Did Amazon bring down Beauty.com and Drugstore.com?
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
In an effort to put more focus on its own e-commerce web site, Walgreens recently announced it will pull the plug on Drugstore.com and Beauty.com. The pharmacy retailer acquired the two websites for $429 million in 2011. While the shutdown will cost Walgreens $115 million, according to a regulatory filing, the move is likely to help the retailer cut costs in the long run and to enhance its omnichannel strategies.
When considering the competition these pure-play websites faced with Amazon’s massive marketplace and Prime advantages, it’s not surprising that Walgreens made the decision to shut them down. And the company is not alone. In January 2016, Target quietly nixed two online culinary companies it had acquired in 2013: CHEFS Catalog and Cooking.com.
Walgreens has already taken strides in enhancing its digital initiatives. The retailer recently announced it will offer paperless coupons that can be “clipped” from product detail pages on Walgreens.com and the Walgreens mobile app.
“Over the past year, we have been focusing on building new omnichannel capabilities on Walgreens.com with initiatives that improved assortment and web site user experiences, enhanced our digital coupon capabilities to provide more customer value, and added digital tools into our stores to elevate our shopping experiences,” said Phil Caruso, a spokesperson for Walgreens in a statement. “Expanding on these efforts is an important part of our strategy.”
DISCUSSION QUESTIONS: What do you think drove the closure of Drugstore.com and Beauty.com? Has it become more challenging for retailers to operate category-specific websites with omnichannel’s increasing demands and the importance of scale?