Leading Off: Find a winning strategy in the big box battle

Leading Off: Find a winning strategy in the big box battle

source-image
May 01, 2012


Michael A. Paul, DVM
Recently, a new model for product and prescription sales came to the market—literally to the market. A generic heartworm preventive and a parasite control product have been released for sale by veterinary prescription, but available only through Walmart and Sam's Club. While the first such products in this distribution model, these certainly will not be the last.

Many pet-owning consumers will likely view the direct-to-pharmacy model as a way to save money by purchasing prescription drugs and products from stores and outlets they already frequent.

The AAHA State of the Industry report, Close-Up Look at 2010 Purchasing Behavior, found that roughly one-third of pet owners buy flea and tick control products only from retail sources other than their veterinarians, one-third buy from their veterinarians and are likely to continue to do so, and about one-third buy from both veterinarians and other retail sources.

A 2011 study conducted by Trone, an industry research and consulting agency, found a distinct difference between veterinarians' and clients' attitudes about shopping. Of the veterinarians surveyed, 77% believe that clients are still most likely to purchase from their veterinarians, whereas only 56% of clients surveyed agreed. In other words, clients are less likely to purchase from their veterinarians than most veterinarians think. We must remember that 70% of pet owners surveyed in the Bayer Veterinary Care Usage Study expressed price sensitivity and believed they were being overcharged for goods and services.

CHANGING ECONOMIC TIMES

Our current dispensing and pharmacy models were developed long before most of us even considered veterinary medicine as a career. We were a closed market dealing with a relatively captive audience, and our markups were pretty much what we thought the market would bear. Product markups of 100% to 200% remain commonplace.

Yet 70% of clients surveyed by Trone said they would, in general, think more highly of veterinarians who told them where to get products for less. Particularly in challenging economic times, people will at least consider cost when making purchasing decisions. And in most cases, once a buying habit changes—say to a superstore pharmacy—it is unlikely to change back.

Is it the end of the world? No. Is it the end of the world as we know it? Probably.