What’s your independent community pharmacy’s most unexpected competition?
It’s not national chain pharmacies. Or the dollar store down the road.
This competition is less noticeable.
While you’re busy watching the big chains, these competitors sneak in and steal your patients.
And, they don’t sell prescription or over-the-counter (OTC) drugs.
They’re called indirect competitors. And they take away customers just like your direct competition.
What’s the difference between direct and indirect competition?
The only way for your pharmacy business to thrive is to know all your competitors, direct and indirect.
Direct competition
Direct competitors sell the same products and services as your pharmacy to meet the same customer need.
For example, Ford is a direct competitor to Chevy because they both sell motor vehicles to meet people’s transportation needs. And, Pizza Hut is a direct competitor to Papa John’s because they both sell pizza to meet people’s hunger need.
How it applies to your pharmacy: Your pharmacy’s direct competition is other pharmacies that sell prescription medications and stores that sell OTC products to meet people’s health needs.
Indirect competition
This competition is sneakier. Indirect competitors sell different products or services than your pharmacy but they satisfy the same customer need. Sometimes companies can lose customers to an indirect competitor without ever realizing it.
For example, while Ford and Chevy are direct competitors in the motor vehicle market, they both face indirect competition from bus and subway lines. A subway meets the same transportation need as a Ford vehicle. So, Ford loses customers who travel by subway in lieu of a motor vehicle.
And, Pizza Hut and Papa John’s compete with every restaurant. If someone is hungry, he can get a burger to meet that need just as easily as pizza. So, the pizza restaurants have to not only determine how to compete with one another but also how to convince people to eat their pizza instead of other types of food.
How it applies to your pharmacy: Your pharmacy’s greatest indirect competition is any business that keeps patients from needing a prescription or OTC product in the first place. So, any products or services that help people become healthy through any means besides prescribed and OTC medications.
People can improve their health through remedying it or through preventing it. So, companies that offer preventative services and products can take your customers away by removing their need for a remedy.
How to beat your pharmacy’s direct and indirect competition
One of the best ways your pharmacy can combat indirect competition is to add preventative services and products to your offerings, including health and wellness programs.
For example, the nutritional supplement industry is in indirect competition with pharmacies because it improves patient health through preventative and natural measures rather than remedial and medicinal.
But many pharmacies now offer nutritional supplements in their pharmacy, which makes them more likely to retain and attract customers who want to go to one place for all their health needs.
Other pharmacies offer a range of vaccinations to prevent illness and disease. If you don’t offer those, patients will go to your competition to receive them.
For each indirect competitor, ask what preventative services and products your pharmacy offers that would entice customers to choose your business instead. Then, market those products or services in the same ad space as those competitors.
Also, ask what can you start offering that will attract those customers. For example, patients may be using the neighborhood clinic to get travel vaccines, so you should consider adding those vaccinations to your service offerings.
You have to know your competition before you can beat it.
A Member-Owned Company Serving Independent Pharmacies
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and owned by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.
An HDA member, PBA Health operates its own NABP-accredited secondary wholesaler with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.
