The development of retail business on the internet — e-tailing —
did not mean that there was no longer a need for retailers and wholesalers,
the conference heard.
Although at last year’s Unichem convention participants had heard that
the retail experience was dead and that the future lay in online buying, that
was not the case, Mr Barry Andrews (executive chairman, Moss Pharmacy) said.
Customers would still want to talk to people in most cases when they wanted
to make a purchase. This was particularly the case with pharmacy.
A leading online travel agent, which had grown to the size of 30 high street
businesses, had found that people researched their holidays online, but 92 per
cent of purchases took place over the telephone. The buying process was changing,
but customers still preferred the final purchase to be a person-to-person transaction.
There was still a need, if anything a greater need, for retailers and wholesalers.
But the role of the middlemen would change. It was pharmacists and wholesalers
who owned their customer relationships and the physical infrastructure and who
were best placed to capitalise on internet opportunities.
Stores, warehouses, and call centres were still the backbone of business and
without strength in these areas new businesses would fail. The most successful
e-commerce businesses such as Amazon and Etoys had both struggled to deliver
products and were now developing, or forming partnerships with, logistics companies
and bricks-and-mortar shops.
The internet enabled buyers to buy on their own terms and in their own time.
Customers no longer had to wait for a sales person; they would search a website
or e-mail a question to a support desk. In the fragmented pharmacy community
this had to be the way forward.
The pharmacy supply chain and its cost structures offered significant opportunities.
The average pharmacy held over 40 days’ stock, wholesalers held between
three and 12 days’ stock and manufacturers held significantly more. There
was considerable scope to make the whole supply chain more efficient, to reduce
costs and to improve service.
Pharmacies were likely to survive because they were required by legislation
and the demands of patient protection, at least in the short term. People valued
the speed, convenience and people contact offered by pharmacies and face-to-face
personal advice. They would not want to wait for home delivery of prescriptions
for acute conditions. However, there was a real e-tailing opportunity for repeat
prescriptions, particularly now that the Government appeared to be behind it.
Mr Andrews concluded that the internet presented both a threat and an opportunity.
Like pharmacies, wholesalers would also still be required because goods would
have to be moved in the new economy and this required vast experience.
So far as the emerging e-commerce companies were concerned, Mr Andrews predicted
rapid consolidation and the emergence of clear brand leaders. The winners would
be those who could integrate online and offline business and who were good at
the basics of traditional business.