Actinic Case Study – The Garden Pharmacy

Online Pharmacy Comes Up Smelling of Roses

Selling online isn't just the territory of pure play startups; well established high street businesses, like The Garden Pharmacy, have also benefited from adding an e-commerce sales channel. It's combined bricks and clicks turnover is now £3.5 million with almost 40% coming from the web.

Back in1985 Harry Ganz opened The Garden Pharmacy in London's Covent Garden where it still has a presence today. Specialising in top of the range cosmetics and perfumes as well as everyday pharmacy products, the store has been very successful. However with rents soaring (the shop is currently paying 25 times the original rent), the business needed to look at other ways of increasing turnover and profit beyond passing footfall trade.

Early days

"In 1995 we were introduced to the internet by a company who set up a few basic pages for us. In spite of this, it was not long before we were receiving emails and enquiries followed by orders," Harry recalls. "About a year later, we added PGP (Pretty Good Privacy) security to the site so that people could order online with credit cards, but by early 1999 we decided to set up a full ecommerce site. After considerable investigation, we settled on Actinic's Catalog software as it offered all the functions we required; could be easily set-up by ourselves; integrated with our in-store EPOS and stock control systems; and was very inexpensive." The www.garden.co.uk site was totally redesigned by web designers: Smart Epos, and re-launched in January 2001 for an investment of only £5000.

Harry comments, "Since the first ecommerce site was established in 1999, the volume of orders has increased dramatically, and continues to do so. 2000 saw an increase of 90% over 1999. Our internet revenue has now become more than a sideline to the bricks and mortar business – it accounts for 38% of total turnover and of our 28 staff, three are full-time on mail and web order processing."

Overcoming obstacles

In fact Harry says that Garden Pharmacy is now the UK's largest online pharmacy and perfumery with 3500 lines ranging from £5 to £95. The site offers cosmetics and perfumes from the likes of Clarins, Clinique, Elizabeth Arden, Chanel, Lancome, Vichy, Revlon, Estee Lauder and many more. "But it hasn't been straight forward to get these brands online," he adds. "This was because of problems of prestige, and a feeling that ecommerce did not suit luxury cosmetics. However, with the introduction of web syndication (this ensures consistency of the branding across the web as the e-stockist's site has an embedded link to the manufacturer's content e.g http://www.garden.co.uk/chanel/chanel_container.php), some of the companies are now more ready for ecommerce. For instance, after three years of negotiations in December 2003 we launched Chanel on the website, to be followed soon by Clinique, Lauder and Lancome – all using web syndication."

But it's not just the glamorous items that are sold online, the site also has a pharmacy section selling mundane items like hair loss treatments, problem skin ointments, anti-smoking products, family planning aids, plus a section for healthy living (e.g. vitamins, homoeopathy, supplements and slimming aids). As to best sellers, Harry has found, "Generally, the more 'niche' or hard-to-find, the more successful the internet sales."

The customer is king

But whatever you sell online Harry points out that, "There are two ways of handling e-commerce: price cutting or top-level service. We have always concentrated on the latter." Examples of good service include responding to emailed queries within two hours, acknowledging and remedying any problems immediately, and sending free samples of other beauty items with every order. This has lead to plenty of positive feedback and even sales on the sample products. And the proof that customers value such service is in the high level of repeat orders – over 20%.

Marketing

Harry Ganz has strong views on marketing that have served his business well:

• No print advertising
• No paying for space (e.g. banners, pop-ups) on other sites except on a pay-per-click or commission basis.

One of his secrets to attracting visitors, who now can top 90,000 per month, is affiliations. The site currently has a network of 900 affiliates through AffiliateWindow.com that generate 12-14% of traffic. Harry has now introduced a direct feed between his online catalogue and the affiliate shopping portals, so a visitor at one of these sites searching for a specific perfume, for instance, gets a list of stockists with a link to buy at Garden Pharmacy at the top.

Of course, affiliates are paid commission and Harry has opted for a generous 10% double that of the majority of beauty sites, but he is more than pleased with the results.

The other key marketing tools are the more well-known search engine optimisation and pay-per-click on Google and Overture which generate another 20% of all visitors.

Finally

So beyond the reticence of some manufacturers, introducing ecommerce has brought few negatives and far more benefits. Issues like customers giving addresses where there is no-one available to accept the delivery are not insurmountable and a rapid response to rectify the problem means the consumer always ends up satisfied.

As a final word, Harry Ganz has some advice to offer anyone venturing into e-tailing. "Don’t spend more than you expect to be able to generate from the site. Increase spending as turnover increases."

Garden.co.uk Facts and Figures

• Unique visits: 25,000 per month in Jan 2001; in 2004 it's 70,000- 90,000 per month.
• Online orders: 1000 orders per month in January 2001; 3000 – 3500 per month in 2004. Sales up 50% for Christmas.
• Average order online: £42
• Current annual turnover: £3.5 million

www.garden.co.uk
www.smartdecisiondotnet.ltd.uk
www.affiliatewindow.com