Drugstore.com’s Soaring Shipments Demand Shipping Upgrade

Drugstore.com, an online provider of personal care, beauty, health, wellness, vision and pharmacy products, is turning to Kewill Solutions North America to meet its soaring shipping needs.

Kewill Solutions North America is the shipping management division of Kewill Systems, an international company that develops and sells software and services to manage complex business-to-business supply chains.

Next-Generation Customer

The solution involves Kewill’s first use of the D1 server technology it acquired through its purchase of a company called ShipNow in April. In that transaction, Kewill bought the assets of ShipNow and its affiliates, including the D1 server, which the company is integrating into its shipping-management software to deliver its next-generation products. Kewill also continues to support ShipNow’s products.

Erich Grohse-Holz, enterprise product manager at Kewill, told CRM Buyer in an interview that Drugstore.com will be the company’s first customer to use the D1 server technology, now called the Kewill Enterprise Shipping Management Solution.

“We are in the definition phase of Drugstore.com deployment,” he said, “but [we] expect to have full implementation sometime during the third quarter.”

Headquartered in Bellevue, Washington, Drugstore.com competes in the mail-order pharmacy and local pick-up pharmacy markets, along with Medco Health Solutions, CVS and Walgreens. The company also competes with Walgreens, Wal-Mart, Kmart, Target, Costco and others in the over-the-counter pharmacy market. Its 290,000-square-foot distribution center is in Swedesboro, New Jersey.

Growth Means an Upgrade

Lorne Brockway, director of information technology support at Drugstore.com, told CRM Buyer that his company currently is shipping between 15,000 and 16,000 packages per day and expects that number to grow to 25,000 to 30,000 by year’s end.

Brockway said Drugstore.com previously was using Kewill’s APSS shipping product, which was retired by Kewill in 2002, and needed to upgrade. He said he looked at several solutions before settling on Kewill’s Enterprise Shipping Management Solution.

“We wanted a solution that could scale with our package shipping growth [and] integrate with our Allpoint warehouse management and our Oracle enterprise resource planning system,” he said. “For our customer-centric supply chain, we needed a solution with the flexibility to manage the shipping and labeling of each of our brands, manage different carriers, select the right carrier for the delivery, identify the correct shipping addresses, as well as handle international and customs complexities.”

Although Drugstore.com stocks more than 4,800 prescription drugs, this area represents only about 25 percent of the company’s total business, according to Brockway. He acknowledged that, for competitive reasons, the company wants to maintain the visibility of not only its primary Drugstore.com brand, but also its subsidiary brands, such as Beauty.com and VisionDirect. This makes brand labeling of each shipment important, he added.

Delivery Often Overlooked

Adrian Gonzalez, director at the ARC Advisory Group, a research and consulting organization, told CRM Buyer in an interview that the parcel shipping software business has an aggregate growth rate of nearly 11 percent per year, illustrating its importance.

The advent and growth of online stores like Drugstore.com and Amazon.com has enabled customers to shop 24 hours a day, seven days a week. Also, these businesses have evolved the ship-direct-to-consumer business model, which is among the trends causing a shift in the overall package-shipping business. More and more online stores are recognizing that they are no longer the masters of their own destiny, but rather are increasingly dependent on the shipping chain linking them to customers.

In the early days of e-commerce, having a pretty Web site was the primary focus, and many companies stumbled when it came to delivering orders to customers, Gonzalez said. However, he added, consumer buying online is increasingly the norm, and companies like Drugstore.com are focusing more on infrastructure to ensure consistent and smooth customer deliveries.

“Companies are asking for partial shipments, and consumers are accepting partial shipments, and that increases the shipping frequency,” he commented.