How To Make Big Profit From Prescription Delivery
Updated: Apr 12
Do you remember Blockbuster before Netflix? It was huge! Everyone went to Blockbuster to rent their videos or DVDs. That is, until the market was completely disrupted by streaming and well... Blockbuster isn't really a thing anymore.
Remember life without Amazon? I'm not even talking next-day delivery here, I'm just talking about life before everyone shopped online. Amazon completely disrupted the way people shop.
And now they're disrupting how people receive their goods.
I've been making some pretty big claims lately, I have to admit. You know, as in delivery equals huge profits, fast and easy.
I'm super excited about the potential I see in delivery.
Because disruption in the market brings opportunity. And right now, we've got disruption on a couple of different fronts.
We've got home delivery bursting with possibilities, but we've also got the COVID-19 crisis. Delivery makes people feel safer; it minimizes the risk of contact that comes with going into the store.
So businesses offering delivery service have a massive opportunity to grow right now. Which is why we at iApotheca feel that delivery service is so important to pharmacies who don't want to be the next Blockbuster.
It's simple; businesses are now offering delivery because customers expect it. Those businesses who don't offer delivery will struggle to keep up with the competition.
On the flip-side, delivery can help you grow your business, which is great. It can help you turn a healthy profit, all while keeping up with the industry.
But the other day it occurred to me that if someone was telling me I could make big profits fast, I'd want proof. And if they couldn't deliver (pardon the pun), well...
But here's the thing; I can deliver. So that's what today's post is about.
By now you've heard that EconoRoute™ by iApotheca will help generate revenue. It'll increase front shop sales.
Not to mention helping you get new patients in the door.
And it'll generate big profits as well, long after COVID-19 is no longer a crisis.
If you need a refresher on this, you can check out our article How to Offer Pharmacy Delivery that Will Increase Revenue. In that article, I go into detail about how to bring in more revenue with delivery.
It's all about two things; happy patients and increased front shop sales.
But what about this profit idea?
Everybody needs that, right? It's the key to building a successful business.
And most of us are in business to succeed. I mean, it's true that you can define success in many ways.
For some pharmacy owners, success means leaving a legacy to future generations.
For others it means building a reputation for the best patient care.
Still others pin their definition of success on becoming an industry thought leader. On building a reputation for being the most innovative, for helping to lead the industry.
But regardless of your definition of success, you need one thing in place to succeed at any of these things. You must have a successful business.
Which means you have to be profitable.
And at iApotheca, we're confident that prescription delivery, done right, can get you there.
Profit the Easy Way
We know you're busy; pharmacies are busy. And we talk to a lot of pharmacists who just aren't sure how they'd get the time to start delivering. Or to grow their current small list of delivery customers.
But wait. If you're in business, you're there to succeed. So how can you be too busy to make profit? Believe it or not, we hear this all the time.
I mean, nobody actually says they're too busy to make a profit. Nobody ever actually says that.
It's really more like, "I don't have time to start a delivery service."
Or, "Sure, I'll start a delivery service, when I decide I need more stress in my life."
So this is where we address the 'fast and easy' bit. Because delivery doesn't need to be stressful. And, you may actually have some fun with it, because it's all about innovating the way you do business.
Not to mention the way you connect with your patients.
Here's how it works.
Five Must-Haves for a High Profit Delivery Model
So how can you structure your delivery service for the highest potential profit?
There are five main points to consider:
Multiple scripts per delivery (think Blister Packs or Med Pouches/Sachets)
Focus on recurring patients
Longer, more efficient trips (driver has more than one delivery when they leave the store)
Promoting your delivery service with a simple yet solid marketing strategy
Follow these five simple steps to make your delivery service the most profitable.
Multiple Scripts Per Delivery
Multiple scripts means multiple dispensing fees, which means more profit. So let's look at it this way; say you're running a pharmacy in Ontario, Canada.
According to a 2018 Manion-Wilkons report, the average dispensing fee in Ontario at that time was around $12.
Great. So let's say your average dispensing fee is $12 per script. And we'll say that you're doing 25 deliveries per day.
If each of your deliveries has an average of 3 scripts in it, you're making around $36 per delivery.
Now, everyone's delivery costs will be different, depending on your setup. But let's say that each delivery is costing you $6 by the time you pay for fuel, your driver and vehicle maintenance.
That means you're making $30.00 per delivery. Which is $750.00 per run. And sure, you could make that and keep it all if you weren't offering delivery service.
You'd have no driver to pay, no fuel costs, nothing. It's very easy to go down that road in your head, but consider this.
In that scenario, you're not thinking about the shift toward delivery in the industry. You're not taking into account what your patients want. You're not building, you're not innovating.
And you're gambling with your business, because your competition will be offering delivery. If they're not delivering now, chances are they will be very soon.
I know that when you're just starting out with delivery, this doesn't look as good.
Maybe you only have 5-10 deliveries per day right now. Maybe even less. And perhaps that's been your status quo for a while. Perhaps you weren't actually planning on expanding it, because that sounds like a real pain to you.
But work your way up to 50+ deliveries a day, which is completely doable, and this starts looking pretty good.
Focus on Patients with Recurring Scripts
So who are the ideal delivery patients? Recurring patients; particularly those with more than one prescription.
Who are they?
And around 1 in 5 reported using at least five prescription drugs.
By marketing to patients with recurring prescriptions, you're guaranteed to drive regular profit. Getting them set up on an automated weekly delivery schedule means it's taken care of week after week.
Consider our earlier example; you're doing 25 deliveries per day at a profit of $30 per delivery.
For one thing, that number would be higher if your patients averaged 5 prescriptions per run. Your profit would then be $54 per delivery for a total of $1350.00 per day.
Now imagine if those runs catered to patients who needed their meds delivered weekly. You'd have predictable revenue from your delivery service.
Making this your daily routine would mean big profit. And the sky's the limit; soon you could work your way up to multiple drivers.
Especially if you were delivering to long term care facilities.
And the best part?
Your patients benefit in more ways than one.
Yes, they have the convenience of not having to go into the pharmacy. And that's big.
It's a win-win.
Make Longer, More Efficient Trips
Organizing your deliveries for longer trips is not only more efficient. It'll add to your profit.
By using your driver's time better, and by allowing you to set up efficient routes.
Think of it this way; we talk to a lot of pharmacists who say they do their deliveries themselves. And that they don't bother to schedule or organize them, they deliver as the orders come in through the day.
They don't have a big delivery service, so it's treated casually.
At first glance, this seems like a great way of doing it. After all, it doesn't cost you anything to jump in the car and take a 30-minute drive, right?
You head out with a script or two, you're gone for a while and then you're back to your tasks in the pharmacy. Until the next delivery comes along. And then you're hopping back in the car, spending another 30-45 minutes on the road before heading back.
No big deal, for a small pharmacy without many deliveries, this could make sense.
Until it doesn't. For a couple of reasons.
First of all, you've no doubt heard the old adage, 'time is money'.
That's a great thing to remember when you're focused on profit, because to be very frank, it's true.
So if you're a pharmacist and you're doing an hour of delivery per day, how much is that costing you?
Well, according to Indeed.com, the average salary for a pharmacist in Ontario in 2020 is around $46.02 per hour. So if you're jumping in the car for an hour, it's costing you $46.02 to make those deliveries.
That's a whopping big cost. Especially when you consider that you could hire a delivery driver for around $16-$17 per hour. And pack their hours with multiple scripts, but we won't get back into that.
So right off the bat, if you're doing your deliveries yourself, you're not making any profit.
But what if you weren't busy? What if you took off during your slow time and you had an hour to kill?
Well, there's an interesting way to look at that. And it brings us to the second reason that doing deliveries yourself is not such a fabulous idea.
You see, there are those who believe that as the pharmacy owner, your time is best spent on other things. Like figuring out how to get more business in the door, because you can never have too much.
Or brainstorming ways to provide better patient care. Training staff. Streamlining processes. Even reconciling your narcotics would be a better use of your time (we know, ugh!).
In short, figuring out the best way to market your pharmacy and building your delivery service. Blowing this thing right out, because now is the time; the opportunity is huge at the moment.
The bottom line is that you should be doing almost anything other than cruising around town. You're the brains of the whole operation. If anyone is going to grow this thing and pull in more profit, it's going to be you.
And then there's the gas you're wasting on your travels.
Which brings me to my next point.
Optimizing Your Routes
Above all, always optimize your routes. Why? Because it's all about profit, so it's important to be efficient with your time, money and fuel.
Think about it. If you have a delivery run of 10 orders going out and you're not optimized, there's so much that can go wrong.
Traffic jams, accidents, you name it.
Your driver sitting in an unexpected snarl of traffic somewhere for over an hour, burning fuel and time. And then your patients start calling in, stressing about when their meds will arrive.
With instant route optimization from anywhere, you always know where to go and what to avoid. And if you happen to be able to track your driver's progress in real time, that's a good thing too.
Can't your driver just find the next closest stop in Apple maps or Google after each delivery?
Sure, that might work on a certain level. But think of all the time spent punching in the next address, fumbling around with the phone or iPad. And if your driver doesn't happen to be overly tech savvy, this could get chaotic fast.
And then of course, your optimization isn't taking into account the run as a whole. The distance between each point, the fastest way to go; there's so much to consider.
A great software with instant route optimizing can save you so much time and money.
It's a beautiful thing, and well worth the cost.
But what if you only have a few deliveries per day? What if you just use a spreadsheet and a map and you optimize the route yourself?
Sure, that's fine. I can see how that would work for you. But it all comes back to those two questions:
Is there a better way you could be using your time?
Are you missing out on potential profit by clinging to the status quo and not growing that delivery service? And if you do grow, how well will that spreadsheet scale?
Not too well, I'm guessing.
Remember Blockbuster. That's not what we're aspiring to here.
Promote your Delivery Service
Promoting your delivery service is so simple. You can get the word out there and pique interest in just a few easy steps.
First off, think branded vehicles. This is a big one; I can't stress this enough. We've chatted with several pharmacies who have built successful delivery services.
What's their greatest tool for success?
Many have pointed to their branded vehicles as one of the key factors in raising awareness for their service.
This is such as simple idea, yet the returns are huge. By advertising your name on your vehicle as your drivers are delivering, you get the word out there.
And it doesn't have to be expensive.
You don't need to pay thousands of dollars to get your vehicle custom wrapped with your branding. A simple magnetic door sign will do it.
For less than $100.00, you can turn your delivery vehicle into a super effective advertisement.
The second most important way to promote your service is through online marketing. It's as simple as a banner on your website and a few social media posts a week.
As for the third most important way to promote your service, it's word-of-mouth. Talk to you patients and customers, let them know you're delivering. Pop a flyer into each bag that goes out of the store to let people know what you're doing.
It doesn't take a lot of effort, but with a little promotion, you'll get people using your service in no time.
Mail Order and Courier Services: Outsourcing and the Real Impact on Profit
So can't you just mail your prescriptions? That's what some of the bigger chains do, right? And what about outsourcing? If you find a good courier with low rates, it can look like a no brainer on the surface.
It's not surprising that this comes up a lot for us. Pharmacies ask us all the time, which is better?
The answer is: neither. Nothing beats in-house.
Let's explore that.
The Pros of Going Mail Order or Courier
There's one big pro here for mail order prescription delivery, and that's price.
Whether you're using Canada Post or USPS, pricing can be quite aggressive. It's not unheard of to be able to send a prescription for between $4 and $10.
Although you very likely have to be doing a certain amount of volume for pricing like that. Still, if you can get it, that's pretty low cost, and on the surface that can look like the most profitable option.
You can say the same for courier service; there are some great couriers out there at a reasonable cost. If you get lucky, you may be able to find a service that doesn't eat into your bottom line too much.
Even if you find the best courier in the world, they're not going to be working to boost your business. They may do a passable job of getting the package there. But that's because they're trying to impress the customer.
And by customer, I mean you, because you're their customer. Unfortunately, your patients aren't really even on their radar. Most couriers are just dropping off packages.
And your patients are the people you need to impress.
So no matter how wonderful your courier is at delivering your packages, you can still improve on that in a big way.
And then there's the loss of brand recognition, because you can't advertise your service on your courier's vehicles. So that's working against you.
How else can outsourcing negatively affect your profit and growth? In several key ways:
When Will the Package Get There?
Unfortunately the answer here is: who knows? Okay, maybe it's not quite that bad, but it might be, too.
Public mail systems are generally pretty good, but they can be a little unpredictable.
For example, let's say your patient needs their prescription by Wednesday. You ship it on Monday.
Are they going to get it on time?
Perhaps, but perhaps not. And the minute you ship that parcel, you've given up all control. Over whether your patient gets what they need on time. Over whether the prescription survives the journey.
Over pretty much everything.
With a courier, the 'when' may not be so much of an issue if you're using a reputable service. But you have no control over how your drugs are being handled.
Are they stored at the right temperature? What about the risk of theft; who has access to your parcels?
So ask yourself, when you envision building the best delivery service in town, is this a good fit?
Then there's security on the journey. We're dealing with medications here; people put this stuff in their bodies. And you're responsible for that.
Is your package handled in a safe way? Is it sitting in a baking hot truck for hours or getting lost under a mountain of mail in a facility somewhere?
And then there's security when it arrives at the door.
We've all heard of porch pirates; an industrious breed of criminal riding the package delivery trend. Porch pirates spend their time swiping packages off of people's doorsteps.
They're good at it, too. So if your patient isn't home when the package arrives, how likely is it to get stolen?
And how comfortable are you with either of these potential issues?
Patient and Customer Care
So, just to get this out of the way, with mail order service your patient and customer care is out the window.
That seems pretty clear, given the fact that once a package is in the mail you have no control over how it's handled.
With a courier service, there is a degree of customer and patient care. How and when the package gets delivered can influence your customer experience.
For example, is the package delivered two days late and all smashed up? Is it left on the doorstep in the baking sun for six hours while the customer is unaware of it being there?
Even if your courier service is top-notch, they're not going to focus on your customers. But we won't get back into that again.
Yet it's something to think about; if you keep your deliveries in-house, you have total control. You can define your service as the best by using it to innovate your patient experience.
Keeping delivery in-house opens the door for you to go above and beyond as far as patient care.
And your patients will love you for it.
Cash on Delivery
Many people love paying cash at the door! It's so simple and convenient, it enhances the customer experience in a big way.
It's also something most couriers won't allow your customers to do.
And those who will can be unreliable in this area, at best. After all, it's not their sales, and the added task of collecting money for you can get... complicated.
Keeping deliveries in-house means having control all the revenue your deliveries generate.
We've all heard the phrase, 'Cash is king...'
That's because it's true, which is why it's so important to have control over your cash at all times.
Safe Handling & Prioritizing Drugs
Whether it's temperature control or urgent needs, are you willing to risk all to save a few bucks? Because that's what going with a courier may be.
Trusting an outside source with your high-priority situations can be a huge gamble.
And it's not only about timelines and the integrity of your prescriptions. A few incidents is all it takes to damage your reputation.
Have packages that can't be delivered? It happens.
What does resolution look like?
Is a courier going to return to you immediately? That's unlikely. So does your package sit in the back of a delivery vehicle until they can get it back to you?
It's yet another big benefit of in-house delivery. You're in control of handling every prescription with care.
And control is everything.
So if you're looking for a way to get more revenue flowing and generate a profit, delivery could be your answer.
If done right, it can be simple to start up and it can turn your patients into raving, loyal fans.
Looking for more information on how to keep startup costs down?
Check out our article on 6 Easy Ways to Save Money on Delivery Start-Up Costs.
If you need suggestions on marketing, don't forget to check out our suggestions for promoting your service.
And of course we've got EconoRoute™ to help get you going. With our instant routing, pay-at-the-door functionality and more, it's a must-have.
Want to know more? Book a demo today!