The Finer Points of e-Commerce
Once providers embrace the right perspective about e-commerce they'll see the learning curve isn't that steep.
- By David Kopf
- Dec 01, 2016
The value of e-commerce is undeniable. For HME businesses that
have endured Medicare reimbursement cuts and audits, diversifying through
retail sales has been a critical way to drive new revenues. And, as a provider
ventures into the territory of retail sales, it’s hard not to notice e-commerce.
Certainly e-commerce is a part of nearly everyone’s daily life, so why shouldn’t
HME providers support retail transactions online?
The numbers are undeniable. The Census Bureau’s tallied retail e-commerce
sales in the United States for the first quarter of 2016, and it grew 3.7 percent
over the previous quarter to a total of $92.8 billion. Moreover, market data
company Statista.com reported that health-related spending constituted 5.6
percent of total e-commerce. That amounts to $5.19 billion in one quarter. And
if you add in the fact that the 78 million-person Baby Boom demographic —
which is Internet savvy and regularly purchasing items online — is retiring at
the rate of 10,000 people per day, it’s hard for HME providers not to sit up and
take notice of e-commerce as it relates to retail DME sales.
But more than anything, the market for retail HME is going online
whether providers like it or not. In fact, more of the trepidation toward
e-commerce might be from providers rather than patients. Seniors are only
too happy to buy online, says Kamal Haddad, CPA, founder and CEO of
Health Mobius LLC, a company specializing in e-commerce for the HME
“Your existing customer is out there buying these cash sale items anyway,”
he says, who adds that most retail transactions are either happening entirely
online or at least involving online research. “Only 20 percent of cash sales
transactions are being conducted purely in a retail environment. So when
you take a look at that 80 percent that’s either involving pure e-commerce
or some combination of online research and in-sore sales, [providers] are
missing out on 80 percent of the business. These customers are buying
So what are some of the finer points that HME providers should consider
when planning out their approach to e-commerce?
Understand Scale and Marketing
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. A provider
could easily be bowled over by a massive surge in demand.
Bearing that in mind, providers should start out identify two or three
products they can offer online and consider 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.
But the provider can also control it reach through marketing. The Internet is
not an out-of-control firehose when it comes to e-commerce; it is a spigot. By
controlling your marketing, you can control your exposure.
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
In fact, online marketing can be as highly targeted as it can be global. So if
a provider actively pursues an online marketing initiative that targets people
in certain zip codes and on certain keywords around very focused types of
medical equipment, then it will find those people and those customers will
find that provider.
Adapting to Customers
Next up, providers must start to focus on how they will build out the actual
e-commerce interface. This is where the provider really needs to do a deep
dive with a service provider. Experience is everything. Just like in the way
providers want their customers’ in-store experience to feel like any other brick-and-mortar retail establishment, they want their customer-facing e-commerce
offering to feel like any other.
In tandem with that effort, the HME provider needs to work with its
e-commerce vendor to consider how the payments are going to be handled
and how they will work with the business’s back end. They want to address
whether or not transactions will be strictly credit card handled via the
provider’s existing processing company, or not, and how everything will be
tied together in terms of accounting systems.
But there’s another important element of the customer experience: being
flexible. Too many providers think in black-and-white terms when it comes
to e-commerce — it either takes place in-store or online. Frankly, that line
of thinking is off the mark. If anything, e-commerce can be a blend of both,
Health Mobius’s Haddad explains.
Providers should ask themselves, why can’t e-commerce serve as an easy-to-access
cash register? For instance, when a service tech is in the field making a
delivery, that tech could assess the home and suggest some appropriate retail
items kept in the truck. From that point forward, the tech could handle the
retail transaction via an iPad or similar device.
“What we’re trying to do, even though we are an e-commerce company, is
we’re trying to rephrase it into the cash register or point of sale in providers’
hands,” Haddad says. “It’s more consistent with the retail mentality. It’s the
same product at the end of the day.”
This article originally appeared in the December 2016 issue of HME Business.
David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.