Online Pharmacies Shake The Fulfilment Status-Quo

News Warehousing

The way we purchase everything has changed dramatically. At the same time, the way orders are being fulfilled has also changed. Only pharmacies are becoming a part of consumers’ lives and they bring many innovative solutions to the logistics product. We spoke to Vince Martinelli, Head of Product and Marketing, at RightHand Robotics, about the way online pharmacies reshape the status-quo and more about general automation.

How are online pharmacies fulfilling orders and what are the trends in the sector?

In Europe there are several trends in this area. Online pharmacies have shown there is a growing demand from consumers to get both over the counter and prescription medications online. I believe that e-commerce is seeing electronic prescriptions in the EU as a big deal and a big opportunity. Prescriptions now can follow the patient no matter where they are across the continent. In the USA it is much easier as we can get medications wherever we are.

Nowadays online pharmacies can fulfil orders using many different technologies that didn’t exist just ten years ago.

Solutions are more affordable and easy to implement with multiple partners that can help. Picking robots can be combined with other solutions that let companies scale up very quickly. Throughput is very tightly controlled and there is no need to teach new robots how to do the job as well as the old ones.

Autonomous picking robots are still at a relatively early stage of adoption but more and more companies are turning to them, given all the current challenges finding labour to do essential, but repetitive and dull tasks. One of our clients processes the same order volume with around 20 people which would generally be done with 200 or more in a manual operation. In some cases, the labour that is needed is very highly qualified pharmacists, but those people are not necessarily interested in working in a warehouse. Also, there is a very high traceability with our robotic system, which is critical since each product needs to have its information captured, scanned and photographed.

What is the state of the general e-commerce sector at the moment?

Certainly there was a sudden jump and it moved ahead by five to 10 years versus the projected growth rate with the pandemic. Things have settled down a little bit but numbers are still positive, and a bit above the prior trend. So, the growth curve we were seeing earlier is continuing. People are going back to the stores but many stayed with e-com, for general merchandise, pharmacy and drugstore items, even grocery. There is a natural growth of e-commerce which is here to stay, based on higher convenience.

I believe the willingness of young people today to go to a store is much lower, especially when you can buy everything you need from your phone or even a smartwatch. There is another group of people who still do their grocery shopping at a store but also order many of the things they need online.

A lot of the pressure we see on logistics is due to the rise of smartphones and apps. Years ago orders, even online, would come at a specific time of the day. Today there is no such thing and companies receive them all the time. It is hard to predict things but I do not see any drop in e-commerce.

In fact, a better way to think about it as a retailer is to think about how you can get your products from the fulfilment centre to the customer’s doorstep as cost-effectively as you got them from a distribution centre to the store shelf. That’s the holy grail, in my mind, if you really want to win big over time, and it absolutely calls for intelligent use of automation.

Should we then rethink the place of the store and where automation goes?

There are many organisations experimenting with different models all the time. One of them is to keep limited inventory in the store and use it more as a showroom. In the USA Amazon is working with stores where you can just grab your items and leave.

Other big companies are also testing things with many retailers jumping in and looking for ways to build the most effective networks for how modern consumers prefer to shop now, and will want to shop in the near future.It is unclear what the exact model will be but overall it is forcing us to figure out where stores fit in the retail space. Just focusing on brick-and-mortar is not going to be beneficial but there is still a place for it.

There is a lot of talk about personalising customers’ experience in retail. I can say from my personal experience, that when I choose to go to the store versus buying online, one factor is the expertise and help I get from the staff. We buy our running shoes from a small chain where every person working there is an avid runner and has been trained on the latest products and how to help customers get the right shoe and fit. That formula is one that is important for physical stores doing specialty retail, in my view.

For pharmacies, similar experimentation is ongoing with pure online models, central fill prescription operations to augment in store pharmacies, and physical drugstores adding more health services in addition to the traditional mix of prescriptions, over the counter medications and other general merchandise.

Everyone in the space is trying to map to the right mix of product and service offerings at this dynamic time for the healthcare industry.

While I can’t predict the specific winners and losers between these approaches, it’s clear that automation needs to play an increasing role to achieve the flexibility and scale with a low cost operational model. That’s the trifecta for profitability and growth.

What technologies are going to shape the sector?

We see an uptake in the installation of automated order solutions of all types, especially in Europe. Firms in the USA are also moving in this direction, but the geographic scale and lower costs for warehouse space make it a different market environment to a degree. Even so, deployments are accelerating.

Companies that felt automation was out of their reach financially are now converting, given the shifting labour market, but also due to progress with the technologies and a very competitive market amongst existing and upstart system providers. The systems are also increasingly easy to integrate and operate, making the return on investment better as other costs rise.

My opinion is that the trend toward using more robotic automation has quickly gone from important to inevitable. There is a huge gap, as reported in national labour statistics for the US alone, of a couple of million jobs in manufacturing and supply chain that are just not being filled at all. What do you do? Businesses can choose to accept losing some revenue because they cannot service demand or they will choose to automate as much as they can. In e-commerce, whether it is pharma or general merchandise, without automation sales will reach a limit where the distribution system tops out. No one wants to be in that position and turn customers away to a competitor.

We think we are in a golden age of robots – not just picking robots, but many types – that will help the pharma and healthcare industries keep up with the shifting consumer preferences and increased demand for on demand availability of all products. The robots, happily taking on the least favourite jobs, are a force multiplier for their human peers as retailers focus on the future. ✷

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