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Taking the Pulse ofInternet Pharmacies

Online shoppers speak out on pharmacy service issues.

By Zhilin Yang, Robin I Peterson, and Lily Huang

S tarting m the late 'QOs, a number of Internet-only health companies began to pop up online,and many traditional health companies started

to move some of their services to the Web. Competi-tion has intensified since then, and non-price competi-tive advantages, which spring from superior customerservice and online information system quality, are nowcritical for success in this industry.

However, online pharmacies continue to run intoproblems with the quality of their services. Theseobstacles remain because theIntemet is a relatively unde-fined and unpredictable chan-nel and because online con-sumer behaviors have not beencomprehensively explored. Ifonline pharmacy providersknew what attributes con-sumers weighed vcben evaluat-ing service quality and overallsatisfaction, they could thentake measures to enhancecompany performance.

In a 1995 study, Johnstonpointed out the importance ofdiscovering the factors thatlead to satisfaction alone, dis-satisfaction alone, and the"dual factors" of both satisfac-tion and dissatisfaction. (See

Uke most businesses, onhne pharmacycompanies will only be successful if theymake sure customers are satisfied withthe service they receive. But whatattributes of service quality lead lo satis-faction and dissatisfaction? This studyidentified 19 Internet pharmacy servicequality dimensions in three categories:(1) product cost and availability, (2) cus-tomer service, and (3) the online mfor-mation system. Our analysis uncoveredattributes that tend to determine con-sumer satisfaction and points out ways toimprove overall service quality in theInternet pharmacy arena.

Additional Reading, page 10.) Further, Mittal and col-leagues found that the positive contribution of a servicequality attribute has less impact on overall consumersatisfaction than negative performance has on that sameattribute. This "asymmetric effect" displays how impor-tant it is to investigate service quality attributes withboth negative and positive performance and to devotemore attention to salient negative attributes. Payingdose attention to these factors can help serviceproviders create strategies to increase customer satisfac-

tion and loyalty. Moreover,listening to consumer com-plaints and compliments canhelp companies gain valuablefeedback on performance anddevise strategies to correctI heir weaknesses and rein-force strengths.

This study aimed to expandI he current body of knowl-edge relating to service qualityin Internet-based pharmacyproduct purchasing. To dothis, we started with threespecific research questions:

• What do consumersperceive to be the keyservice quality attributesof online pharmacies?

MARKETING HEALTH SERVICES 5

•Among those identified service quality attributes,which serve predominantly as satisfiers andwhich mainly lead to dissatisfaction?

• How can Internet pharmacies improve servicequality and, in tum, online customer satisfaction?

Further, we identified a total of 19 Internetpharmacy service quality attributes and sortedthese into three groups: (1) product cost and avail-ability, (2) customer service, and (3) online infor-mation systems quality.

Product cost and availability. Internet searchengines can help consumers quickly locate andcompare health care products offered hy compet-ing retailers. This price transparency forces onlinedrug retailers to concentrate on other attributessuch as total delivered costs, product availabi]ity,and variety. As online consumers gam more expe-rience with e-commerce, they tend to focus moreon total delivered cost rather than solely on listprice. In addition, many consumers use the Webto search for drug products not easily found any-where else. This means that companies with wideproduct lines can effectively appeal to individualsm market niches.

Customer service quahty. Over the past threedecades, researchers have tried to identify serviceattributes that contribute significantly to cus-tomers' assessment of service quality. In 1979,Hellm and colleagues pointed out that high prices,long pharmacy waiting time, and poor pharmacyservice lead to dissatisfaction with outpatientpharmacies. A 1985 study by Parasuraman andcoHeagues revealed 10 different service dimen-sions. Since then, researchers have uncovered sev-eral factors related to customer satisfaction withpharmacy sei-vice, including the provision of druginformation while dispensing medication, commu-nication with the pharmacist, and personal ser-vice. In their 1992 analysis, Lang and Fullertonidentified four factors related to outpatient phar-macy services: professional communication, physi-cal and emotional comfort, demographics, andlocation and convenience.

Recent studies have gone on to target keyattributes of service quality that apply specificallyto Internet commerce. In a 1997 study. Rice dis-covered that the most important variables induc-ing users to revisit a Web site were design featuressuch as content, layout, ease of finding informa-tion, ease of navigation, and emotional experience(e.g., enjoyment and excitement). In their investi-gation of top 100 U.S. retailers' Web sites, Griffithand Krampf cited lack of prompt response, espe-

cially to e-mail inquiries, as the most commonnegatively perceived phenomenon in cyberspace.More recently. Liu and Arnett identified informa-tion quality, system use, system-design quality,and playfulness as the four major determinants ofa Web site's success.

Online infonnation system quality. Theonline customer is the end user in any e-com-merce transaction. To measure end-user satisfac-tion, Doll and Torkzadeh uncovered five qualitydimensions: content, accuracy, format, ease of use,and timeliness. These attributes, as well as otherInternet-only traits Uke aesthetics, security, andeffective navigation, can make up a preliminar)'framework for measuring online informationsystems quality.

Starting OutTo uncover major service quality attributes, we

examined 10 prominent consumer review Websites and analyzed consumer feedback on theironline pharmacy purchasing experiences. Althoughconsumers' comments may not completely reflecttheir total experience with a product or service,they do highlight some important concems.

Our study used the following criteria:

1. Consumers should be allowed to rate andreview online companies based on their ownonline shopping experience.

2. Consumers should not be financially moti-vated to express their opinions lavoring thereviewed companies (e.g.. some Web sitesaward money to a consumer if his/her reviewled a reader to make a purchase from the eval-uated online company).

3. Consumers should be encouraged to mentionhoth dissatisfaction and satisfaction issues.

Two leading online consumer review sites(www.gomcz.com and www.ratingwonders.com)met the requirements. We then selected nine ofthemost influential online health products companiesfor study: Costco, CVS, DrugEmporium.com, Drug-Store.com, FamilyMeds, HealthCentralRX.com,More.com, PlanetRX.com, and Walgreens. Thesecompanies sell both prescription products andnon-prescription products such as beauty aids,baby care, health care, and personal care productsvia the Internet.

From Nov. 1 to Nov. 10, 2000, we accessed thetwo Web sites mentioned above and gathered atotal of 1,078 useful consumer comments related to

6 SUMMER 2001

the nine companies selling drugs onlme. Afterdeleting irrelevant comments, we selected 178 con-sumer anecdotes of incidents for further analysis.While some consumers described their purchasingexperiences in considerable detail, others were ver)-brief. The length of an average anecdote wasapproximately 60 words. We numbered, formatted,and imported the anecdotes to Ethnograph 5,0, asoftware package designed for coding qualitativedata. Based on the consumers' attitudes, we classi-fied statements in each anecdote into two cate-gories: satisfied attributes {positive performance)and dissatisfied attnbutes (negative perfoniiance).

Based on the 178 anecdotes collected, wedeveloped 50 categories, or coding words. (Thedetailed coding sheet is available by contacting theauthors,) These initial 50 coding words make upthe primary themes of the quality of online healthproduct purchasing. The categories were furtherrefined into 19 subcategories: two for productcost/availability, 11 for customer service, and sixfor online information system quality. We thenindependently classified each of the anecdotes.The reliability was calculated by determining thepercentage of tbe cases in which the judges agreedto the classification. The judges" agreement rateswere 86.4% for the satisfying anecdotes and88-5% for the dissatisfying anecdotes.

After analyzing consumer feedback on onlinepharmacy purchasing experiences, we were ableto identify 19 service quahty attributes, which wesorted into three groups. The first group, lorexample, product cost and availability, includestwo categories: product cost (including shippingand return costs, coupons, discounts, and freegifts) and product availability/variety (width ofproduct line, convenience in finding products,and availability of new products).

The Customers RespondBecause e-commerce has made prices more

transparent, total delivered cost, not list price, hasbecome an increasingly important factor in attract-ing patronage. Customers are becoming more sen-sitive to the bottom line. Many study participantsemphasized the cost dimensions with commentslike the following:

"They olfer e-coupons for additional savings,and free shipping for a prescription drug order orwhen you spend more than $35."

"It was much easier to do than I thought itwould be and it saved me money. Shipping is freewhen you get a prescription, and prices werelower than I could get at my local Wal-Mart."

Online pharmacy companies often use freegifts, discounts, and coupons to attract new cus-tomers. Most customers are very pleased whenthey discover these promotions are smoothly per-formed and make statements like, "I purchasedfrom [Company Al.com because they offered me a$25 gift certificate for nonprescription purchase ifI used their pharmacy."

As customer feedback demonstrates, the "prod-uct availability and variety" dimension is critical toattract customers who are looking for items notavailable in local stores:

"Tbe problem is with the products it carries,which are ver>' limited. Several product lines aremmimally represented, and others aren't avaiiabieat all. In six of six searches for a specific item, 0matches were found. Conversely, at [Company C],five of six searches were found. If one is shoppinglor the pharmacy alone, the site v^ll serve yourneeds well, but not great."

"The selection is a nice composite of just aboutanything you could want in your medical supplies,"

Customer service quality also emerged as akey issue in our research. We uncovered theI1 following salient customer-service qualityattributes: reliability, responsiveness, communi-cation, access, competence, credibihty, personal-ization, courtesy, convenience, continuousimprovement, and collaboration. Further, weidentified three important attnbutes of customerservice: (1) convenience, (2) continuousimprovement, and (3) collaboration.

Some ser\'ice attributes are unique to the Inter-net purchasing environment. For example, manycustomers are likely to rely on e-mail to

MARKETING HEALTH SERVICES 7

communicate with online companies. Most ofthem use dial-up Internet connections and do notwant to cut off the line to make a phone call, sothey tend to wnte e-mail inquiries about pertinentissues. Therefore, a quick and responsive e-mailservice is a distinct and important feature for bothaccess and responsiveness. For instance, one cus-tomer described his/her satisfaction with a prompte-mail reply;

"I had a question about my prescription,1 e-mailed and was immediately connected to thepharmacist who was quite helpful and had all theanswers I needed. 1 cannot help but rate this drug-store as a 10."

On the other hand, many consumers whosee-mail inquires were delayed or ignored tended tobe disappointed. Some typical anecdotes follow:

"I tried e-mail, but never got an answer."

"...Trying to send e-mail from their Web pageresults in an error message. Avoid like the plague!"

Responsiveness is the most frequently men-tioned attribute producing customer dissatisfac-tion and is the second largest factor in satisfaction.Timely responses from representatives, promptdelivery, and the provision of other services in areliable manner are important aspects of thisdimension. On the other hand, delayed servicescan detract from the potential convenience andease brought by the Internet:

"1 recently tried to hll two prescriptionsthrough them—after six days there was no sign ofprogress. 1 called their phone number and was onhold for 1/2 hour."

"Calling is a hoot. You have to have a lot of freetime and then you do not get any worthwhileinfonnation. Sometimes you even get insulted."

Ofthe three newly found attributes producedin this study, "convenience" is not unexpectedbecause time and location flexibiUty areintended benefits of Internet pharmacy market-ing. The emergence of the "continuous improve-ment" attribute signifies that companies shouldcontinuously update their levels of productquality, customer service, and online informa-tion system performance. Customers favor com-panies that are devoted to improving theirweaknesses and that continue to meet cus-tomers' changing needs and preferences. Sometypical comments follow:

"They have so greatly improved their site, theease of shopping, and their customer service, youwouldn't believe it! As for outdated stuff, I'venever seen it."

•'iCompany C] has partnered with the HMOExpress Scnpts, which has been in business for sev-eral years now. They have an Internet site that givescustomers info on their order status. PlanetRx.comnow works through them in order to gain addi-tional prescription insurance coverage and thereforemore customer service. You wouldn't believe it!"

On the other hand, many customers registercomplaints when a company's service quality levelappeared to be deteriorating. Evidence of "negativecontinuous improvement" performance can befound in the following message:

"ICompany D] just doesn't appear to take onlinecustomers very seriously at this time. Althoughthere are possibilities in their stated Internet strat-egy to provide centralized health information fortheir customers, ICompany D] competitors' Websites currently have more to offer."

The third new attribute, collaboration, consistsof both intemal and external collaboration. Intemalcollaboration refers to close cooperation betweenseparate departments in the same firm and theirrespective employees. Extemal collaboration meanscooperation between individual firms and theirrespective business partners. Many online healthindustr)' companies outsource their logistic func-tions, such as warehousing and delivery, to third-party enterprises. In order to provide superior ser-vices to customers, Internet phamiacies mustorganize and integrate all of the important interac-tions between themselves and their business part-ners. Tbe latter group includes transportation com-panies that furnish deliver)' as well as financialinstitutions that provide funds. The lack of integra-tion with external partners is one of the main rea-sons for customer complaints about delayed deliv-er)', as the following comment indicates:

"The same thing happened today receiving ane-mail reminder in my mailbox, but its procedurescould not renew a prescription because the refill isnot on file. The physical label of the product previ-ously sent after much phoning says 'one more refill.'"

Other potential sources ol delay are related toextemal collaboration. For example, online phar-macies require either the patient or the physician tosupply prescriptions by mail. Altematively, the pre-scribing physician may contact the patient's physi-

8 SUMMER 2001

cian with the permission of the patient. Under thisarrangement, a patient is normally required to allowup to five days for the Web pharmacy to establish acontact- However, a lack of extemal collaborationmay delay delivery significantly-

Another vital attribute that distinguishes phar-macy service on the Web is the quality of onlinesystems. The six attributes of online system qualityidentified here embrace (1) content (i.e., informa-tion consumers need); (2) accuracy (i.e., transac-tion, interface, content accuracy); (3) ease ofuse/navigation {.l e,, user friendliness, easy login,response speed, easy navigation, friend search,easy accessibility); (4) timeliness; (5) aesthetics(i.e., attractiveness of the site, catalogs, pictures);and (6) privacy/security.

One feature that sets online service satisfactionapart is ease of use. Some frequently mentionedfacets of this are easy navigation, response speed,and effective search capabilities. Certainly, easynavigation simplifies and helps the customer com-plete the shopping process more quickly. If sitedifficulties persist, the customer may elect to termi-nate the transaction and make a purchase else-where. In the same vein, customers often complainabout sites that lack needed navigation function.

Accurate transactions are also an importantingredient in online service quality and help pre-vent errors and the loss of customers. To beeffective, online transactions require flawlessand smooth integration of the myriad compo-nents of computers and other information sys-tems (e.g., online database interfacing). Siteaesthetics serve an important function as well.They provide visitors with a positive image thatgrabs their attention and makes their surfingexperience enjoyable. As expected, onlinesecurity and privacy continue to be objects ofconcern. However, as more customers becomeaccustomed to shopping online, they arequickly overcoming security and privacy fears.

Are You Satisfied?Next we analyzed both negative and posi-

tive reactions to the attributes under study.Because some consumers evaluated theironline providers both negatively and posi-tively, even in one message, we coded positivepoints to satisfied attributes and negativepoints to dissatisfied. For instance, we codedprompt delivery in the satisfied class anddelayed delivery in the dissatisfied grouping.Exhibit 1 sets forth the frequency of mentionsfor each of the quality attributes identifiedearlier, classified by the satisfaction and dis-satisfaction destination.

Fxhibit 1 reveals that, compared to the othertwo major groupings-—product cost/availabilityand online information systems—customer serviceplays the tuost critical role in customer satisfaction(45,9% of all mentions) and dissatisfaction (71%of al! mentions). The following six attributes werethe most frequently mentioned for the satisfiedcategor)-: perceived cost, responsiveness, credibil-ity, product variety/availability, convenience, andease of use. These six attributes represented 78.8%ot all of the mentions while the remaining 13attnbutes only registered 11.2%. As we expected,the perceived cost was responsible for the highestfrequency of mention, followed by responsiveness,credibility, product vanety/avaliability, conve-nience, and ease of use. For the dissatisfied group,responsiveness was tbe most influential source(20%), followed by reliability (12%), ease of use(9%), credibility (9%), and cost (8%), These fiveattributes make up 58% of all mentions.

The relative importance of factors contribut-ing to customers' dissatisfaction differs some-what from those of satisfaction. For instance,lack of prompt responsiveness was the leadingcontributor to dissatisfaction, while lower costwas the most frequently mentioned factoramong satisfied customers.

EXHIBIT 1

Frequency of mentions for quality attributes

Quality Oi mansions

A. Product CosVAvallabllltv (2 dimension*)

1 Perceived Cosl

2 Product Vaiiely/Availab 1 Illy

8. Custam§r Sarvtcs (11 dimensiam)

1. Responsiveness

2. Credibility

3. Convenience

4 Reliability

5.KnowtbeCtJSioiT)er

6. Access

7. Courtesy

8. CwnpelGnce

9. Collaboration

10. Communicalion

11. Conlinuous improi/emenl

C, Onlina Intormation Systems (6 dimensions)

1. Ease ol Use

2. Contents

3. Accuracy

4. Secu'iiy/Privacy

5. flesKtetics

6. Timeliness

Total Msntians

Salisfjed

Ng.

182

154

28

188

56

33

27

7

U

12

10

12

5

S

4

40

25

13

2

1

0

0

411

Pet.

44.4

376

6.8

45.9

13.̂ "

8.0

6.6

1.7

3.4

2.9

2.3

0.9

1.2

1.7

1.0

9.8

6.1

2.9

0.5

0.3

0.0

0.0

100.0

DissatisMed

No.

12

a4

71

20

9

5

12

5

6

5

3

5

0

1

17

9

4

1

2

1

1

101

Pet.

12.0

8.0

iO

71.0

200

90

50

120

50

5.6

2.3

3.9

5.0

2.7

0.0

17.0

9.0

3.0

10

2.0

1.0

1.0

100.0

Total

No.

194

162

32

259

?6

42

32

19

19

18

15

15

10

a5

57

34

15

3

3

1

1

512

Pd.

38.0

31.8

6,3

•W.7

14.9

8.2

6.3

3.7

3.7

3.1

2.3

1.5

0.5

19

0.3

11.2

70

2.9

0.8

0.3

0.2

02

100.0

MARKETING HEALTH SERVICES 9

Implications for ManagersTo satisfy customers in today's competitive

e-marketplace, Internet pharmacies must take acloser look at service. To do this, most onlinepharmacy companies would do well to zero m onthe key dimensions of responsiveness, reliability,ease of use, credibility, and perceived cost.

Prompt delivery and prompt response to eus-tomers' concerns and inquires are crucial herebecause order fulfillment still remains a sore spotfor online retailers. Further, because e-mail is animportant means of customer communication,companies that want to succeed must step up theirresponse time to customers' e-mail inquires.

An online company can create credibility onlyif it provides accountable and accurate delivery ofpromised services. Internet-based health storesstill function as traditional entities, and the entirepurchasing process is semiautomatic at best. Manyissues still demand human inter\'ention, and com-munication may suffer when online customerslack direct, face-to-face interaction with serviceproviders. As such, company representatives mustbe able to answer customer inquiries and solveproblems as they arise.

It's important for companies to create a positiveand enjoyable shopping experience to facilitate theconsumer search for desired products, services,and information. It's also crucial to providethe vital lunctions customers need, create user-friendly pages, and increase the speed of anonline system's response to customers' input.

But no matter how many bells and whistles aWeb site offers, customer satisfaction still hingeslargely on product cost. With this in mind, smartonline pharmacy companies v^ll offer customerscompetitive delivered product cost, includingproduct price, shipping costs, coupons, discounts,free gifts, and other implicit and explicit expenses.By paying attention to cost, providing responsivecustomer service, and simplifying navigation,online pharmacies can start to create a solid baseof happy and satisfied customers. However, ourstudy shows they still have some work to dobefore reaching their full potential. •

ADDITIONAL READING

Doll, William J. and Gholamreza Torkzadeh(1995), "The Measurement of End-UserComputing Satisfaction," Information SystemReseareh.bU). 177-188.

Gnffith, D. A. and R. A. Krampf (1998), "AnExamination of the Web-Based Strategies of the

Top 100 U.S. Retai]ers," journal oj MarketingTheory and Practice, 6 (3), 12-23.

Heliin, G. K., C. D. Hepler, and M. E. Jones(1979), "Effects of Direct Clinical Pharmaceuti-cal Service on Patients' Perceptions of HealthCare Quality," American Journal of HospitalPharmacy, 36 (March), 325-329.

Johnston. Robert (1995), "The Detemiinants ofService Quality: Satisfiers and Dissatisfiers,"International journal ofSeryice Industry Manage-ment, 8 {5), 53-71-

Lang, James R. and Sam D. Fullerton (1992), "TheComponents of Satisfaction with OutpatientPharmacy Services," Health Marketing Quarterly,10(1/2), 143-152.

Liu, Chang and Kirk P. Amett (2000), "Exploringthe Factors Associated with Web Site Success inthe Context of Electronic Commerce," Informa-tion & Management, 38 (October), 23-34.

Mittal, Vikas, William T. Ross, and Patrick M.Baldasare (1998), "The Asymmetric Impact ofNegative and Positive Attribute-Level Perfor-mance on Overall Satisfaction and RepurchaseIntentions," Journal oJMarketing, 62 Qanuary),33-47.

Parasuraman, A., Valarie A. Zeithaml, and LeonardL. Berry (1985), "A Conceptual Model ofService Quality and Its Implications for FutureResearch," Journal of Marketmg. 49 (Fall), 41-50.

Rice, Marshal] U997), "What Makes Users Revisita Web Site," Marheting News. 31 (6), 12-13.

ABOUT THE AUTHORS

Zhilin Yang is an instructor in the departmentof marketing at New Mexico State University. Hemay be reached at z)'ang@nmsu.edu.

Robin T. Peterson is a Norwest distinguishedprofessor of marketing at New Mexico State Uni-versity. He may be reached at ropeters@nmsu.edu.

Lily Huang is an accountant with thedepartment of accounting and business computersystems at New Mexico State University. She maybe reached at ]ihuangz@yahoo.com.

10 SUMMER 2001