Products & Technology

3 Ways to Achieve e-Commerce

While providers might not know how to take the first step, there are three business models that can put them on the path to e-commerce success.

• By David Kopf, Joseph Duffy
• Nov 01, 2017

To many HME businesses, e-commerce might seem like a wild, wooly world where competition occurs on a national scale, providing no room for the “little guy” to compete on such a scale. But the truth is, getting involved in e-commerce is actually much easier, much more scalable, and much more attainable than you might initially think. In fact, it can be argued that some elements of e-commerce are, at this point, a business imperative for HME providers.

Regardless of your industry, starting or improving an online presence that uses some level of digital marketplace tools should be top of mind, because e-commerce has become a “norm” when it comes to doing business. According to a June 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.

If that makes you feel like you’re behind the eight-ball, don’t. Waking up to the momentum and pervasiveness of e-commerce is something many industries are experiencing. Even though customers are seeking information online, an astounding 46 percent of the small businesses who were surveyed still don’t have a company website, according to a Clutch business report.

Moreover it is important to understand what e-commerce actually is. Upon hearing the word “e-commerce,” the first image that immediately pops into the head of somebody who doesn’t have experience with e-commerce is an office with a bunch of tech people and a warehouse that is constantly hammering out retail fulfillment on a 24/7 basis. But e-commerce is much more manageable.

The Three Models of e-Commerce

In fact, some e-commerce efforts might not necessarily involve selling anything online at all, according to 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 e-commerce:

• Model 1, Awareness—an online presence meant to drive traffic to the physical location.
• Model 2, Convenience—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.
• Model, 3 Dedicated e-commerce—a business that is dedicated to e-commerce and is focused on engaging with and transacting with online customers on a regional, national or international level.

The first question that springs to mind in surveying these three scenarios is where do HME providers stand? Throndson says that a loose estimate based on her experience with VGM Forbin customers, approximately 60 percent of HME providers with an e-commerce presence would fall into model 1, about 35 percent would be model 2 and only approximately 5 percent would qualify as model 3. That said, the overarching goal of each model is to grow sales. The difference lies in the digital strategy the HME provider implements.

Model 1: Awareness

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.

That said, 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 one helps with building awareness in the community; building relationships with your existing customers,” she explains. “Often times I’ll even hear, ‘Oh, you know, I’m not really doing my social media, but if I do e-commerce I will.’ Well, why? Because you have a lot of opportunity to engage your existing customers, and even those in the community that are not maybe your customers right now but very well could be, or that could be a good referral source.”

And to that end, the use of social media in model one is about playing a role in the community. A provider shouldn’t look at social media as a tool for pure self-promotion. They should focus on providing value.

“It’s not always just about this particular product or service; the posts and the content might not always be about that,” Throndson says. “It’s about your influence as a business as well. It doesn’t matter if it’s in Washington or something localized or how they’ve helped patients or whatever. That’s something that a lot of HMEs discredit themselves for.”

The cost for model 1 is difficult to calculate, as HME providers have many options, such as building a site or using a third-party vendor. Ask yourself, are you doing online ads, paying for content, using a web designer? All considered, expect to spend about $500.00 a month to maintain a robust model 1 site.

So how does this work in real life? HME Home Medical (hmehomemedical.com) does not sell any products on its website, but uses it as a marketing tool to get current and potential customers to visit one of its three brick and mortar locations. The goal is not for the website to take them nationwide; it’s to offer information and a product offering via an online catalog to local Wisconsin customers and encourage them to visit their store in person.

Although they don’t sell online, they use their website data as part of their market research, and coordinate TV, print and monthly email marketing efforts with the website’s product focus. In fact, according to Executive Director Don Bye, just last month, they had 2,463 total engaged web sessions with an average visit duration of about two minutes. And while most visitors come from within the state, they have people searching from outside the area, as well.

According to Bye, the website data has put them on a path to find out more information about growing their online presence and introduce features found in model 2 businesses. Today, they have a full-time communications manager who is dedicated to the website and Facebook presence. Bye says his website costs are “minimal.”

Model 2: Convenience

Sharing elements of model 1, model 2 provides even more convenience to your customers. 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.

“You’re not only reengaging, but the thing that’s really changed in model 2 is the selling and fulfilling is,” Throndson says. “You’re still going to utilize your existing audience, you’re still going to push your local presence.”

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.

Cost for a model 2 presence depends on your effort, capability, motivation and needs of your audience. Expect more time addressing questions, web maintenance and creating content to stay fresh and relevant. Depending on your location, product span, and the number of locations you have, your model 2 costs can easily range in the thousands of dollars per month.

Sitting square in Model 2 is Williams Bros. Health Care Pharmacy (williamsbrospharmacy.com), a pharmacy that also does HME retail. With 9 DME locations in Southern Indiana and Illinois, the company sells products online, distributing some products itself from its own warehouse and other products from manufacturer product feeds. They have one website covering all locations.

According to Lisa Fouts, director of advertising and marketing, although they are offering customers a convenient way to buy online, the main goal of the website is to drive customers into the stores. Not everything in the store is online for purchase. In fact, William Bros.’ online purchasing strategy is to place “featured products” (about 200 to 300) for sale on the website to give customers a “taste” of what’s in-store.

Finally, to support the feeds and their overall marketing efforts, Fouts says they run special deals to push customers to the website and do some SEO and SEM to generate better search results.

Model 3: E-commerce

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.

“Model three is really standalone,” Throndson explains. “A lot of times a different DBA with nothing to do with MediCare. It’s not so much about the local business, because while that can assist, a lot of times they can’t go hand in hand, or it’s at the least very difficult, especially if the local business billing Medicare because your pricing is a huge factor.”

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 that 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.

“It’s not easy because you have many hurdles,” Throndson says. “You’ve got insurance hurdles; you’ve got pricing hurdles; you’ve got hurdles such as Amazon, Walmart, Walgreens, SpinLife, you name it. Those are folks that not only already have a really great reputation and client base, they’ve got really great pricing and they’ve got the dollars to back up the advertising, as well. That is a huge struggle to try to compete against those folks.

“It’s not just the reputation with the end user, it’s the reputation with the search engines,” she adds. “They [the big name players] have an established online presence. It does take sometimes a year, sometimes longer, to even build some of that stuff up. If you get niched on some product lines that are unique, it could take much less time, but I would definitely say your budget — as far as what advertising and your time investment, of course pricing comes into that —those are huge items of consideration.”

Living in the Micro-moment

Digital business is growing and evolving every day, as customers turn more frequently to using computers, tablets and smartphones to purchase and research product information. A consumer’s first step is no longer picking up the phone to ask you a question about a product — the expectation is that this information is available with just a few clicks or keystrokes. This quick clicks, swipes and scrolls on clients’ smart phones are what Throndson refers to as “micro-moments” and if your business is not a part of those moments, then it is missing out on potential revenue, regardless of which model makes the most sense for your business.

“It’s all based on the audience,” Throndson says. “It seems crazy to think that micro-moments apply to our industry, but if you take yourself out of the HME industry, put yourself in the shoes of the user, not even HME-related, would you engage with some sites if they didn’t do what you expected? No. You’d hit the back button and you would just pass it off, thinking, ‘They don’t have what I need.’ Because you want that need filled at that time and that’s what that micromoment is, so we have to feed those micro moments as they come to us.”

Those micro-moments are the lynchpin of today’s e-commerce. In fact, they are the lynchpin of doing business today, plain and simple. So regardless of the level of your digital business today, it is imperative that your business plan soon reflect a digital strategy that supports customers who are quickly accepting and expecting a robust e-commerce model as a condition of doing business.

This article originally appeared in the November 2017 issue of HME Business.