Walgreens plans to shutter Drugstore.com and Beauty.com
July 29, 2016 11:44 AM
Walgreen Co. is pulling the plug on Drugstore.com and Beauty.com.
Walgreens.com, No. 37 Internet Retailer 2016 Top 500 Guide, says it will shut down both sites by the end of September and focus its attention on Walgreens.com. “There were several options we considered to focus on shareholder return, but right now our intention is to focus on Walgreens.com,” a company spokesman says.
Walgreens acquired Drugstore.com and its subsidiary e-commerce sites Beauty.com and SkinStore.com in 2011 in deal valued at $409 million. At the time, Top 500 Guide ranked Drugstore.com No. 46 and Walgreens No. 73. Drugstore.com’s 2010 web sales were $456.5 million, according to Top500Guide.com.
Shuttering the subsidiary sites indicates Walgreens’ desire to build a single brand centered on health, wellness and beauty, says Paul Schrimpf, an associate partner at brand and marketing consultancy firm Prophet.
“Walgreens is bolstering its presence online to compete with the likes of Amazon, which is stealing sales from it,” Schrimpf says. “The misperception is that Walgreens’ greatest competitor is CVS. It’s not. It’s Amazon in retail, and the likes of OptumRx in prescription drugs.” Amazon.com Inc. is No. 1 in the Top 500.
Having two fewer brands to worry about will allow Walgreens to focus its e-commerce strategy on the flagship site, he says.
“It’s about winning online, and to do that it needs to build a strong, single brand,” Schrimpf says. “It is not only more efficient to invest in one brand, but also more effective because you’re able to cross-sell other products.”
In May, Walgreens sold SkinStore.com to The Hut Group, a U.K-based mass merchant that owns other e-commerce sites including MyBag.co.uk, MyProtein.com and ThuHut.com. The Hut Group is No. 56 in the Internet Retailer 2016 Europe 500.
Walgreens’ other domain, VisionDirect.com, an e-retailer of contact lenses and eye care accessories, will remain its own digital entity, the Walgreens spokesman says.
Walgreens would not say if it plans to sell the domains Beauty.com or Drugstore.com after shutting them down. Keeping the domains would ensure that a competitor doesn’t buy them and use the assets to compete with Walgreens, Schrimpf says. It also leaves the door open for Walgreens to possibly reuse them in the future, he says.
“At Prophet, we’ve helped many clients launch innovative new offerings, and resurrecting old, already-owned brands and domains often makes this easy, effective and cheaper,” Schrimpf says.
Russ Winer, a marketing professor at New York University, however, speculates that Walgreens may sell the domains, which have brand equity, especially Drugstore.com, he says.