Drugstores in The Netherlands & Online Business
who is going to be the winner and who is going to be the loser?
For some time now E-commerce in The Netherlands has been a growth market. Online shops were able to make 11% more turnover in the second quarter of 2013. Brick-and-mortar stores, however, saw their turnover taking a dive down (CBS, 2013). This again shows the importance of online for any business. Bijenkorf – the Dutch equivalent of Bloomingdales or Harrods – has responded to this trend: this ‘brick and mortar’ retailer has recently decided to shut down some of the stores throughout The Netherlands and invest heavily in their online business.
In light of this development, we compared six well known Dutch drugstores in an online business scan. The key question being: who is going to be the winner and who is going to be the big loser?
By [icon style="linkedin" color="53001b"] Marcel Nahapiet & [icon style="linkedin" color="53001b"] Roel Hendrikx
The concluding TipsAs a result of the online business scan we formed the following considerations. DA: choose a niche. This can either be ‘expertise’ (moving somewhat towards a pharmacy) or personal contact (the drugstore near you). Becoming a price-fighter is not a feasible option: we think you can never win that battle. Kruidvat: intensify your online activity. Kruidvat has all the elements in place to become a – or the – online winner. To become the winner, Kruidvat needs to get at least on par with Bol.com and Drogisterij.net when it comes to online shopping and delivery. Furthermore the app needs to be upgraded to a sales and loyalty channel. Etos: choose  become an aisle in the affiliated Albert Heijn supermarkets – or –  aim for either a niche or mass market. Etos is not a cosmetics store like Douglas, nor a drugstore like DA or DeTuinen. It is somewhere in between. With the business processes and tools of the sister companies (Bol.com, Albert Heijn) Etos should in theory be able to conquer the online world… but what are the plans of the mother company Ahold are with the brand. Drogisterij.net: invest in loyalty and online marketing. Drogisterij.net is a strong online player, but it can be rivalled rather easily. Drogisterij.net is in trouble as soon as any other company is cheaper or better equipped in reaching customer. Drogisterij.net is still a relatively unknown brand in The Netherlands, so increasing awareness is paramount. That is step-1 in building a relation with the customer. A loyalty programme needs to be in place in order to keep the customer hooked. Bol.com: claim the drugstore market. Even though Bol.com is not known as a drugstore, they do offer the drugstore line of products. They only need to put the word out there. De Tuinen: work on the branding and atmosphere of your websites and social media. The experience in the brick and mortar store is excellent, but the online counterpart withers in comparison. And all the while DeTuinen’s image is perfectly apt for online application. DeTuinen: make it happen.
We have come to these concluding tips by executing the online business scan, the summary of which is given below.
THE ONLINE BUSINESS SCAN
Summary of the Online Business Scan. Executed in August – September 2013.
We have compared six drugstores in this online business scan. We deliberately took some of the traditional drugstores on the one hand and newer competitors on the other. We weren’t able to include all of the aspects in this scan, like e.g: the IT capabilities, sales & conversion figures.
DA suffers from an identity crisis. It used to have the identity of the solid and trustworthy drugstore in your vicinity. But now it is hard to tell if it is a price-fighter or an expert. The website DA.nl comes across as unstructured and unfocused: there is a lot of irrelevant information, there is a myriad of ads and it is like a brochure put online (literally: you open PDF documents of their products). We get the same feel on their social media channels Facebook and Twitter.
The next question is: can you order online at DA? The answer is: no and yes. You cannot buy products on the DA.nl site, which is a bit surprising as they put so many ads online. There is a website with the name “DA” in the website’s address. This site, however, is not run by DA headquarters. In fact it is the web shop of one individual store (in the city of Vianen) within the DA company. This is very confusing. On further investigation we found even more DA brick and mortar stores with their own web shops. The branding is inconsistent and DA stores are now competing with each other. This may be the downside of their franchise model.
All in all there is an inconsistent image being projected. DA scores worst in this online business scan. If they don’t get their act together they may be marginalised even more.
Kruidvat shows a much better picture. Their site is well structured and you can have your order delivered at home. They have an app for customers giving push notifications for personalised discounts. The app doesn’t do much more than that, but it is a very good way to keep customers interested and have them make a trip to the store.
Their strength lies in the combination of a wide variety of products, online shopping & home delivery, and they have successfully manifested their price-fighter image. The odd thing is the two separate shopping baskets in the web shop. One for their products, and one for the trips to the zoo or a stay in a hotel.
Etos has two websites: Etos.nl and webwinkel.etos.nl. The latter is the web shop. We ask ourselves, why two websites? It puts up an unwanted hurdle for buying online at Etos. Etos.nl is probably what potential buyers enter in their browsers when they want to buy at Etos. But you can’t buy anything on that website, and to make things worse: there is no clear link to the web shop.
The website Etos.nl is a content based website with an occasional link to a PDF brochure. It took us some effort to find they had a separate store, much like DA. The sites are hard to use on smartphones and tablets and there is no app. This makes them perform poorly in this online business scan.
Etos’s activity on social media focuses on product promotions and answering questions. They do have a relative large amount of likes on Facebook, but their branding lacks a bit. Just compare Boots and Etos and you can immediately see the difference.
This is a true online company. There are no stores in the streets. Their brand is less known in The Netherlands then DA, Etos or Kruidvat, but they seem to be able to attract as much online visitors as the better known drugstores. This is probably due to a well executed search engine and advertising plan. They do have social media, but this is still in a very undeveloped state with a small audience and low activity.
Drogisterij.net stands for price (low), a wide variety of products and service (delivery at any location). Their positioning is similar to that of Bol.com and Kruidvat. We think Drogisterij.net can increase their success by utilizing social media much more and increase the awareness of the broader public.
The first impression of their web shop is good. They know to instill trust with a clear website, customer reviews of products, the phone number of customer care and the famous “Thuiswinkel” seal (a mark for trusted online shops).
Even though Bol.com is not a drugstore they do offer the line of products. Bol.com is one of the largest online retailers in The Netherlands. Typically known for books, music and electronics, and expanding their line of products continuously. They are the Dutch Amazon.com.
Their website is excellent and works perfectly on smartphones and laptops. They don’t have a customer app – like Kruidvat and Drogisterij.net – which could be a next step. An app can be better equipped at extending the customer intimacy with personalised discounts and help in collecting your order at a physical location.
In our opinion it would seem relatively easy for Bol.com to claim the online drugstore market. They have the right means to address the nation, both through TV / Radio ads and through their own extensive e-mail list. They have recently sent out an e-mail to their client base launching a new line of clothing. But as said, they might as well do this on TV and Radio. The drugstore market is within Bol.com’s grasp.
Bol.com is a part of the Ahold corporation. Ahold owns the supermarket chain Albert Heijn (the largest in The Netherlands), liquor store Gall & Gall, drugstore Etos and the delivery service named Albert. Together they have a dense network of stores, online shopping possibilities and a delivery system at any place: at one of the local stores, at home or at your office.
Again: Bol.com is not known for offering drugstore products, but that seems to be only a marketing campaign away.
De Tuinen has a very unique identity in their brick and mortar stores. It differs significantly from other drugstores in the cities and De Tuinen has a unique line of products.
But even though De Tuinen is successful in creating an unique shopping experience in city centers, they are far from achieving a good online experience. Their website is out of date and is not able to convey the unique identity of De Tuinen. They are somewhat better at communicating their identity through social media with organic and sometimes esoteric images, but there is too little connection to the store and their line of products. The website is an online shop, but it is unusable on mobile phones.
We have the impression that De Tuinen is unaware of the importance and potential of online business.
TRENDS IN THE MARKET
The drugstore market shows a scattered image of vendors. There are traditional drugstores (some of which have not yet really tapped into the potential of online business) there are big retailers with a strong online business and there are small entrepreneurs running specialised web shops (like Scheermesjespro.nl, specialising in razors).
We won’t be surprised if this market will develop in the same way the consumer electronic or bookstore market has developed. A few large retailers will dominate the market – offering shopping & delivery convenience – with a array of niche players offering expertise and specialised products.
TREND-1 MEASURE & OPTIMISE
In the online world everything is measured and optimised. We see this trend crossing over to the real / brick and mortar world. There are shops experimenting with facial recognition or registering who visits their physical store in order to offer a personalised experience.
Larger retailers are better equipped with tools and processes then the smaller ones. This is true for the online drugstore market as well. The challenge for all of them is to upgrade their optimising capabilities, if they want to survive.
Internet is accessed on mobile devices. This has been true for some time now, so we were quite surprised to find drugstores with mobile-unfriendly websites and to find a lack of apps. Mobile is a direct communication channel with your customers, a perfect way to increase loyalty through personal services and offerings. Especially in a saturated market as the drugstore market is, convenience services are a key element in keeping customers. Walgreens and Walmart, for instance, offer apps making it easy to order prior purchases again, help you find your way through the brick and mortar store and even cut the long checkout line. The Dutch drugstores can learn from these examples.
TREND-3 WEB SHOPS OPEN BRICK AND MORTAR SHOPS
Web shops have been opening their first set of brick and mortar shops lately. And with success. This signals a clear threat to any established company. And at the same time we see traditional stores opening their doors in the online world.
Both the physical and digital world are merging together and the companies who are able to manage this well will win the game.
Some of the six drugstores are well behind and need to strategize and catch up. Some of the companies who are ahead need to stay so.
TREND-4 A FEW BIG ONES
Markets have a tendency to generate a few big companies and a larger set of small ones. Apple and Amazon.com have changed the music and book market dramatically. Mediamarkt is the largest consumer electronics brand in The Netherlands, with a set specialized small stores servicing the fringes of the market.
We think the same process is about to happen in the drugstore market. Every company who is currently active in this market needs to make choice. Aim for the mass market or for a well defined niche market. Right at this moment DA, Etos and DeTuinen are the weakest players. Make a choice, excel in making that choice a reality and make yourself unmissable in the market.
These are four trends we see as the most relevant for the six drugstores. Bol.com, Kruidvat and Drogisterij.net are best positioned – right now. But there is still a lot of untapped potential of the online domain for all of these six companies. In the continuous effort to attract the customer, the question is:
who of these drugstores will be the first to lose the battle?
Marcel Nahapiet & Roel Hendrikx