Pharmapacks, an e-retailer of pharmaceutical and personal hygiene products, is having a good run. Last year, Pharmapacks, which sells over-the-counter medications for everything from acne to stomach problems, as well as vitamins, supplements, home medical supplies, baby and children’s feeding and changing supplies, and health and beauty products, generated web sales of $170 million.
But web sales are on track to reach $270 million in 2018—and Pharmapacks has ambitious plans to reach $1 billion in annual online sales in as soon as four years.
Here Pharmapacks co-founder and CEO Andrew Vagenas tells Internet Health Management how the company is ramping up its expansion plans and outlines Pharmapacks’ strategy to become a $1 billion player in healthcare e-commerce.
How did you get into the healthcare space?
We actually started as a pharmacy. We were a mom-and-pop retail pharmacy in the Bronx in New York, about seven years ago. We wanted to start selling products online, and I ended up raising money from friends and family.
I raised about $750,000. We got a warehouse in Queens—3,000 square feet. Our decision was to build our software, so we built all our own software internally. The goal was to build software to tie into Amazon, because we thought that Amazon would be the largest e-commerce player in the next ten years.
We rolled our dice on that. All our software that we built for Amazon also had to take effect with eBay, and then Walmart came with a marketplace after that.
We focused on logistics, distribution and now marketing. That’s basically it. We’ve become one of Amazon’s largest retailers and sellers on their platform, same thing for Walmart. And we’re starting to become a value add in the category that we’re in.
What were web sales in 2017 and what do you expect them to be in 2018?
2017 was about $160 million and it was a move year. We moved last year, from 31,000 square feet to about 141,000 square feet. I would say half the year was lost to the actual move.
What are you aiming for this year?
We have a projection of about $270 million.
Where do you want to be in five years?
If everything goes as planned, we think within three to four years we’ll be at $1 billion. That’s the goal.
Why do you like healthcare? Not everybody does. It’s unique. It’s complex. It’s red tape. It’s privacy. It’s all of the above.
We carry a combination of over-the-counter, beauty and personal care. Essentially, that’s how we started because of the pharmacy. We just kind of went with it. We like it. It’s a lot of repeat customers basically. The larger you get, the more trusted you get, the more followers you have. So, throughout Amazon’s marketplace, we see people shopping from us a lot even if there’s another seller because we have 700,000 reviews.
If someone is buying an ingestible, they want to get it from a trusted partner, so we do see a lot of that. Same thing with beauty; a lot of people see us and they see some of the brands we represent. So, they trust the brands we represent. I just think it’s a good market to be in. Less returns—clothing has like a 30-40% return rate. Ours is less than a quarter of 1%. It’s different.
Who do you see as your chief competitors?
The way we see it is we don’t have competitors. Actually, a big part of our business is our partnerships with Amazon, Walmart and eBay. Those are our three big partnerships that we’re really focused on.
We’re partners with them, we aren’t competing with them. We’re offering more catalog, and we’re offering more customer experience to their customers. It is already a fact that Amazon owns the largest part of the market, so we don’t see Walgreens or Rite Aid as our competition.
We see e-commerce as our main area to offer products, and as far as competition, Amazon speaks for itself on who they compete with.
What are your plans to grow Pharmapacks?
The emerging brands division that we’re growing out is essentially going to be our focus division. That’s essentially brands that are new to the market that we partner with. When I say we partner, we sign a three- to five-year exclusive with them.
We take their brand, we launch them across all the sales channels, Amazon, Walmart, eBay and Jet, and we offer a ton of marketing capabilities. We end up being their marketing arm as well. We have 31 brands rolled out—they’re all millennial brands created by millennial entrepreneurs. That’s going to be a big focus of ours.
We have another 30 brands we’re rolling out this summer. And then another 30-40 by the end of Q3 into Q4. We’re going to have a hundred exclusive brands by the end of this year. We’re also launching another social following platform that we’re going to be able to be broadcasting these brands.
So, through Instagram, through Twitter, through Facebook, through Pinterest and other channels, we are actually creating a new subdivision where that’s going to be our marketing arm.
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