Drugstore Products in Europe: The Amazon Effect

By Nathan Rigby, VP Sales and Marketing at One Click Retail

If recent history has taught us anything about Amazon, it's that no retail sector is off-limits. Household consumables once thought to be ecommerce proof, such as fresh groceries and luxury beauty products, have become extremely profitable for Amazon.

Of course, this was by design – Amazon has been competing in the consumables space with numerous private brands for years, and their recent acquisition of Whole Foods is just the latest (and largest) in a long line of strategic investments in the grocery industry. And now it's looking like Amazon's next frontier is drugstore products – so much so that it's even causing drugstore chain stocks to plummet.

To succeed in capturing the coveted consumables market, Amazon has had to understand the different shopping habits across its major markets in America and Europe. Unlike Americans, who love a well-stocked medicine cabinet, British and European consumers are more likely to only purchase drugstore products on an as-needed basis.

The American habit of "stocking up" comes from the fact that most US drugstores are large, department-style chain stores located in shopping centers. In Europe, small corner drugstores are much more common so most Europeans will just walk around the block to get their medication. In addition, Europeans tend to make smaller and more frequent trips to the grocer, so they put less emphasis on keeping things in stock.

As a result, medicine cabinet staples such as antacids, analgesics, and first aid items are significantly less popular among European Amazon shoppers compared to Americans, but other drugstore products are picking up the slack. Let's take a look at which subcategories European consumers are buying from Amazon and which brands are having the most success in these markets.

What's Big

  • Smoking Cessation

The UK is Amazon's largest European market for drugstore products with an estimated $48 million in 2017 sales. It's also steadily growing at a rate of 51% year-over-year driven by strong growth in the largest subcategory by far: Smoking Cessation. Led by one of the strongest global brands in this space, Nicorette, the subcategory earned an estimated $7 million last year (almost double the next-largest category) and grew in size by 37% compared to the previous year.

By marketing their brand through Amazon while drugstore products were still emerging as a category, Nicorette was able to capture the Smoking Cessation market on Amazon.co.uk with barely any competition. The brand now controls this space with all of the top 10 items in this subcategory (including Nicorette QuickMist Mouth Spray Duo Pack, Amazon's #1 drugstore product of 2017 in the UK), making it extremely difficult for competitors to gain visibility in the same niche and to rank high in category and keyword searches.

  • Foot Care

Smoking Cessation does not rank as high in Germany or France, where Foot Care is the largest drugstore subcategory (it's also #2 in the UK). In Germany, where Amazon's sales of drugstore products plateaued in 2017, Foot Care was the clear market leader with $5 million in estimated sales and each of the top four bestselling items.

Like Nicorette, the Scholl brand has found success by investing in Amazon when few competitors were doing so. Scholl is responsible for at least the top two Foot Care items in each of the three countries – the UK, Germany and France – with only a handful of competitors such as Excilor and Hansaplast ranking among them.

What's Growing

  • Hair Loss

Already a top subcategory in the UK, Hair Loss more than doubled in size in 2017.  Regaine (marketed as Rogaine in the US) led the subcategory with the Regaine For Men Hair Regrowth Foam Triple Pack and also controlled most of the bestselling Hair Loss items.

Despite Regaine's strong brand recognition, lesser-known competitor Viviscal managed to climb to the #2 spot in 2017 by offering a unique alternative to Regaine's topical creams and foams: a Hair Loss supplement. Even though the subcategory is dominated by a single strong brand, Viviscal is able to compete by targeting a specific niche and innovating within the space.

In both Hair Loss and Smoking Cessation, brands have had success with Amazon's Subscribe and Save program. These products tend toward regular (though hopefully only temporary) predictable use, so offering shoppers a discount in exchange for "subscribing" to the product has proven effective. That way, customers can set a regular delivery interval and don't have to worry about placing an order every time, and the brand benefits from the predictable repeat patronage of their customers.

  • Homeopathy

Amazon's drugstore products market in France is still in its early growth stage, but its standout categories point toward some emerging trends.  Homeopathy is the #3 subcategory in the country and is driving growth throughout Europe. In the UK, Homeopathy was the 4th-largest subcategory with 33% YoY growth.

Despite a strong performance on Amazon.co.uk in 2017, the subcategory had no items among the top 30 bestsellers. Typically, this indicates that no major, well-known brand is investing heavily enough in Amazon as a sales channel to control their niche, allowing many small, emerging brands to enter the market and gain high visibility.

Amazon is transforming retail in Europe. Shoppers today are buying more and more of their household consumables from Amazon – every product group has felt the effect and drugstore products are no exception. The success of brands like Nicorette, Scholl and Regaine is easy to explain: they made Amazon a priority while their competitors failed to do so. This strategy could work for any brand, from the household name to the generic. Amazon's sales of drugstore products are growing at over 50% YoY in most European market, so brands need to capture the loyalty of Amazon shoppers now to gain visibility, grow their sales rank, and collect their profits.

One Click Retail is the industry’s most accurate source of sales data for the world’s top eCommerce marketplaces. Using a combination of website indexing, machine learning and proprietary software, OCR estimates weekly online sales figures with market leading accuracy in order to deliver the best insights, analytics and strategies to their brand manufacturer clients. To catch a glimpse of how OCR gives brands critical edge on online platforms with our unique data and expertise, subscribe to our weekly eCommerce insights blog, and follow us on Twitter and LinkedIn.

If you are a brand manufacturer who would like to learn more about how you stack up to the competition—or would like to see your market share and category growth insights—email us at info@oneclickretail.com for a free capabilities demo or fill out the form on the right.

Whitepaper

By Nathan Rigby, VP Sales and Marketing at One Click Retail

If recent history has taught us anything about Amazon, it's that no retail sector is off-limits. Household consumables once thought to be ecommerce proof, such as fresh groceries and luxury beauty products, have become extremely profitable for Amazon.

Of course, this was by design – Amazon has been competing in the consumables space with numerous private brands for years, and their recent acquisition of Whole Foods is just the latest (and largest) in a long line of strategic investments in the grocery industry. And now it's looking like Amazon's next frontier is drugstore products – so much so that it's even causing drugstore chain stocks to plummet.

To succeed in capturing the coveted consumables market, Amazon has had to understand the different shopping habits across its major markets in America and Europe. Unlike Americans, who love a well-stocked medicine cabinet, British and European consumers are more likely to only purchase drugstore products on an as-needed basis.

The American habit of "stocking up" comes from the fact that most US drugstores are large, department-style chain stores located in shopping centers. In Europe, small corner drugstores are much more common so most Europeans will just walk around the block to get their medication. In addition, Europeans tend to make smaller and more frequent trips to the grocer, so they put less emphasis on keeping things in stock.

As a result, medicine cabinet staples such as antacids, analgesics, and first aid items are significantly less popular among European Amazon shoppers compared to Americans, but other drugstore products are picking up the slack. Let's take a look at which subcategories European consumers are buying from Amazon and which brands are having the most success in these markets.

What's Big

  • Smoking Cessation

The UK is Amazon's largest European market for drugstore products with an estimated $48 million in 2017 sales. It's also steadily growing at a rate of 51% year-over-year driven by strong growth in the largest subcategory by far: Smoking Cessation. Led by one of the strongest global brands in this space, Nicorette, the subcategory earned an estimated $7 million last year (almost double the next-largest category) and grew in size by 37% compared to the previous year.

By marketing their brand through Amazon while drugstore products were still emerging as a category, Nicorette was able to capture the Smoking Cessation market on Amazon.co.uk with barely any competition. The brand now controls this space with all of the top 10 items in this subcategory (including Nicorette QuickMist Mouth Spray Duo Pack, Amazon's #1 drugstore product of 2017 in the UK), making it extremely difficult for competitors to gain visibility in the same niche and to rank high in category and keyword searches.

  • Foot Care

Smoking Cessation does not rank as high in Germany or France, where Foot Care is the largest drugstore subcategory (it's also #2 in the UK). In Germany, where Amazon's sales of drugstore products plateaued in 2017, Foot Care was the clear market leader with $5 million in estimated sales and each of the top four bestselling items.

Like Nicorette, the Scholl brand has found success by investing in Amazon when few competitors were doing so. Scholl is responsible for at least the top two Foot Care items in each of the three countries – the UK, Germany and France – with only a handful of competitors such as Excilor and Hansaplast ranking among them.

What's Growing

  • Hair Loss

Already a top subcategory in the UK, Hair Loss more than doubled in size in 2017.  Regaine (marketed as Rogaine in the US) led the subcategory with the Regaine For Men Hair Regrowth Foam Triple Pack and also controlled most of the bestselling Hair Loss items.

Despite Regaine's strong brand recognition, lesser-known competitor Viviscal managed to climb to the #2 spot in 2017 by offering a unique alternative to Regaine's topical creams and foams: a Hair Loss supplement. Even though the subcategory is dominated by a single strong brand, Viviscal is able to compete by targeting a specific niche and innovating within the space.

In both Hair Loss and Smoking Cessation, brands have had success with Amazon's Subscribe and Save program. These products tend toward regular (though hopefully only temporary) predictable use, so offering shoppers a discount in exchange for "subscribing" to the product has proven effective. That way, customers can set a regular delivery interval and don't have to worry about placing an order every time, and the brand benefits from the predictable repeat patronage of their customers.

  • Homeopathy

Amazon's drugstore products market in France is still in its early growth stage, but its standout categories point toward some emerging trends.  Homeopathy is the #3 subcategory in the country and is driving growth throughout Europe. In the UK, Homeopathy was the 4th-largest subcategory with 33% YoY growth.

Despite a strong performance on Amazon.co.uk in 2017, the subcategory had no items among the top 30 bestsellers. Typically, this indicates that no major, well-known brand is investing heavily enough in Amazon as a sales channel to control their niche, allowing many small, emerging brands to enter the market and gain high visibility.

Amazon is transforming retail in Europe. Shoppers today are buying more and more of their household consumables from Amazon – every product group has felt the effect and drugstore products are no exception. The success of brands like Nicorette, Scholl and Regaine is easy to explain: they made Amazon a priority while their competitors failed to do so. This strategy could work for any brand, from the household name to the generic. Amazon's sales of drugstore products are growing at over 50% YoY in most European market, so brands need to capture the loyalty of Amazon shoppers now to gain visibility, grow their sales rank, and collect their profits.

One Click Retail is the industry’s most accurate source of sales data for the world’s top eCommerce marketplaces. Using a combination of website indexing, machine learning and proprietary software, OCR estimates weekly online sales figures with market leading accuracy in order to deliver the best insights, analytics and strategies to their brand manufacturer clients. To catch a glimpse of how OCR gives brands critical edge on online platforms with our unique data and expertise, subscribe to our weekly eCommerce insights blog, and follow us on Twitter and LinkedIn.

If you are a brand manufacturer who would like to learn more about how you stack up to the competition—or would like to see your market share and category growth insights—email us at info@oneclickretail.com for a free capabilities demo or fill out the form on the right.