>Northwest business briefs: Drugstore.com readies to fill its own orders
by Seattle Times staff and news services
LAS VEGAS - Bellevue-based online pharmacy Drugstore.com will end contracts with distributors by the end of the quarter and start filling all orders on its own, the company's chief executive said.
Drugstore.com, which began selling health and beauty aids on the Web 13 months ago, opened a distribution center in Bridgeport, N.J., in January. The center already fills about two-thirds of drugstore.com's non-prescription orders.
Hiring distributors let the company focus on selling goods and adding customers, CEO Peter Neupert said. Drugstore.com today has 1 million customers, and sales last year were $34.8 million. The company can now try to lower costs and better control service by handling its own orders, he said.
"We partnered to get big fast," said Neupert, a former Microsoft executive. "As we got bigger, it just became clear we needed to do it on our own."
Drugstore.com has no plans to share warehouses with top Internet retailer Amazon.com, though the companies signed a three-year marketing agreement in January, Neupert said. Amazon.com doesn't have the government licenses required to ship pharmaceuticals, he said.
The in-house effort could help improve drugstore.com's gross margin, which measures the profitability of sales. The company has had negative margins, meaning it lost money on sales, mainly because of costly promotions. Some analysts expect drugstore.com to show a positive margin for the first quarter. |
