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Challenges in Pharmacy Retailing And How to Tactfully Overcome Them

Challenges in Pharmacy Retailing And How to Tactfully Overcome Them

Significance of Pharmacies in a Healthcare Ecosystem

After hospitals and clinics, pharmacies play the role of an important delivery channel in a healthcare ecosystem. It is through retail pharmacies that people get access to medicines and other medical supplies at the local level. Visiting doctors in local pharmacies provides people with an easy avenue to access preliminary consulting services and recommendations for more advanced medical consultation and care. Pharmacies also create employment opportunities. Qualified pharmacies are also capable of playing the role of delivery partners in mass health campaigns.

Given the importance of pharmacies in a healthcare ecosystem, managing them professionally becomes critically important. That aside, pharmacies are also business enterprises. There are unique requirements and challenges that come with establishing and running a pharmacy business.

In this blog, four common challenges faced by retail pharmacy businesses are highlighted with a curative approach.

Challenges & Solutions

Operational Challenges

One of the important requirements in the pharmacy business is that only registered professionals with the recommended qualifications can oversee the operations of pharmacies. The challenge here is that there is a scaling shortage of qualified pharmacists in the world. Pharmacy education has witnessed falling intake in colleges and universities. Since a large majority of pharmacies fall in the category of small businesses, the pay factors also emerge as an impediment in encouraging students to get into this profession. To overcome the problem of finding the right talent, pharmacies should reach out to relevant colleges and universities and promote their business vision and employment opportunities. Interaction with students is an important component in this endeavour.

Inventory management is another domain that calls for high standards of management in the pharmacy business. A universal requirement is to ensure that the required stock is always available while avoiding overstocking. Pharmacies also need to keep an eye on the expiry dates of products and replace their stock accordingly. The third factor is keeping updated products as medicines are subject to change driven by new research and development. The fourth factor is that pharmacies have to keep realigning their stock based on seasonal demand. These are considered operational challenges because they cannot be overcome without having the right inventory management system in place.

Two key solutions to address operational challenges in the pharmacy business are pharmacy standard operating procedures (Pharmacy SOPs) and pharmacy management software.

Planning and Strategic Challenges

Business idea validation is the first every entrepreneur and business owner should be taking. This is usually a long and time-consuming process. It must begin with the reasons for selecting the business concept. It helps establish and leverage inherent strengths in possession. This gives critical directions to business models and business plans. For instance, having own commercial space gives a competitive advantage from the beginning. However, strengths and weaknesses are not so straightforward in today’s world which makes this job more challenging.

The next planning and strategic challenge emerging is market research. Many businesses undermine the importance of market research or substitute it with a general understanding of markets and consumer behaviour. What makes market research challenging is data collection and generating meaningful and actionable insights from the reports. To shorten the process of market research, there is also a common tendency to avoid comprehensive and customised studies and analyses. Until the benefits of going to great lengths in understanding markets are not realised, it is difficult to see the reasons for making the required effort.

Another planning and strategic challenge from the domain of business model development is recognizing the on-spot value propositions. Different markets have different features and necessities. This influences what value propositions are sought in each market. If there is a mismatch here, it becomes difficult for businesses to attract and retain customers.

With flaws in planning and strategies, growth and expansion become very difficult for pharmacies.

Financial & Commercial Challenges

Pharmacy inventory management has financial and commercial implications at many levels. Pharmacies must carry a wide variety of inventory based on demand projections. There is also the need to keep adjusting inventory based on expiry dates of products. This calls for a certain degree of meticulousness in purchase planning and implementation. Then there is the need to avoid keeping situations of understocking and overstocking at bay. New players in both online and local markets often make pharmacy retailers slice discounts from their margins. This presents a bit of a difficult situation for businesses with low inventory turnover.

Rising operational costs make managing finances and other commercial aspects even more challenging. Some of the common sources of rise in operational costs come from rental hikes, hikes in tariffs of utility services, higher pay to attract and retain talented and productive employees, etc.

Changes in the regulatory framework not only call for operational adjustments but they also have financial and commercial implications in areas like taxation, wages and salaries, renewal of trade licenses, technology, etc. The necessary adaptation must be quick and smooth which is often challenging in a short span of time.

Competition, changes in industry standards, and alignment with customer expectations with time demand that pharmacy businesses keep themselves updated from time to time. Making such adjustments in business comes at a cost. Digital transformation fits as an example here.

Cash flow management is a tough nut to crack in any business. Pharmacy stores are no exception. Without prior knowledge and expertise of the principles and practices of cash flow management, it can take a long time to learn from experience alone. Businesses cannot afford to indulge in the luxury of time when better alternatives are available.

Technological Challenges

On the technology front, the inventory management software application is one of the most rudimentary necessities in pharmacy retailing. Having the right software empowers retailers with the inventory information and insights to keep a tab on stock levels and make timely and precise decisions pertaining to pharmacy inventory management like checking expiry dates, reordering, budgetary controls, etc. Different software products come with different capabilities. The key here is ascertaining the technological solutions that best meets the business demands. Dependencies on stock registers as a primary platform for inventory management slow down the entire business. Recording information on registers and copies is highly subject to misunderstandings.

Another critical technology is the pharmacy billing software. Having a user-friendly billing software application that also meets the business requirements helps reduce the waiting time for customers at checkout counters. It is also important that the billing and inventory applications are properly integrated so that stock levels are updated in real time and reorders are placed on time.

A technology that is becoming increasingly relevant in this industry is pharmacy analytics. It is very important to corroborate and analyse business-specific data for better alignment with market demand, consumer behaviour, and staying true to localisation. More specifically, a good analytics application helps make more accurate demand projections, read consumer behaviour with insights based on statistics, measure the performance of suppliers, carry out process audits, etc. It is difficult for many businesses, especially the ones with traditional triumphs and seeking to modernise, to correctly identify the best-fit analytics capabilities for their business.

About Your Retail Coach

YRC is a retail and eCommerce consulting brand specialising in delivering tailored enterprise solutions for businesses of all sizes including startups. With over ten years of experience and a success ratio of over 94%, YRC has worked with more than 500 clients in 25+ sectors. Today, YRC is a brand with a growing global presence. In pharmacy business consulting, YRC specialises in planning and implementation services and solutions for business setup and expansion.

To learn more about our pharmacy business consulting services or to speak to one of our expert pharmacy business consultants, please drop us a message and we will reach out to you at the earliest.

FAQs

How to attract and retain customers in pharmacy business?

Here are some important considerations revolving around branding and promotional initiatives:

  •         Improving the look of the store with modern exterior and interior solutions
  •         Displaying certificates, accreditations, business alliances, etc.
  •         Association with renowned and reputed healthcare service providers
  •         Onboarding renowned doctors/specialists on a visiting basis
  •         Building digital presence, business listing for search engines, and social media presence
  •         Professional staffing solutions

For customer retention, there should not be any deviation from the expected and required standards in the core offerings. It is also imperative to conserve consistency in the delivery of overall value propositions.

Should I start my own pharmacy business or take up a franchise?

Here are three important considerations:

  •         Level of competition: Is your target market very competitive? Getting associated with a brand in the form of a franchise provides a direct competitive edge. If there is no significant competition, starting your own business provides an opportunity to play as an independent enterprise and become the market leader.
  •         Financial and commercial implications: Making the necessary financial and commercial projections helps gauge the economic aspects of a business decision. The financial and commercial conditions of franchising vary from brand to brand. It is recommended to make a detailed analysis of each franchise option.
  •         Expertise to set up the business – Establishing a business calls for a certain degree of knowledge and expertise concerning the nature of the business. There are functional strategies to be formulated. Layout planning must be done. The operations framework must be designed. There are technology-related decisions to be made. For every type of business, the requirements on these fronts vary. For example, the layout strategy for an apparel store cannot be the same as the layout strategy of a pharmacy. Essentially, the thought process is different.

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Author Bio

Nikhil Agarwal

Nikhil Agarwal

Chief Growth Officer

Nikhil is a calm and composed individual who has a master’s degree in international business and finance from the United Kingdom. Nikhil Agarwal has worked with 300+ retail e-commerce brands and companies from various sectors, since 2012, to define their growth strategy and achieve operational excellence. Nikhil & his team have remarkable success stories of helping brands achieve 10X growth.

Get In Touch

    PROCESS AUTOMATION

    The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

    In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

    Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

    Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

    YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

    VIDEOGRAPHY & PHOTOGRAPHY

    No matter how good your product is, the customer would know only if it looks good.

    Photography includes the following steps:

    • Cataloguing your products
    • Cataloguing your images
    • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
    • Choose the right camera & lens (You may also outsource the photography to a third party agency)

    DIGITAL MARKETING

    Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

    Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

    These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

    Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

    This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

    IT INTEGRATION

    Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

    YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

    IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

    This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

    Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

    WAREHOUSE & LOGISTICS PLANNING

    • How many cities or countries you wish to sell in?
    • Where should your Warehouse be located?
    • Should you have one warehouse in each country or city?
    • Should you be having your own delivery team in your base city?
    • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
    • How should I manage the logistics if my goods are coming from different countries?
    • How should the goods be stored and barcoded?
    • How much space do I require for warehouse?
    • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

     

    At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

    We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

    Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

    UI & UX DESIGNING

    This Step involves 03 distinct parts:

    Part 1: Choosing the right Platform:

    From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

    Part 2: UX Designing:

    “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

    UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

    “As per statistics, 68% of the customers abandon the carts before payment”

    An interesting UX ensures the customer sticks on to the website for a longer time.

    Part 3: UI Designing:

    UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

    A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

    The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

    If User experience is the bare bone, user interface wraps it up with an attractive cape.

    At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

    SAMPLING & PRODUCTION

    This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

    In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

    Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

    Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

    Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

    Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

    Production Sample is made before the production which is the replica of what is going to be finally produced.

    Once you are through with all this, you are good to go ahead & get your goods manufactured.

    PRODUCT DESIGNING / SOURCING

    Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

    Product Designing / Sourcing can be done in several ways, as follows:

    • In-house Design Team
    • Freelance Designers
    • Outsourced Design Team
    • Ready Product Sourcing (From Manufacturer or Wholesaler)

    At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

    These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

    If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

    Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

    BRANDING

    Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

    Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

    It is an integral part to attract the target audience.

    ORGANOGRAMS & SOP’s

    Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

    SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

    At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

    CRITICAL PATHWAY

    Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

    CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

    CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

    At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

    BUSINESS STRATEGY & BUSINESS PLAN

    Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

    Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

    Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

    YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

    MARKET RESEARCH

    Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.