Pharma wholesaler API cuts call center volume 20% with a new e-commerce platform.

Until 2012, Australian Pharmaceutical Industries Ltd. took orders from its wholesale pharmaceutical customers via EDI, phone and fax. The process was labor-intensive and, therefore, costly in addition to being inefficient, says Dirk Bellmann, API’s applications manager for online systems.

Since rolling out an e-commerce platform late that year, online drug orders have grown and now account for 75% of all wholesale orders, which in turn account for 50% of sales volume, Bellmann says. The e-commerce platform now processes more than 12,000 orders daily, compared with 6,000 a day via EDI or manually in 2012, before implementing the Magento Enterprise platform from Magento Inc. later that year.

Creating a self-serve option for its client pharmacies enabled API to shut down a call center that had more than 10 employees.
Dirk Bellmann, applications manager, online systems
Australian Pharmaceutical Industries Ltd.

Dirk Bellmann, API

The Australian wholesale drug supply business is highly regulated and the country’s 5,500 pharmacies and hospitals all are served by three major wholesalers, including Sigma Healthcare Ltd. and Symbion Ltd. Each of the pharmacies and hospitals has a preferred major supplier and all use a second or third back-up supplier, Bellmann says.

Pricing for each facility is complex, particularly in calculating discounts and promotional offers, Bellmann says. In the past, questions about discounts prompted many customer service calls, but the Magento system enables buyers to see best prices and volume options as they search, he says. Wholesale customers place orders on the myAPI portal.

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Government regulations require that API and other wholesalers deliver all orders within 24 hours, especially challenging for delivering orders to cities like Broome on the west coast, about 1,900 miles from the nearest of API’s nine distribution centers, Bellman says.

Online drug orders account for 1.25 billion Australian dollars (US$950.1 million) of 2.5 billion Australian dollars (US$1.90 billion) in API’s total wholesale sales. Although some customers prefer to phone in orders, creating a self-serve option for its client pharmacies enabled API to shut down a call center that had more than 10 employees, Bellmann says. The e-commerce platform produced other, immediate savings. “If a product is not in stock, buyers can put it on back-order and get it delivered once it’s in stock,” he says. “That used to require a phone call. When we added a check box to indicate that option, it reduced calls by 25%.”

Bellmann declines to provide APIs’total investment in the Magento platform, but notes the return on investment “is fantastic,” when factoring in call center workforce reductions.

API also has a retail operation called Priceline that sells through 450 stores and online at Priceline.com.au. Priceline sells beauty, hair care and fragrance products, along with non-prescription medications. Each store also has a pharmacy. In addition, API has a diet supplement and vitamin manufacturing segment based in New Zealand.

Wholesale and retail operations combined generate about 3.5 billion Australian dollars (US$2.66 billion) in annual revenue. In 2016 total sales were 3.84 billion Australian dollars (US$2.92 billion).

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An early attempt to install Magento’s e-commerce platform in 2012 failed, because the company hired to implement the system was not experienced with the platform, Bellmann says. But API was undeterred and moved ahead with a simultaneous wholesale and retail deployment. The pharmaceutical and health products company handles coding and development in-house.

In addition to online ordering, API wanted to implement digital documents, stock management, and other self-service functionality. API now is moving away from printing physical documents and customers can download any financial document on myAPI, and review their order and return history and status.

As part of the new e-commerce platform, API designed a mobile scanning app, called ScanAPI, enabling pharmacy customers to scan barcodes with their smartphone to reorder products directly from the pharmacy aisle. The tool eliminated dedicated hand-held scanners that required linking via modem to update its inventory system.

For the fiscal year ended Aug. 31, API reported:

  • Total sales of 3.84 billion Australian dollars (US$2.92 billion), up 11.0% from 3.46 billion Australian dollars (US$2.63 billion) in the previous year.
  • Net income of 53.9 million Australian dollars (US$41.0 million), compared with 42.7 million Australian dollars (US$32.5 million) in fiscal 2015.

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