Pharmacies go out of business due to online competition

The share of online sales of pharmaceuticals will grow at least by 25–30% annually.

General Director of Factoring PLUS Viktor Vernov shared this forecast adding that the increase in the share of e-commerce is driven by vendors expanding their offer as well as by new consumer habits in buying health-related products.

The growth potential is enormous here, especially when you look at foreign markets. In the United States, where a preventive healthcare culture had developed long before last year, the segment of vitamins, dietary supplements, and beauty and health products is tens or even hundreds of times bigger than the same market segment in Russia,” the expert noted.

According to Vernov, the growth in e-commerce will entail a drastic reduction in the number of offline points of sale, and their operation will mainly be reduced to distribution of online orders. Conventional retailers that have already announced their interest in developing the pharmaceutical component will also play a role in the off-trade pharmaceuticals market’s contraction.

In the near future, most of the pharmacies will rebrand as departments or shop-in-shop tenants in large grocery chains and again, will focus on servicing online orders.

Retailers will develop their own pharmacy brands, the expert says while also admitting there may be collaborations between existing pharmacy chains and smaller retail players, primarily in the regions.

The number or identity of players will bring no surprises, Viktor Vernov notes. The e-commerce leaders as well as businesses now extending to this segment through mergers and acquisitions — Ozon, Wildberries, Yandex.Market, Sberbank, X5 Group, Magnit and others — will join the race. It is possible that large global players like Amazon will also give it a try.

Marketplaces will increase their online sales, and retailers will boost their overall turnover by attracting additional customer traffic.

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