Why Your CPG Brand Needs a Walgreens E-commerce Strategy
Most retail pundits probably wouldn’t include Walgreens on their list of top e-commerce pioneers. However, the retail pharmacy has been offering online prescription refill services since the late 1990s and has been selling other products online since the early 2000s. At the time, this was unorthodox for a retailer with several thousand physical locations. In 2011, Walgreens accelerated its e-commerce investments when it acquired the drugstore.com portfolio of brands, which included drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com.
Though these websites were ultimately shuttered in 2016 and 2017, they provided Walgreens with a deep reserve of specialized human capital, which significantly accelerated its digital capabilities and provided the foundation for today’s e-commerce success. The second-largest retail pharmacy in the United States, Walgreens has recently undertaken several major digital initiatives. This article outlines five reasons why CPG brands need a dedicated Walgreens e-commerce strategy.
New CEO With Digital Retail Experience
In March 2021, Walgreens hired a new CEO with a track record of digital innovation at large retail brands. During her five years as CEO of Sam’s Club, Rosalind “Roz” Brewer oversaw several major digital initiatives, including improvements to curbside pickup and the development of a mobile scan-and-go program in stores. These advancements further solidified Sam’s Club’s status as an omnichannel retailer and differentiated the wholesale club from its largest competitor, Costco.
After leaving Sam’s Club in 2017, Brewer became COO of Starbucks, where she was integral in growing the company’s loyalty program and mobile ordering business. Brewer was also a board member at Amazon for two years before resigning to become CEO at Walgreens. Her familiarity with Amazon will no doubt be beneficial to Walgreens as it faces increased competition from the online retail juggernaut.
Revamped Loyalty Program and Mobile App
With more than 100 million members, Walgreens has the largest health and wellbeing-centered loyalty program in the United States. Despite its market leadership, the retail pharmacy is still looking for new ways to deliver an unparalleled customer experience. In November 2020, Walgreens launched a complete reinvention of its loyalty program named myWalgreens. The program offers members a number of new benefits, including Walgreens Cash rewards for purchases and personalized “Only for You” discounts.
In conjunction with the new loyalty program, Walgreens also introduced a redesigned mobile app. The previous version of the Walgreens app was already popular and had been downloaded over 65 million times. The new app delivers a more personalized experience, with customized home page widgets and daily health and wellness recommendations. This type of mass personalization boosted Walgreens’ retail sales by 100 basis points in the third quarter of its 2021 fiscal year.
Expanded Pickup and Delivery Options
The rollout of Walgreens’ new loyalty program and mobile app was complemented by its decision to begin offering same-day retail pickup for online orders in as little as 30 minutes. According to the retailer, this is the fastest same-day retail pickup offering that’s currently available. Customers can use the Walgreens website or mobile app to place an order and pick it up in the store, curbside or at the drive thru.
Walgreens began offering online order pickup via its pharmacy drive-thrus in May of 2020 to help promote social distancing at the height of the COVID-19 pandemic. During the pandemic, it also expanded its options for on-demand delivery, inking deals with Postmates, DoorDash and Instacart. This past May, the retail pharmacy rolled out contactless delivery in under two hours directly from its own website and mobile app, allowing it to retain more shopper data.
Retail Media Offerings
Walgreens is the latest retailer to develop its own retail media offerings. Walgreens Advertising Group (wag) promises brands a more meaningful way to connect with customers by leveraging insights from more than 100 million loyalty program members, one billion daily digital touchpoints, and a massive amount of in-store shopper data. Using advanced technology to unlock the power of this first-party data, the company claims it can help brands accelerate ROI by delivering personalized experiences to their best shoppers.
The programmatic demand-side platform offers real-time, SKU-level optimization based on daily transactions. More than just a retail media network, wag provides brands with enhanced audience insights, creative services, and robust optimization and measurement capabilities. To further differentiate itself from other retail media networks, wag recently added a new suite of advanced television advertising capabilities. Inventory is sourced through more than 100 apps and 10 supply-side platforms that offer more than 2.5 billion potential daily impressions.
Strategic Partnership With Kroger
To compete with omnichannel leaders such as Walmart and Amazon, Walgreens and Kroger have developed an innovative partnership that combines the unique strengths of each retailer. This partnership began in October 2018 as a “store within a store” pilot program involving 13 Walgreens locations in northern Kentucky. Each Walgreens store was outfitted with a Kroger Express section that was stocked with perishables, refrigerated products and dry grocery items from both Kroger store brands and national brands. The sections featured Kroger signage, and the locations offered curbside pickup for online grocery orders placed through the Kroger website and mobile app. year later, in August 2019, the retailers announced they would be expanding the pilot program and introducing various Kroger Express formats in 35 additional stores in Knoxville, Tennessee. This expansion also piloted a selection of Walgreens’ owned-brand health, personal care and beauty products in 17 Kroger stores.
Building on their partnership, Walgreens and Kroger formed a group purchasing organization (GPO) called the Retail Procurement Alliance in December 2019. The GPO will enhance sourcing efficiencies, lower costs, and foster innovation through combined resources. Alex Gourlay, co-COO of Walgreens Boots Alliance, believes this unique joint venture will enable the companies to further meet customers’ evolving needs for value and convenience. Considering the scale of both retailers, the GPO may very well give them the competitive edge they need to outperform their omnichannel rivals. It has also fueled speculation that the two companies may eventually merge.
Walgreens’ oft-forgotten status as a digital pioneer, its early investments in a portfolio of e-commerce brands, and its continuous online expansion make it an unassuming yet powerful force to be reckoned with in the omnichannel wars. CPG brands looking to grow their online sales would be wise to prioritize the retail pharmacy as a strategic e-commerce investment.
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