Expert advice on how to protect your profitable pharmacy business.
As an independent veterinarian, you might be tempted to bow out of today’s competitive veterinary pharmacy business, but veterinary financial consultant Fritz Wood urges against abandoning this important business segment.
“For 30 years, people have predicted the demise of the veterinary pharmacy, but when I look at numbers from veterinary practices, they don’t support that at all,” he says. A “significant majority” of pharmacy sales today—about 71% according to Packaged Facts—go through the veterinary channel, he says. “It’s probably at least one-quarter of your total business. As a business advisor, I don’t believe that losing 25% of your business can do anything but harm you.”
Recognize, too, that you have a natural advantage over online retailers. “You have a customer that trusts you—a pet-owning customer standing right in front of you, who is interested in what you have to say because you are the authority figure. Chewy would die to have that!” says Wood.
Wood suggests how to compete:
Price your pharmacy correctly. First, it’s critical to make sure your pharmacy pricing won’t drive clients away. “I believe that mispricing the pharmacy is one of the leading causes of lost clients,” he says.
Always stick with the minimum advertised price (MAP), he advises. And whenever possible, source your pharmacy products from a vendor that doesn’t allow any additional online discounts beyond that price.
That’s because people will immediately look products up on their phones to compare online prices with what you’re charging. “And if you seem overpriced, you risk that clients will assume you’re gouging them, walk away and not come back,” says Wood. “We have to sell these products at the manufacturer’s minimum advertised price.”
Consider that the lifetime value of a dog to a veterinary clinic is about $25,000. So if a new client walking in the door will have six pets in their lifetime as your client, that client represents $150,000 in potential income.
Go for Greenline. But what about the additional rebates, incentives and percentages off of MAP that online vendors often tack on? To keep up, Wood recommends using Greenline Pet, a digital service that takes available coupons and rebates off the client’s bill right at the time of purchase.
“It’s quick, it’s easy, it’s an easy opportunity to exceed expectations instantaneously at the point of sale,” says Wood. “I cannot imagine the circumstances under which everyone shouldn’t be doing it.”
From the customer’s point of view, he adds, the savings don’t look as if they’re coming from Greenline or the manufacturer, but from the veterinary clinic. And those savings can be significant: “If a client goes with a year’s supply, you can be underselling Chewy,” he says. “It puts you in a very competitive place.”
Show your customers how your prices are competitive. Overall, you need to address the question in your clients’ minds: Why should I buy from you? Studies have found that about 80% of pet owners believe that your clinic is not the best place to buy products, says Wood.
Make a bar chart showing that your pricing is the same as they will find elsewhere, Wood suggests. “That lets them see from across the room that they’re not making a mistake by buying this product here.”
Then post this chart in exam rooms and the pay stations, on invoice footers and your website’s landing page. Add a line saying “Compare our prices in the pharmacy. Don’t overpay!” he suggests. “Every chance you get, you need to shout from the mountaintop that people are not making a mistake by buying the product here.”