Better broadband boon for pharmacy

Jason Roberts says slow, high-cost internet connections have been obstacles to growth in e-commerce. Picture / Brett Phibbs

For online businesses, the pending improvements in broadband services are just what the doctor ordered, says Jason Roberts.

The marketing and business development manager for Pharmacy Direct, an online medicine retailer, believes that with the unbundling of broadband, e-business will go through the roof.

Before the Government's announcement on unbundling, Pharmacy Direct anticipated sales figures would approach $5 million for the year to March 2007. As a result of the announcement, Roberts now believes sales will easily overshoot that figure.

"We are convinced that the spread of broadband has been a major factor fuelling sales over recent years. These rose by 500 per cent during the year to March 2006, following a 300 per cent rise in the year to March 2005," he says.

Broadband has already made online ordering faster and more convenient, Roberts says, and that experience has made consumers more comfortable about buying online.

But the limitations in the New Zealand online market, caused by comparatively slow, high-cost internet connections, have served to highlight the obstacles to growth in e-commerce. The Government announcement will spur a substantial increase in online commerce, he says, even before unbundling gets signed into law.

Pharmacy Direct has been in business since 1996, but has only come into its own over the past two or three years. Once a prime example of being a clip-on to a normal bricks and mortar pharmacy, it is now the primary driver of the business, Roberts says.

"It's a lot more mature and commercial. It was always an online retail site but there wasn't any marketing or particular dedication to driving business like there is now."

This country has around 300 pharmacy websites but Pharmacy Direct is only one of two accredited by the Pharmaceutical Society. (The other is Cyberchemist - see link below.)

The rest are primarily bricks and mortar retailers. That brings with it some problems, Roberts says. "The business model is challenged when you don't want to take business away from the retail sector."

One challenge facing e-commerce sites lies in converting a large amount of visitors into actual sales. About 80 per cent of Pharmacy Direct's visitors come to the site for health information or price comparisons, but complete their purchases offline.

As a result, the company is gearing up to significantly change the way it communicates with customers. The answer, Roberts says, is through the rich media capability and interactivity that faster broadband will bring, helping to develop closer relationships and more personalised communications with customers.

"We've moved from just price pointing to now recognising that our customers are a relationship. The future of our website is to enhance that. It makes sense for us to deliver a richer experience."

A lot of Pharmacy Direct's supply companies - not just drug companies, Roberts points out - are excited by the prospect.

"They spend so much time and money on traditional media. But for a smidgen of the price we can work online and have all sorts of options you don't have through television. You can't click here to buy or to read more info - it's a one-way medium."

Pharmacy Direct places its own online advertising in order to attract customers. In March, the company had 80 million page impressions through an advertising mix on the Xtra, Trade Me and Commonwealth Games websites, Roberts says.

"With that many impressions it really challenges what print and traditional media are offering," he says.

What's more, Pharmacy Direct favours hyperlinked text advertisements over display ads such as banners, which nowadays are used more for branding purposes.

"Branding is all very well and good but in the end companies like us have to achieve sales. One advantage with text-based advertising is that the copy can be tweaked to improve click-through rates," he says.

While customers can't yet get a prescription online, e-scripting - when a doctor sends an electronic prescription through to a pharmacy via the internet - will happen soon, Roberts says. "It's something that we are looking forward to. And when it does happen well see a paradigm shift."

PHARMACY DIRECT

Who: Jason Roberts, marketing and business development manager.

Where: Auckland.

What: Online pharmacy.

Why: "Our customers are a relationship. The future of our website is to enhance that."