7 factors changing the OTC e-commerce business
The OTC e-commerce channel is the 900-lb. gorilla in the traditional domestic and global retail worlds. A U.S. brand owner is now confronted with a global pricing discipline challenge. The speed and ubiquity of product pricing and information has forced the issue. To paraphrase Hermione in “Harry Potter,” everything has changed.
In 300 BCE, Greek astronomers proved that the earth was round. This is the old retail world. Today’s digital era has enabled customers and consumers to make it flat again with ongoing implications: “Product” has a broader definition. Speed to market and pricing discipline are not optional.
- Products are sold differently now. Consumers seek health or beauty solutions that combine products, information and tools that solve bigger challenges. Products are increasingly part of a broader solution. This requires internal cooperation and alignment. Selling just a product will inevitably lead to being treated like a commodity.
- Product goes somewhere. U.S. sales organizations inside a company with global aspirations can no longer dump or close out product by shipping it to an unknown destination via a potentially less-than-reputable wholesaler. Price points and expectations are being set in important future markets. This practice can be especially tough to break, as annual plans are set on last year’s numbers. It’s a vicious cycle. When negotiating in Korea or China, e-commerce pricing (and therefore the entire value chain) usually come up in the first 30 minutes. Lowered margins leave no room for formal launch marketing budgets.
- The consumer and customer have leverage. Digital technology enables product research, exploration of alternatives and real-time interaction with similar customers previously not available. The unfettered digital world is real. Chinese consumers get their U.S. product information from Alibaba’s Taobao or TMall.
- Speed (or the lack of it) can kill. Product differentiation and functionality can be copied. New offerings and competitors come to market quicker. When bird flu hit Asian markets, there were 40-50 new instant hand sanitizer brands within weeks.
- Legacy business models are a problem. Existing business models — organization structure, skills, processes and culture — are built for an environment that is disappearing. Delivering superior cross-functional, customer solutions wrapped in customer experience wins, but the functional silo company isn’t wired to deliver that. Brand owners that re-wire themselves by horizontally encouraging and incentivizing cross-functional interaction will survive and thrive. Mindset is everything. Walmart has a strategy to combat Amazon with the Jet platform. Major drug chains like Walgreens and CVS Pharmacy lag in this area.
- New business models are a problem. Amazon Dash has created an automatic replenishment solution for customers requiring little active involvement. This impacts the entire distribution chain: reduced pricing flexibility, distributors and transportation providers cut out and ultimately, retailers eliminated.
- New competitors are born agile. Digital startups do not have legacy systems and are formed around agile passionate cross-functional teams. They are lean, low-cost and productive TODAY. Meanwhile, legacy companies must deal with entrenched organizational interests that resist change, especially when jobs are threatened. They move slowly, extremely slowly if at all. RIP Sears.
Culture is a precursor to digital transformation and requires senior leadership. Everything has indeed changed. Who thought the world could be so flat?
Ed Rowland, is a Drug Store News contributing editor covering global issues. As the principal of Rowland Global, he believes in the promise of global business and supports companies in their strategy, tactics and execution of international growth initiatives. He thanks fellow Executive Forum members Mike Prebenda and Ed Cannon for permitting borrowing from previously co-authored digital articles.
C&D’s latest Replens moisturizer addresses chafing for women
EWING, N.J. —Church & Dwight on Tuesday introduced a hormone-free and fragrance-free Replens Moisture Restore External Comfort Gel, for soothing relief from external vaginal dryness, in menopause, post-partum and after a cancer diagnosis.
"Ladies, don't despair. Vaginal dryness can be a nuisance at any age. It's one of the most common symptoms of menopause and unfortunately, can worsen over time," stated Mary Jane Minkin, clinical professor of Obstetrics, Gynecology and Reproductive Sciences at Yale University. "Luckily, there are non-hormonal products like Replens," she said. "I recommend these products to patients as first line therapies to help relieve internal and external vaginal dryness."
The same hormonal changes that cause internal vaginal dryness can also contribute to external vaginal discomfort. The outside skin surrounding the vagina can become irritated and cause discomfort during normal daily activities like walking, prolonged sitting, exercising and bike riding. Replens Moisture Restore External Comfort Gel with the HydraPro Complex, a blend of moisturizers and vitamins including Vitamin E and Pro-Vitamin B5, helps soothe and relieve irritation, discomfort and chafing from external vaginal dryness.
The Replens family of hormone-free products work together to provide a complete solution to vaginal dryness and discomfort. Replens Long-Lasting Vaginal Moisturizer relieves internal dryness for up to three days, leaving tissues hydrated by helping to replenish moisture and rejuvenating dry internal vaginal cells while Replens Moisture Restore External Comfort Gel addresses vaginal dryness on the outside skin. Replens Silky Smooth premium silicone personal lubricant supplements the body's natural lubrication when applied just before sex to ease penetration, increase slipperiness, and enhance intimacy.
More supermarkets investing in health and wellness as growth vehicle, FMI reports
ARLINGTON, Va. — Health and wellness represents a significant growth opportunity for supermarket retailers, according to 81% of the food retailers who participated in a recent Food Marketing Institute survey. That's up from 70% in 2014, FMI reported.
"The convergence of the changing health care environment; consumers’ interest in having a closer connection to their food; and supermarket-solution-provider capabilities all create the potential for dynamic relationships between the food retailer and the shopper," noted Sue Borra, chief health and wellness officer for FMI and executive director of the FMI Foundation. "As a nutrition educator by training, I view this convergence of factors as a trifecta for positive behavior change."
And more supermarket operators are investing in that growth opportunity with a window office in the c-suite. "If I look back to just three years ago in our industry, two primary leadership teams held responsibility for operationalized health and wellness initiatives in food retail – pharmacy (59%) and nutrition (50%) leadership teams," Borra noted. "Now we’re witnessing an entire category of managers for health and wellness leadership: 71% of these professionals are focused experts leading the decision-making process on how programs are established and operationalized."
Other key findings from the survey, published in the FMI Retailer Contributions to Health & Wellness 2017, were:
- 72% of respondents also view health and wellness as a significant growth opportunity for their own store brand;
- 89% of food retailer respondents have established health and wellness programs for customers, employees or both and 96% are committed to expanding programs in their stores; and
- In more than 50% of stores, product sampling (86%), healthy recipes (86%) and good-for-you-products (86%) were ranked highest among strategies to promote health and wellness. Smartphone apps and text programs for creating grocery lists was second at 68%.