I recently came across the announcement that Target has purchased Dermstore.com, an online retailer created by a dermatologist to resell a wide variety of commonly used physician-dispensed cosmeceutical brands. What is physician-dispensed you ask. Well, it generally means that these products are sold through physician offices, not in retail stores and as a result, these products get the extra seal of approval from the accredited physician that this is a product that is safe and effective.
Since Target now owns DermStore Beauty group, does that mean that consumers are purchasing these premium skincare products through what would be considered a retail channel Quite possibly. And how are physicians supposed to compete with such a large conglomerate in terms of pricing and accessibility. It's pretty unlikely that they could. I recently conducted a bunch of interviews with dermatologists about their opinions on online purchasing channels and this is what one of them had to say:
"I don't like that. I think that sort of takes things out of our hands, in terms of getting the patient to the office, reviewing things with them. They just basically buy online, which takes us completely out of the loop. It hurts and I basically try not to have any products that patients can buy online. Dermatologist, AR"
Now it makes me consider, could this action cause backlash to manufacturers from their core customer group, the physicians. While speculative, it's totally possible. Selling these products is an easy way to earn some extra cash flow for dermatologists and plastic surgeons. But if their in-office sales drop, they could easily focus more effort on their medical procedures, or even other aesthetic treatments to fuel their practice revenues. If they do stop carrying these products altogether, the manufacturers will not only lose an important sales channel, they will lose a source of credible endorsements and recommendations. They also need to consider what might happen to their next generation of products, if they can't rely on physicians to introduce it to their patients.
Furthermore, the next concern is whether physician-dispensed cosmeceutical manufacturers would be able to compete effectively against all the retail brands that sell at sometimes half the cost but market the same efficacy. Some companies have done that like CeraVe, which recently moved from being physician-dispensed to being sold at Walmart, but then again, CeraVe was already a fairly low-cost product line, and so that made it easier for them to compete for sales in a price-sensitive environment.
At the end of the day, manufacturers will need to weigh carefully whether they want to satisfy their core customer group, or move towards the potential for mass retail and higher revenues by cutting out the intermediary. It seems unlikely that they can fully accomplish both at the same time.