Products & Technology
Making the e-Commerce Connection
Retail-minded providers are realizing the potential of e-commerce, but there are many crucial considerations that should go into their business plans long before consumers start clicking 'buy.'
- By David Kopf
- Aug 01, 2016
For providers that have long suffered through Medicare reimbursement
frustrations and cuts, retail sales has served as a ray of hope when
it comes to driving new revenues. And, as they have explored retail sales one
thing is becoming abundantly clear: e-commerce represents a tremendous
opportunity for them to expand those revenues even further.
Make no mistake, there is a lot at stake. The Census Bureau’s latest estimate
of U.S. retail e-commerce sales for the first quarter of 2016 saw a 3.7 percent
increase from the previous quarter to a total of $92.8 billion, and Statista.com
puts health-related spending at 5.6 percent of total e-commerce. That amounts
to $5.19 billion — in one quarter alone.
Add in numbers related specifically with the HME market, and the case for
e-commerce becomes even more compelling.
“With 78 million “Baby Boomers” retiring at the rate of 10,000 per day, the
demand for DME is increasing exponentially,” says Jeffrey Baird, Esq., chairman
of the Health Care Group at law firm Brown & Fortunato, P.C., who has studied
the retail market, e-commerce and how it impacts providers legally. “…
Boomers are Internet savvy. They are comfortable with purchasing products
online. If Boomers are comfortable with purchasing clothes, tools and dishes
online, then they will be comfortable with purchasing most DME items online.”
Any provider with even the faintest sense of entrepreneurial spirit can’t
bother taking notice of the numbers and how tapping into them could boost the
The question is, how do providers do it right? Making a solid e-commerce
connection comes down to proper planning. One weak link, and what might
have initially looked like a solid business plan could fall to pieces, advises
Robert Duryea, president of VGM Forbin, a business unit of VGM Group Inc.
that specializes in helping providers create their web sites and e-commerce
businesses (see the sidebar, “E-Commerce Resources”). E-commerce requires
commitment and smart planning.
“E-commerce is not for everybody,” he says. “It’s not a magic elixir and
money is not going to simply fall from the heavens. If it matches your business
plan, and you can provide certain value online to your customers, then it absolutely
makes sense, but it does require work.”
Providers must start by asking the kinds of questions that will help them start
“What are competitors doing in your local business area,” Duryea suggests.
“What are your national competitors? ‘Do I want to go online with CPAP
supplies and compete with some of the national big boys? What are the prices
like? What is the value I can provide and can I communicate that online?’ If
they can do that, and they know what they can focus on, then by all means do
it, and it can be a tremendous revenue opportunity. But you need to be very
thoughtful about it, and have a plan going in.”
Local Appeal on a Global Scale
HME providers have traditionally traded on a reputation for product and care
expertise, and particularly at the local level. That has been their sweet spot and
the value that they bring to the home medical supplies and equipment market.
Most people would reasonably look at the global reach of e-commerce, and
conclude that the business model would be very different. Moreover, it presents
providers with the challenge of having to provide the same things that make
them appealing to their local or regional market, but on a larger scale.
“If you provide a valuable service to your customers at your brick and mortar
location, then you need to do that just as well online,” Duryea says. “So that
means being very deliberate about how you enter into that, and key when
entering the e-commerce world, because there are going to be people out
there that have been doing it for a while, and they’re going to have [their business
model] ironed out.”
The best way to start that process is by considering scale. Do providers sell
everything they have available, or do they focus on certain items that translate
well to an e-commerce environment? What specific items map well to that business
model? How do they ensure they provide the same high-touch service to
their customers online?
“Because if [your customers] are online and they don’t like something, then
they are probably going to talk about it online, as well,” Duryea explains. “And
that’s going to go bad for you very quickly. There’s not a lot of wiggle room in
there to make mistakes.”
To be certain, online, news travels fast, and bad news travels even faster, so
providers want to approach e-commerce with care and caution, and an eye on
ensuring they can live up to their reputation.
The issue of scale must be foremost in a provider’s mind when outlining an
e-commerce business plan. The reach of e-commerce represents a doubleedged
sword: On the one hand, providers have access to a massive, previously
unreached customers base. However, if a provider’s site catches on, their
e-commerce business can escape their grasp relatively quickly. In essence, too
much success too early can lead to premature failure.
“That’s the beauty of the online, digital age,” Duryea says. “Your ability to
scale and contact people anywhere and everywhere is very fast and cheap, but
let’s say I work in South Florida, I’m selling this product online, and now I’m shipping
to the northwest, the southeast, the southwest, to all over the place. Can
I scale up? Can I get enough product from my manufacturers, and in a timely
These are important questions to ask in a world where everyone in the
modern, “connected” world expects two-day shipping from Amazon.com. Telling
customers you don’t have product in stock and are waiting on a shipment can
lead to complaints with an equally global reach. Very little wiggle room exists.
Bearing that in mind, Duryea suggests approaching e-commerce in stages.
Providers should start out seriously thinking of two or three products they can
offer online and how well those products can scale quickly if the provider sees
some initial success. Can they get enough from their vendors? Are their vendors
confident they can maintain that supply? And then the provider needs to think
of the next two or three or products that can translate well to e-commerce. This
gives the provider the ability to ramp up.
Managing Your Reach Through Marketing
That said, providers can maintain some control over scale if they plan their
“Maybe I don’t want to play nationally,” Duryea says. “Maybe I just want to
advertise within my state or my 10 counties, or something like that, first. And
then I can push wider once I start figuring out how that works for me.”
It turns out that even though the web gives providers national reach, they can fly
under the radar and limit their exposure. Since there are so many players online,
if a provider decides to focus geographically, the rest of the world will likely see
other businesses, while the provider is chiefly visible to just its local market.
“There are a lot of other companies advertising for a lot of different areas,”
Duryea explains. “… This isn’t ‘Field of Dreams. There are a lot of people out in
this space. So if you have a product that you provide and you provide it well. You
can advertise to those customers in those areas.
“So if you’re actively spending the money online marketing to go after people
in certain zip codes and on certain keywords around very focused types of
medical equipment, then you’re going to find them and they’re going to find
you,” he continues. “If you’re not doing that, there is enough money out there
and enough companies out there in the e-commerce business that the odds
of [customers] finding you are pretty slim. They’re going to have to be looking
specifically for you.”
Prioritizing the User Experience
So assuming a provider understand that scale is an issue, that they should start
with some key offerings, and that they can limit their scale based on smart
online marketing, how should they dive in? How do they start creating their
It beings with finding a service provider that can help the provider set up their
e-commerce site. It all comes down to user experience, so the provider wants
to find an e-commerce provider that is going to focus on ensuring sites that
highlight the customer experience.
“If a user doesn’t like a shopping experience on an online shopping site, and is
having trouble finding their cart, or deleting items from it — if that’s not a good
user experience, cart abandonment is very big, and people will leave you, and go
somewhere else. So make sure that experience is very smooth and very tight.”
Once that is set up, the provider needs to consider how the payments are
going to be handled: Will this be strictly credit card with an existing processing
company? How will it be tied into the existing business?
Reputation management is another key consideration. Companies such as
VGM Forbin and ARI strive to help their e-commerce clients ensure that their
online reputations remain positive, and that customers leave reviews to help
raise the provider’s online profile.
“Credibility is something very important,” Duryea notes. “Nobody knows you
from Adam, because you’re [new e-commerce providers] not all that much of a
face [online]. So how are you creating, for the customers, a reason for them to
trust you and the services you provide?”
Building out the Back-end
This is where the actual mechanics of e-commerce come into play. Providers
must ensure sufficient inventory, and fast fulfillment of orders. Moreover, the
packing has to be professional and sturdy. The provider must ensure it is
addressing all the nuts-and-bolts fulfillment elements that clients have come to
expect in an Amazon.com world. Similarly returns must be handled efficiently
and within clients’ customer service expectations.
“It sounds simple to go online and fire up your e-commerce site, but there are a
lot of little things thought through and to have [an e-commerce] provider that can
help you do all those things for you is something you need to have,” Duryea notes.
This means that a provider must plan in dedicated staff, warehouse space,
shipping resources, and other “real world” assets to ensure that it adequately
supports its nascent e-commerce business.
“You’re going to have to have dedicated personnel based on the size of your
operation,” he says. “They’re going to see the orders come in, they’re going to
going to go out on your floor and get the product, they’re going to package it up, and ship it out.
“What’s your relationship with your carriers?” He asks. “FedEx, UPS and USPS?
How quick are they? Are you taking the orders to them? Are they picking them
up? How are you controlling your costs from that aspect?”
And from an IT perspective, the provider must also examine how the
e-commerce offering will tie in with its existing software infrastructure. Can
e-commerce link up with typical HME management systems’ to check available
inventory, or update customer purchase records?
“The short answer is yes,” Duryea says, adding that this is where a good
e-commerce provider is important. “It’s just creating that kind of connectivity.
Whoever is providing the e-commerce connectivity needs to be familiar with it
and have done that before.”
The Legal Aspects of E-Commerce
Another element of e-commerce that providers absolutely must understand
when formulating their business plans are the legal requirement related to such
an enterprise. It’s important to remember that while e-commerce concerns retail
sales (at least for the moment), that doesn’t mean that retail is not entirely free
from legal concerns. Just like on-premises retail sales, HME providers must live
up to various legal requirements.
“As suppliers enter the e-commerce space, they need to be aware of federal
and state laws that govern the space,” Baird explains. “Many of these laws apply
to all e-commerce, not just health care e-commerce. However, there are other
laws that are specific to the healthcare space.”
Starting with healthcare and non-healthcare products that might be transacted
via e-commerce, Baird lists a number of laws that could impact providers
selling products online. This is particularly true when it comes to their marketing
efforts. Baird suggests providers keep the following in mind:
E-Mail Marketing. This is one of the most critical marketing-related legal
consideration. “Controlling the Assault of Non-Solicited Pornography and
Marketing Act of 2003 (CAN-SPAM Act) imposes restrictions on the sending of
commercial e-mail,” Baird notes. Providers should be very familiar with this Act’s
requirements. Learn more at bit.ly/29Pvt2Y.
Telephone Solicitation. “Telephone solicitation is the subject of several federal
and state regulations,” Baird says. “Telephone calls and messages designed to
encourage the purchase of products or services are regulated by the Federal
Communications Commission (FCC). Likewise, the Federal Trade Commission
(FTC) enforces rules and regulations that protect against deceptive, misleading,
and abusive telemarketing practices. All 50 states have some statutory version
of the FCC and FTC regulations that regulate telephone solicitation and
telemarketing as well. All telephone solicitation is regulated in some form or
fashion, but additional constraints are placed on telephone solicitation that is
Telemarketing. The FTC penalizes abusive telemarketing acts and practices.
If a telephone solicitor qualifies as a telemarketer, the FTC Telemarketing Sales
Rule (TSR) applies, Baird advises.
National Do-Not-Call Registry. “Calling telephone numbers on the national
do-not-call registry is punishable as abusive telemarketing,” Baird says, but
notes a key exception: “Carved out from this definition are calls made to those
with whom the seller has an established business relationship.”
State Do-Not-Call Registries. Similarly, there are many restrictions and limitations
placed on telemarketers and telephone solicitation by the states, the
most important of which are registration and bonding requirements and statespecific
do-not-call lists, according to Baird.
Telephone Consumer Protection. Under the Telephone Consumer Protection
Act, the FCC implements regulations to protect the privacy rights of citizens by
restricting the use of the telephone network for unsolicited advertising, Baird states.
Direct Mailing. Direct mailings must comply with the laws of three regulatory agencies: (i) FTC, (ii) U.S. Postal Service and (iii) State Attorneys General, Baird
Registration as a “Foreign” Corporation. “If a supplier is shipping products
into other states, as to whether or not the supplier must register in the
other states is determined by whether or not the supplier has a ‘nexus’ with
the states,” Baird says. “Normally, merely shipping product into a state will not
establish such a nexus.”
Next, there are several laws related to providing
healthcare services and products that providers must
comply with in their e-commerce efforts, according to
Baird. Those requirements are:
State DME Licensure. “If a DME supplier is shipping
products into other states, then it is highly likely that
the supplier will be required to obtain DME licensure in
those states,” Baird says.
Sales Tax. If a supplier is shipping products into other
states, as to whether or not the supplier must collect
sales tax in the other states is determined by whether
or not the supplier has a nexus with the states, Baird
explains. “Normally, merely shipping product into a
state will not establish such a nexus,” he adds.
Telephone Solicitation Statute. “There is a federal
law that is specific to DME suppliers,” Baird warns. “It
says that a supplier cannot call a Medicare beneficiary
unless one of three exceptions are met. Two exceptions
apply to existing customers of the supplier. The
third exception applies to potential customers. It says
that a supplier cannot call a potential customer (who is
a Medicare beneficiary) unless the beneficiary has first
given his prior written consent (‘blue ink,’ or electronic).”
HIPAA. HIPAA imposes a number of restrictions on
health care providers (including DME suppliers) if they
desire to use “protected health information” of their
customers for the purpose of marketing, Baird notes.
Supplier Without a PTAN. “Assume that a DME supplier does not have a
Medicare Part B supplier number (PTAN),” Baird explains. “Assume that the
supplier sells DME over the internet for cash. The supplier must inform its
Medicare-aged customers that the supplier is not a ‘Medicare supplier,’ and that
Medicare will not reimburse the customer for the product he purchases from the
Here are some service providers who are offering
e-commerce services specifically to HME providers.
The latest e-commerce-related enhancements/additions to
ARI’s services for HME provider websites: ARI Mobile to put
complete control of a provider’s inventory in the palm of their
hand, allowing inventory to be uploaded to their website,
optimize inventory listings and syndicate to third-party sales
channels – from anywhere, at any time; enhancements to
mobile sites to allow the display of merchandising slides; improved
multi-location support allows geo-location and store
selection; fraud alerts; upgrade to PayPal to allow consumers
to enter a credit payment without a PayPal account; ability to
import custom e-commerce catalogs with associated images;
ability to export custom e-commerce catalogs for use in other
systems; integration to Traffic Log Pro CMS and more.
Forbin provides helps providers create web sites for their
business, and part of their services include a range of turnkey
e-commerce offerings that focus on user friendliness,
providing immediate fulfillment, and security. The company
emphasizes the fact that e-commerce can work for just about
any provider that offers retail friendly products, and that it
will help providers set up e-commerce front ends that help
customers quickly and securely conduct transactions.
This article originally appeared in the August 2016 issue of HME Business.