Rx For Success

Finding the right prescription for putting its business on-line is an ongoing process for London Drugs Ltd.

The pharmacy chain, which operates 51 stores throughout British Columbia and Alberta, already has a Web presence, but developing and expanding the capabilities of its site is an effort that is treated with the same seriousness as the addition of three new stores.

In fact, Dick Vollet, general manager of retail operations for the Richmond, B.C.-based company, finds working on the Web has become an ever-increasing part of the job.

"Right now, it's probably about 10 per cent of my time, which is a lot compared to everything else I have to do," Vollet says. "I'm also project sponsor of the supply chain infrastructure project, which takes up about 55 per cent of my time."

Once the supply chain project, with its automatic replenishment capabilities, is rolled out next year, it will assist the company in its e-commerce efforts.

However, before that happens, there are other business issues that need addressing.

"We want to protect our reputation as a company first, and the name of London Drugs," Vollet says. "London Drugs is Western (Canada)-based, but the Web goes around the world. We need to keep our reputation intact and maintain the same level of service."

What makes that difficult, according to Vollet, is the lack of control. In its traditional retail environments, London Drugs can manage all aspects of the customer experience. In the on-line world, it can't.

"Usually when people talk about e-commerce, they say the point of contact is when your customer is shopping on your site, but the real point of contact is when the item is delivered. With the Web, they are faceless customers until we deliver the product into their hands."

Handing over control of such a crucial part of the shopping process has been difficult, and the company has had to take its time finding the right partner.

"We ran an early pilot and approached a large number of courier companies, and they were not interested. We were turned down by a large number of national companies. Today, it is a little different. Now those same companies are clamouring for business."

According to Vollet, the trick is finding a delivery partner "with the same philosophy in customer service." For London Drugs that is Canada Post, but even solving that challenge doesn't mean shipping issues have been sorted out.

"What are our customers willing to pay for convenience? We will monitor that very closely. If they waste all their savings on delivery, they might as well just shop retail. And if all they're buying is a tube of toothpaste, what will they pay?"

Selling toothpaste to an on-line customer is one thing. Selling that same customer a big-screen television or a mountain bike is a completely different transaction, but it is also one that confronts London Drugs. While its primary business focus is still pharmaceuticals, the stores offer a wide variety of items and services. Computers and home electronics share floor space with Internet cafes and cosmetics departments that rival those at upscale department stores. Some locations even offer insurance and banking services. On average, London Drugs has 40,000 separate SKUs in its database.

"We're not going to bring every item to the Web. It would be a phenomenal task," Vollet says.

Instead, the company plans to offer the items in its flyer for sale on its Web site (http://www.londondrugs.com). That way, consumers are given a fresh site every couple of weeks, and limits can be placed on the number of products offered.

Keeping track of customer demand on the sale items is going to be one of the challenges of moving to an e-commerce model. Fulfilling its customers' requests is something London Drugs strives to do in the bricks-and-mortar world, and Vollet says the supply chain management system should help track demand for products. A prototype e-commerce site already exists, but it won't go live until Vollet is 110 per cent sure that it is going to work as promised.

The global nature of the Web also presents a number of challenges. Delivering some products to the United States or to other countries can pose a problem to some of its suppliers.

"We have to be careful and respect their boundaries. For example, a television offered here might not be offered for sale in Australia. We need to work with our buyers. The educational curve is pretty steep and they have to be really cautious. We would have to have a whole new dialogue with our suppliers," Vollet says.

While e-commerce is still in the company's future, it is having success putting other parts of its business on-line. Currently, photofinishing customers can access their pictures on-line, digitally manipulate them, and e-mail them to friends.

The service Vollet is most excited about is LDHealth.com (http://www.ldhealth.com), which offers both a library of information on common medical conditions and the capability for existing London Drugs customers to renew their prescriptions on-line.

Bringing the pharmaceutical side of the business on-line means facing government restrictions, and customer concerns.

"LDHealth.com is our most secure site. The customer's information at the pharmacy is kept in a separate database. We are very involved in local regulatory bodies [looking at issues around on-line medical records]. We exceed all regulatory body requirements in terms of security," Vollet says.

Despite the challenges of putting the London Drugs business on-line, Vollet has found the process satisfying.

"I think the business reward is that I see the internal team and structure pulling together -- everybody from merchandising to the buyers to the IT group.

Everybody understands the goal and the objectives."

But, he warns, getting there isn't easy.

"The surprise is that the complexity of putting your business on the Web is something that people underestimate," Vollet says.

Carolyn Gruske is a Toronto freelance writer who specializes in IT reporting.

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