Cvs - Web Strategy

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Running head: CASE ANALYSIS – CVS: THE WEB STRATEGY

Abstract
CVS decided to expand its services by opening a Web -based drugstore. Initially, there were many doubts concerning how to do it “right”; building it from start, or acquisition were the options on hand. After studying the possibilities CVS decided to acquire Soma.com and gradually (less than 3 months) turn it into CVS.com. There were many challenges during the process: coordinating a bicoastal organization (Soma.com headquarters were in Seattle and CVS headquarters were in Rhode Island), determining how the reimbursement were going to be handle for online purchases, building brand awareness and increasing traffi c and sales on the new channel (the Web). This paper intends to analyze CVS’ Web strategy and provide some recommendations on that area.

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CASE ANALYSIS – CVS: THE WEB STRATEGY

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CASE ANALYSIS – C VS: THE WEB STRATEGY
After carefully studying how to venture in a new distribution channel (the Web), CVS decided to acquire an established company (Soma.com). The goal was to re -launch Soma.com as CVS.com, in just a few months. The pressure was high since the competition was fierce and constantly increasing. By the time CVS acquired Soma.com there were already strong competitors in the market: Drugstore.com and Planet Rx. Venturing on a Web-based drugstore was based on the fact that “the market for drugstore products was four times the combined sales of books and CD’s, two sectors that had flourished on the web” (Shah, 1999, p.1). Everyday more and more drugstores were thinking about the possibility of venturing with online presence, the Internet was flourishing and everyone wanted to take advantage of it. According to Shah (1999), CVS decided to acquire Soma.com for several reasons: speed, human resource quality, fully automated warehouse, and similar health -care-focused beliefs. Speed was crucial to respond to the fast -growing competition, “it would have taken [them] 3 to 4 months to build what [they] bought for the same cost” (Shah, 1999, p.6). In fact, Soma.com used top notch technology to operate and control its business, managing up to 3,000 SKUs of just prescription medicines. Moreover, Soma.com’s huma n resource was a great asset that came ‘with the price’. Soma.com was especially careful about hiring people “with mail order prescription backgrounds” (Shah, 1999, p.6). Therefore, hiring qualified employees to manage the new distribution channel was not a concern for CVS.

The following table was design to summarize the analysis of the provided information about CVS web venture. The table summarizes the strengths and weaknesses of the organization and the opportunities and threats of its environment.

CASE ANALYSIS – CVS: THE WEB STRATEGY

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Table 1
CVS Web-based Drugstore SWOT Analysis
Strengths


CVS brand equity: second drugstore in the US,

Weaknesses


Bicoastal organization: Soma.com

and the one with more number of stores.
Detailed and well-design operation process from

headquarters were in Rhode Island. Time

dispensing to shipping: registration required,



headquarters were in Seattle and CVS

difference is a challenge.

specified reimbursement need from the customer,



Privacy issues: user sensibility to sharing

different options to present the prescription, free
shipping of orders that included prescription

reminders were not in sync with brick -and-

medicines.


medical information online, e-mail prescription

mortars drugstores.

“E-mail prescription refill reminders for registered



Making a product available on cvs.com was

users, and 24-hour access to pharmacists via email or telephone” (Shah, 1999, p.6) Top-notch automated technology in the

can click on the dosage, indications and
description of ingredients” (Pigott as cited in

prescription medicines.


to web-enable each product to make sure you

warehouse, able to deal with up to 3,000...
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