pandemic helped Hims reach new demographics. People haven’t been able to shop in person or comfortably make routine salon and doctor’s appointments like usual, but they likely have more time to finally commit to beauty regimens such as hair regrowth while stuck at home.

Additionally, consumers are noticing their normal skin care routines aren’t cutting it while fighting “maskne,” the recent phenomenon of acne caused by mask wearing, and turning to prescription-level products in increasing numbers, Coles says. In May, Hims even started selling an at-home COVID-19 saliva test in partnership with a Rutgers University lab, which was granted emergency-use authorization from the FDA. Results are available online in three to five days after a consumer’s sample is shipped to the lab.

While the company declines to comment on Hims’ ecommerce growth during the pandemic, Coles says it has been “sustained and significant.” With consumers shifting more of their retail and healthcare experiences online during COVID-19, digitally native brands are presented with a huge opportunity, she adds. And Hims is particularly well-positioned given its telehealth background and the digital infrastructure it has built.

Hims’ bold moves and explosive growth have attracted the attention of investors. The brand has raised $197 million to date, and much of that capital has gone into creating the healthcare framework needed to run its ecommerce operations where products require prescriptions. The Hims team set up medical entities in every state; created the company’s own electronic medical records system, or EMR; and recently opened a 300,000-square-foot pharmacy in Ohio.

ForHims.com also already has medical questionnaires and instructions in place for its free online hair, skin and erectile dysfunction consultations. The brand’s use of interactive online quizzes is a common tool employed by retailers selling beauty products as it aids site personalization efforts by collecting data and helping retailers improve individualized product recommendations. Researchers visited the ecommerce sites of the 55 retailers in the subcategory and found nearly two thirds (65.5%) offer shoppers a quiz to guide them to the right product. The share of the 55 cosmetics, skin care and hair care retailers with sites that feature quizzes is roughly double that of any other subcategory tracked by Digital Commerce 360 across 14 major merchandise categories.

At ForHims.com, site visitors looking for hair loss treatments, for example, are asked to identify their current hair: receding hairline, thinning at the crown, overall hair loss/thinning or full head of hair. A follow-up question also inquires about preferred results: regrowing hair, preventing further hair loss or both.

Consumers are required to enter their birthdate and email address and later even upload a photo of their ID for proof that they are eligible to receive treatment. After that, visitors are given a 12-question survey for the system to collect information on their health, medical history and lifestyle that then goes into the patient’s file and is sent along to a licensed healthcare provider, who reviews it and responds to complete the consultation. Visitors then are asked to submit photos of the front and back of their hairline as well as their face to help the doctor make a diagnosis.

Once consumers are matched with a treatment, they select a subscription plan and are given a results timeline of what to expect once they start their new hair care routine. They can also message their provider and receive continued support from the Hims’ care team. Items ship for free if and when a doctor authorizes the prescription.

Using telehealth infrastructure to expand offerings

With that infrastructure and process in place before the pandemic hit, Hims was able to quickly add more services to help alleviate the overburdened healthcare system this spring, Coles says. A few weeks after people widely started to work from home in March, the brand launched primary care visits through its platform. For a $39 fee, which isn’t covered by insurance, consumers can set up a virtual visit where providers can treat symptoms and have prescriptions sent to local pharmacies for pickup, where insurance picks up the tab.

While Hims doesn’t sell goods in this broader space, Coles says the intent is to give consumers the ability to stay home and keep their families safe by avoiding doctors’ waiting rooms but still be able to treat more common health issues that crop up like sinus congestion, urinary tract infections, rashes and bug bites. Hims even added Spanish-language and mental health services to accommodate more households.

“As a telehealth company, we’re working to seamlessly merge the ease, convenience and affordability that consumers—particularly millennials and Gen Z—have come to expect with the rigor and safety of a direct relationship with a medical provider,” Coles says. “We want to build this long-term relationship with our consumer versus having a one-off, and these services add to our ecosystem and give us tremendous firepower.”

Favorite

The post Hims, a men’s wellness brand selling direct to consumers, is going public appeared first on Digital Commerce 360.

]]>
Investment firm KKR buys 1-800 Contacts for more than $3 billion https://www.digitalcommerce360.com/2020/09/24/investment-firm-kkr-buys-1-800-contacts-for-more-than-3-billion/ Thu, 24 Sep 2020 21:08:12 +0000 https://www.digitalcommerce360.com/?p=980294 Investment giant KKR & Co. Inc. agreed to buy online contact lens retailer 1-800 Contacts Inc. (No. 93 in the 2020 Digital Commerce 360 Top 1000) from previous owner AEA Investors LP. 1-800 Contacts and KKR didn’t disclose the transaction’s financial terms in a joint statement Wednesday. However, people familiar with the matter said the deal values […]

The post Investment firm KKR buys 1-800 Contacts for more than $3 billion appeared first on Digital Commerce 360.

]]>
Investment giant KKR & Co. Inc. agreed to buy online contact lens retailer 1-800 Contacts Inc. (No. 93 in the 2020 Digital Commerce 360 Top 1000) from previous owner AEA Investors LP.

1-800 Contacts and KKR didn’t disclose the transaction’s financial terms in a joint statement Wednesday. However, people familiar with the matter said the deal values 1-800 Contacts at more than $3.00 billion.

“They spent a lot of time investing in telemedicine solutions,” Felix Gernburd, a managing director at KKR, told Bloomberg News. “When shelter-in-place orders were restricting movement, 1-800 Contacts was one of the few places you could go to get your contacts.” The number of people using the retailer’s two online eye-exam apps at least tripled at the peak of the coronavirus-related shutdowns, the statement says.

Started in a dorm room in 1995, 1-800 Contacts sells eyewear and contact lenses online. AEA Investors acquired the merchant in 2016 from Thomas H. Lee Partners.

“We believe 1-800 Contacts’ singular focus on providing a consistent and high-quality customer experience, fueled by industry-leading capabilities and telemedicine solutions, positions them well to continue to drive innovation in the category,” Felix Gernburd, a KKR managing director, said in the joint statement.

KKR’s rationale for buying 1-800 Contacts makes a lot of sense, according to George Deeb, managing partner of consulting and venture capital firm Red Rocket Ventures. The appeal for KKR, he says, is the chance to gain a sizable, innovative business in the massive healthcare industry with telemedicine capabilities, such as the ability to offer online eye exams. The deal also shows the strength of ecommerce during the pandemic, he says.

“The transaction clearly shows that ecommerce is alive and well in a world post-COVID, as more shoppers are buying from home—not in stores,” Deeb says.

AEA Investors bought 1-800 Contacts almost five years ago, and most professional investors have a three- to seven-year time horizon. Hence, AEA most likely wanted to exit its investment to help lock in the returns, Deeb says.

This week’s acquisition is not KKR’s first foray into eye care. In 2014, KKR invested in bricks-and-mortar eyewear retailer National Vision Holdings Inc. and then took it public in 2017.

A surge of new customers during the pandemic

As Americans get used to the new reality of receiving health care products and services during the pandemic, 1-800 Contacts experienced a surge of new customers—and a need to adapt.

1-800 Contacts says it increased its engagement across social channels to connect with consumers posting about buying contacts or glasses online.

The retailer also experienced roughly 100% year-over-year increases in new customers and repeat customers, 1-800 Contacts says, without providing specific numbers. The retailer declined to discuss how much its sales increased during that time.

Once the pandemic-related lockdowns started, 1-800 Contacts says it increased its engagement across social channels to connect with consumers posting about buying contacts or eyeglasses online. Partially because of those efforts, the retailer saw a roughly 200% increase in the use of ExpressExam—an online vision test consumers can use to renew their prescriptions, Phil Bienert, chief marketing officer, told Digital Commerce 360 before the retailer and KKR announced the acquisition.

In some respects, 1-800 Contacts was “almost designed” for the COVID-19 crisis and the lockdowns, Bienert says. “We’ve been champions of the expansion of telemedicine for many years, both as a way to increase access to vision care and to help evolve the stagnant vision industry. We were already offering telemedicine services that allow customers to renew prescriptions online, choose from the largest selection of brands and receive their contacts right to their door quickly, which meant we already had the technology in place to be able to serve our customers when others can’t,” he says.

ExpressExam provides eligible customers with a free, 10-minute online vision exam and renewed contact lens prescriptions from board-certified eye doctors. Consumers can have the exams from smartphones or computers and often get new prescriptions within just a few hours, the retailer says. The retailer determines eligibility for telehealth services by gathering information about customers’ age, location and eye health history.

“When optometrists were forced to close their doors, we stepped up our efforts to help Americans get their prescriptions renewed and contacts replenished, especially those on the front lines,” Bienert says. “We have over 45 million contact lenses in our distribution centers and are shipping orders daily. There’s been no disruption to the supply chain, so we are well prepared to take care of customers.” 

The volume of calls the retailer’s call-center staff handles per day is as much as an 85% increase over pre-pandemic projections, Bienert says. To help meet the surge in sales and customers, the retailer added 200 employees from March 16 to early September, he says. The lion’s share of the new hiring was in operations roles, but the retailer hired corporate staff as well, he says.

During peak times, as many as 50 company “volunteers,” including CEO John Graham, stepped in to help ship orders at the distribution center, Bienert says.

1-800 Contacts, founded 25 years ago, owns brands including Liingo Eyewear, 6over6, Boomerang and Premium Vision. Morgan Stanley and Jefferies Financial Group Inc. are financial advisers to the retailer on the KKR deal.

James Melton contributed to this report.

 

Favorite

The post Investment firm KKR buys 1-800 Contacts for more than $3 billion appeared first on Digital Commerce 360.

]]>