drugstore.com hopes it has the right Rx for e-commerce success. A subsidiary of drugstore-giant Walgreen, the e-tailer sells some 75,000 name-brand and private-label health and beauty items, personal care products, household goods, and over-the-counter (OTC) drugs through its website and by telephone. A partnership with GNC Corporation allows drugstore.com to offer the retailer's vitamins and wellness products online. It also sells high-end cosmetics and skin care items through its Beauty.com unit. The company markets contact lenses through its Vision Direct subsidiary and customized nutritional supplement programs through its Custom Nutrition Services subsidiary.
Change in Company Type
Walgreen acquired drugstore.com in a deal valued at $410 million in 2011. The purchase made drugstore.com an integral part of the US's largest drug retailer and enhanced Walgreen's online presence. To date, Walgreen has retained the drugstore.com brand and website, but eventually will fully integrate the drugstore.com operations into its existing e-commerce business.
The addition of drugstore.com boosted Walgreen's fiscal 2012 (ends August) by 1%.
The timing of Walgreen's purchase was advantageous for the online retailer, which had been logging mounting losses. Since its founding in 1998, drugstore.com's sales rose, but the company failed to turn a profit on a consistent basis. In its last year as an independent company, drugstore.com generated $456 million in revenues in 2010, a 21% improvement over 2009 ($375 million in sales). However, its losses widened from $1 million in 2009 to more than $3 million in 2010.
Drugstore.com has been actively expanding its business through partnerships with health care firms. To that end, the company partnered with leading pharmacy benefit manager Medco Health Solutions to offer its members access to drugstore.com's selection of nonprescription health care products, including over-the-counter drugs and supplements, in 2009. A partnership with HealthCare.com, a search engine for finding doctors and dentists, allows drugstore.com users to locate health care providers near them. Through its partnership with DrWeilVitaminAdvisor.com, drugstore.com is the exclusive provider of its customized nutritional supplements.