HME's Three e-Commerce Models
How do providers approach e-commerce? It starts by picking from three basic business models for HME e-commerce.
- By David Kopf
- Sep 01, 2018
While it might sound daunting to some providers, e-commerce is becoming a business imperative in the HME industry, and it should be part of your strategic planning for 2018. Simply put, it’s where the customers are. According to a June 2017 Forbes article (bit.ly/2zqbEv4), online sales grew faster in 2016 than they had over the past three years and account for 11.7 percent of overall retail sales. There seems to be no stopping this sea change of how customers shop and get much of their product information.
So how do providers approach e-commerce? It starts by picking a business model. Christina Throndson, director of business development for VGM Forbin. Throndson oversees all business development by VGM Forbin for websites, social media and online advertising. She outlines three basic models for HME e-commerce:
Model 1, Awareness
This model is meant to create an online offering that drives traffic to the physical location. As the most common and easiest level for HME providers to rollout, model 1 is a basic online presence that informs customers about what a provider offers and specializes in, and how clients can find or contact the business. It is more of a billboard than an interactive marketplace. The main goal of a model 1 website is to drive customers into the brick and mortar location in order to conduct business.
Truly succeeding at model 1 is much more involved than it sounds. Media to mining data analytics, creating, maintaining and measuring your customer pipeline is perhaps the biggest learning curve for online HME providers. The more a provider knows and acts on your data, the more successful it will be at building an online presence, regardless of the level. Also, social media plays a big role in model one, according to Throndson.
Model 2, Convenience
This is a limited e-commerce presence designed to help patients purchase resupply items and other HME offerings online, but still in support of a physical location. This model allows customers to explore more information online, such as individual products with purchase capabilities. Unlike model 1, model 2 can have elements of e-commerce, which is the ability to order, re-order and purchase online using credit cards — so customers don’t have to come in the store to get what they need. The online strategy is likely limited in its use of online marketing campaigns to bring in new customers. Like model 1, the focus is on a local presence, but you are giving convenience to current customers and potential prospects by letting them purchase online.
Many model 2 providers see the value in partnering with distributors and member organizations, such as McKesson and VGM Forbin, to take advantage of online platforms and product databases — making it easier to build an online catalog of products with online purchasing capabilities. These modules enable complimentary regular data feeds to keep on top of product changes and availability. In addition, HMEs can leverage distributors drop ship models to ship the products directly to the customers home.
Model, 3 Dedicated e-commerce
This is a business model that is dedicated to e-commerce and is focused on engaging with and transacting with online customers on a regional, national or international level. Model 3 could incorporate some of the goals and tools of model 2, but the main focus is running a full-fledged e-commerce platform (purchase, fulfillment, online marketing, social media, database management, etc.) that lets providers re-engage with past clients and seek new ones. E-commerce HME providers must realize that they compete online with retail heavyweights, such as Wal-Mart and Amazon, so a strategy of adding value that differentiates the provider from big-box retailers is integral to success. It can also be difficult to re-engage as this model is often seen as a transactional (onetime) experience.
In model 3, not only is visibility crucial — ranking high on search engines and advertising on a wide scale —but so too are pricing and legitimacy. Throndson explains that people will research as many as 10 different online retailers before making a decision, especially on items costing more than $100. And, if any of those online retailers do not provide phone numbers, return policies, and all the reassurances that online buyers expect, customers will click past. Make no mistake, model 3 is the territory of dedicated players.
This article originally appeared in the September 2018 issue of HME Business.
David Kopf is the Executive Editor of HME Business and DME Pharmacy magazine. Follow him on Twitter at @postacutenews.