Drugstore.com reports booming business, plans for expansion with microsite

7/31/2009

BELLEVUE, Wash. While retailers have experienced flat to declining revenues through the current recession, Drugstore.com’s online business is booming on account of two trends: 1. over-the-counter medicines and beauty products which are historically recession-resistant, and 2. more consumers are turning to the Internet in their search of deals.

“Overall revenues [for the quarter] were $100.3 million, the highest in company history,” Dawn Lepore, Drugstore.com CEO and chairman, told analysts Thursday evening. “OTC revenue grew 10% despite flat-to-declining e-commerce industry trends.”

And the online West Coast retailer envisions that OTC revenue continue its upward climb by hundreds of basis points going forward, thanks in part to Drugstore.com’s corporate partnerships with Medco and Rite Aid and the imminent launch of a new Drugstore.com concept called “microsites,” where Drugstore.com will create an online destination center around specific OTC categories that go beyond the offerings available on its core site.

Drugstore.com on June 1 officially launched its online Medco Health Store — a branded Medco site powered by Drugstore.com where Medco’s 60-million-plus covered can order over-the-counter medicines online.

“This is an exciting opportunity especially when you consider that $20 billion in pharmaceutical drug [sales] are expected to go OTC in the next five years,” Lepore said. “We offer over 20,000 of our SKUs on their site categorized [by] healthcare condition.”

And the e-retailer plans to launch its first microsite — Sexualwellbeing.com — next week with the goal of being the low-cost leader specifically in that category. “We are able to leverage our existing inventory and organization to cost-effectively launch a series of sites dedicated to specific areas,” Lepore explained. “Sexual well-being is an obvious category for a microsite. There [will be] some additional products [on that site] that may not be appropriate for the Drugstore.com site,” she added. “There are a number of categories — everything from mens to allergy — that are very promising microsites.”

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