Drugstore.com targets $750 million in revenues by 2013.

Drugstore.com Inc. says it expects annual revenue of at least $750 million in 2013--a 64% increase over 2010--with mobile and social media helping the company get there, according to internetretailer.com.

The company said it will be focusing on three key areas: retaining and expanding its customer base, leveraging emerging marketing channels and increasing its reach into new market segments.

The etailer is also phasing in new user tools over the next few weeks to help drive conversion rates. Including increased personalization and enhanced reviews will help it become a destination site for those seeking information and expertise in health and beauty care.

We think Drugstore.com has good reason to be bullish given increasing consumer demand for HBC and personal care items online. The focus on delivering content, as well as an emphasis on higher margin specialty items is smart, and will differentiate drugstore.com from a field of increasingly competitive etailers competing largely on price.

Light online shoppers show highest brand loyalty, lowest price sensitivity.

In a study recently published in The Journal of Interactive Marketing, researchers have concluded that online shoppers with the least amount of online shopping experience exhibit the highest brand and package size loyalty, and the lowest price sensitivity.

The study entitled Shopping Behavior Across Online and Offline Channel for Grocery Products, “looks at the moderating effects of household (e.g., shopping frequency) and product (e.g., sensory nature) characteristics on household brand loyalty, size loyalty and price sensitivity across online and offline channels for grocery products.“

It is important to note the study was conducted in Europe and that the effect of in-store features and displays was not taken into consideration.

For CPG marketers, knowing price sensitivity has a strong correlation to online shopping frequency should prompt a move to incorporate online shopping frequency into targeting metrics used for coupons drops and email promotions.

We see this as further validation that consumer behavior online does not simply mirror behavior in traditional offline channels, and that separate but integrated marketing strategies are required.

Click here for a link to the study.

How Do Shoppers Shop CPGs Online?

According to Nielsen (see attached chart), there are three distinct styles that different shoppers use to find the CPG products they are looking for online. While there is some overlap, brands need to account for all three of the following to optimize their visibility, sales and loyalty:

1. Search - is the most popular method on etailer websites. 95% of purchases are made from the first page of search results, getting above the fold is a high priority! Brands must partner and invest with etailers on sound SEO/SEM pratices grounded in learnings/best practices.

2. Virtual Aisle Shopping - the second most popular way shoppers shop for CPG brands is similar to their behavior in a physical brick and mortar location - they choose aisles or categories and then select from a list of products. Brands should look for opportunities for virtual merchandising (banner, buttons, featured brands, etc.) at the category level.

3. Auto Replenishment/Saved Lists - there are also a significant number of shoppers who use a saved list and/or auto replenishment to determine their purchases. Amazon is pushing Subscribe and Save for CPGs to drive growth and loyalty. There is a sense of urgency for brands to "Get on The List" before their competitors do!

Falling E-Retail Customer Satisfaction

ForeSee Annual ACSI E-Commerce Report, February 2011 reports falling Customer Satisfaction for E-Commerce Sector in general. The downward pressure is being driven by the Retail segments versus Online Brokerage and Online Travel segments that were flat to moderately up, respectively.

The e-retail industry fell to its lowest score since 2004, despite customer satisfaction improvements by Amazon, Overstock and eBay. ASCI attributes the decline to a recovering economy, in which smaller companies with limited resources are hit harder than the larger companies who have more flexibility and can still offer discounts and free shipping.

Beyond the discounts and free shipping, you can add lack of industry focus on the basic blocking and tackling that is necessary to drive customer satisfaction such as the right product assortment, ease of online shopping, solution selling, merchandising and lack of focus on customer shopping needs.

The online sales arena should be driving the highest levels of customer satisfaction through convenience, availability of the right products, quality assortment and ease of finding the products customers want.

The online sales community needs to bring the basic service structure consumers want to continue to expand sales and capture new users.

Petfooddirect redefines "convenience" in face of winter weather.

As winter weather raged across the country last week, the home page at PetFoodDirect.com smartly asked, "Aren't you glad you get your pet food delivered?"

Online sales of petfood are forecasted to grow by about 15% per year through 2014, according to Forrester research. Given the frequency of replenishment combined with the inconvenience of lugging home bags of dry food or cases of cans, we expect the pet category to be an early beneficiary of the auto replenishment services offered by many etailers.

Additionally, the rising cost of fuel, the overall aging of the U.S. population and the growing number of internet savvy shoppers--especially seniors--will continue to drive demand for home delivery and subscription replenishment services.

Something to Wag Your Tales At

Petfood is among the fastest growing categories online with over 15% CAGR. Both mature clicks and bricks (petco, petsmart) and pureplays (petfooddirect) have experienced solid growth in online sales. Walmart entered the market in late 2010 featuring a wide assortment of petfood for sale online. Amazon ranging includes over 20,000 pet food items. New pure players like petflow are entring the market and growing rapidly. This week Purina is parnering up with petsmart.com on a stock up and save event.

Explosive growth in the category speaks to consumers affinity with the converience of shopping online and are willing to buy when price + shipping hurdles are reasonable.

Who Conrols The Online Sales Environment

When looking at which etailers dominate food and healthcare online sales, be surprised by the fact that Walmart, and Target are not found in the top 10 for All Female Adults, aged 18-54, college graduates with kids. The online sales environment is significantly more fragmented than traditional Brick and Mortar calling for a unique sales and marketing strategy to best represent brands

What Were Consumers Doing After They Shopped on Black Friday?

.....Posting about it on Facebook.

On Black Friday 2010, there were more than 6x the number of Facebook status updates related to retail purchases as on the previous Friday (Facebook, January 2011).

2011 will see an increase in the convergence of social networking and ecommerce. According to the Gigya Group, nearly half of the top 25 retailers have integrated Facebook into their websites.

Retailers that are creating insights driven, seamless integration between both their websites and social networks are beginning to enhance the shopper experience vs. detract from it.