Competing With Online Pharmacies

By Lori Luechtefeld

Online pet pharmacies continue to grow into increasingly formidable competitors in the veterinary supplies market. But consultants say veterinarians  shouldn’t conclude that the death of all in-clinic sales is inevitable.

Jennifer Inbody, CVPM, PHR, of Lead Dog Consultants in Punta Gorda, Fla., notes that many veterinarians  and practice managers are concerned about competition from online pet pharmacies,  as many practices are seeing a decrease in revenues from pharmaceuticals.

“I have even heard several veterinarians  argue that these companies are taking revenue that is rightly theirs,” Inbody says. "Unfortunately, these pharmacies are a fact of life for our profession. We need to continue to work on finding ways for all of us to positively interact with one another.”

Given today’s economic climate, clients are likely to view prescription pet medications as commodities because the products appear to be the same, regardless of their source, says Bill Kearley, DVM, MBA, of Kearley Consulting in Boise, Idaho.

“When something becomes a commodity, there is a natural desire to seek the low-cost provider,” he says. “This is especially true for products that a client buys repeatedly over time.”

Prime examples of such products include heartworm and flea and tick preventives. 

When purchasing a perceived commodity, people focus on price and ease of purchase—two areas where online pharmacies excel.

“The way to make a product less of a commodity is to integrate the product with concurrent service as much as possible,” Dr. Kearley says. “The future for veterinarians will demand they focus on services for the majority of their net income.”

Strategies for Success

Because large online pharmacies are in a position to move a large volume of product—much more than the average veterinary clinic—they are often able to offer lower prices on some common medications.

Inbody notes that some veterinary practices have attempted to compete with online pharmacies by matching prices.

“If the practice is going to use this tactic, it is important to make sure you are covering, at a minimum, your actual cost and to also tie education in with the sale of the product,” she says.

Inbody also recommends that clinic staff ask clients what the practice can do to make purchasing from the practice more convenient.
Along these lines, Kearley says practices need to offer easy refills of prescription medications.

“Many offer an easy-to-use system on their website that clients can log into and order a prescription refill,” he says. “A quick and efficient pickup system needs to be in place when the client stops at the hospital to pick up the medication. If someone has to wait in line for 30 minutes just to pick up their prescription, there is more incentive to go online for the next refill.”

Some clinics have toyed with charging a fee for writing prescriptions that can be filled elsewhere, including online pharmacies. But Inbody says she believes that charging a fee to write a prescription will end up ultimately hurting a practice.

“Clients do not want to feel like they are being held hostage,” she says. “I completely understand the desire for the practice to try and recoup some of the cost involved for doctor and staff time, but many pet owners will become disgruntled over having to pay this fee. Again, I understand the reasoning behind it, but is it worth losing clients over?”  

Kearley also recommends against charging a fee for writing a prescription.

“Pet owners are not used to paying their MD a fee just to get the prescription,” he says. “They are used to the requirement for regular physical exams for continued rewriting of the prescription, though.”

Likewise,  Kearley says it’s also critically important for veterinarians to stress the quality assurance of the products they sell through their practice.

“This is a definite client value compared to purchasing through an Internet pharmacy,” he says.

Getting Some Help

When it comes to competing with online pharmacies, clinics do not have to go it alone.

For example, there are services that offer group purchasing plans for veterinary clinics that help defray upfront product costs. Inbody also notes that many of the vendors that practices deal with on a regular basis will offer assistance—such as special mailing envelopes—to help practices to ship product to clients.

“In addition, there are many outside resources available to assist veterinary hospitals in creating a website—if they do not already have one—and using this site to start their own online store,” Inbody says. “(Most) clients want to purchase medications from a trusted source, their veterinarian.  So give them the opportunity to do just that.”

Inbody says she has heard nothing but good things from veterinarians and practice managers who have brought such resources into their hospitals.

“It’s a win-win situation for everyone,” she says. “The practice will have less overhead because it isn’t having to handle the inventory itself, the practice can carry less inventory, and clients can take advantage of lower costs and the convenience of online shopping and home delivery.”

Inbody also notes that, depending on which company or distributor a hospital uses, it may be able to offer other pet products, such as bowls and leashes, through its online store, thereby generating revenue from products that the clinic does not physically stock.

Kearley agrees that companies that help veterinarians offer online ordering and delivery systems to their clients can be quite useful.

“If a practice is interested in pursuing this route, it’s important to study the different companies and choose the one that best fits their particular needs,” Kearley says.

Inbody concurs. When selecting this type of service, she suggests that clinics ask for and contact other hospitals using the companies’ services.

“If you are part of an online veterinary community, ask questions and for suggestions via the message boards on the site,” she says. “It is also a good idea to request demos of several different companies to help you compare what services each provides.”

Still, Kearley points out, no one answer works for every practice when it comes to addressing online pharmacies. “Every veterinary practice has to look at the options available to them and choose the one that best fits their particular practice,” he says.