Walgreens Pulling Back From E-Commerce

Daniel Jennings profile picture
Daniel Jennings

Walgreens Boots Alliance (NASDAQ:WBA) is greatly reducing its e-commerce footprint.

Walgreens is planning to shut down its Drugstore.com and Beauty.com websites, an SEC filing dated July 27, 2016, indicates. The company will consolidate its American online sales through Walgreens.com after those sites go away. The two sites should vanish from the web by September.

It looks as if Walgreens has become the latest victim of Amazon (AMZN). The drugstore giant is already struggling with stagnant front-end retail sales. Non-prescription retail sales fell at Walgreens for the last quarter of 2015 and first quarter 2016.

Walgreens' US retail sales increased by just .1% in second quarter 2016, Reuters reported. That was less than the .7% increase analysts were expecting which was dismal to begin with.

Is Amazon Hurting Walgreens Now?

Walgreens was not able to compete directly with Amazon online. The online-retail Goliath threatens Walgreens; which is heavily reliant on sales of beauty products, nonprescription drugs and toiletries.

Most of those products are small and very easy to ship which makes them perfect items for online retail. There are now hundreds of merchants selling such items directly to consumers through Amazon and Walmart.com (WMT). Many of them offer lower prices, and free shipping.

That's real bad news for Walgreens because non-prescription retail sales make up around a third of its American business, Reuters reported. Beauty, haircare and shaving products are major drivers of foot traffic at Walgreens' stores in urban areas.

Walgreens may have to cut back on sales of such items or look for alternatives. Some products it might consider adding are financial services, more groceries, more ready to eat food, a larger selection of beverages and postage or shipping services. Another amenity Walgreens should consider is adding a pickup area for items ordered online.

A long-term opportunity Walgreens should

This article was written by

Daniel Jennings profile picture
Daniel G. Jennings is a professional freelance writer, longtime blogger, and recovering journalist with nearly 20 years of writing experience. He has written hundreds of articles and blog posts for clients all over the world, many articles on stocks and financial topics for Motley Fool and Seeking Alpha, and other forms of copy for many different websites. Off the web, Jennings has an MBA and a BA in history; he has also worked for newspapers in four states and in the accounting department of an S&P 500 corporation. He is currently the owner and operator of the Car Insurance Samurai, Market Madhouse, and Make Cash from Books blogs.

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