Shop Apotheke Europe’s Secrets to Success: Agility, Trust, and Open Communication

(Pic Courtesy: Shop Apotheke Europe)

Shop Apotheke Europe, the leading online pharmacy in Europe, has experienced remarkable growth in recent years. With its expansion comes the challenge of managing customer experience, procurement, inventory, and risk effectively.

Shop Apotheke Europe works with about 1,400 pharma suppliers, with over 99% of them based in an OECD member state. The company classifies its suppliers into two primary categories: Pharma and Indirect Spend. Pharma is further divided into Wholesale and Direct, encompassing the procurement of OTC, Rx, beauty and personal care, and related products. The company's country-specific websites offer access to more than 150,000 products.

To maintain its edge in the market, Shop Apotheke Europe aims to continually invest in technology and process improvements to enhance customer experience and streamline its operations. By doing so, the company aims to attract and retain customers, driving growth.

In an exclusive interview with Beroe, Katrin Messingfeld, the company's Executive Director, Procurement & Product Data Management, shared insights on the procurement approach that helps drive company success.

Katrin has been with Shop Apotheke Europe since February 2019. Over the past few years, her role has evolved taking care of different areas of responsibilities, including overseeing operational and strategic procurement activities, managing the returns team, category management, and content for product detail pages on the company’s e-commerce site. Currently, her focus is on leading the strategic procurement department. Over the last four and a half years, she significantly shaped and improved the procurement team, transforming it from a basic, transactional function to a highly professional one.

Katrin Messingfeld described the changes she has observed in the procurement team since her arrival, noting that the team has grown and become more strategic, slowly shifting away from excessive focus on day-to-day operational procurement. She also highlighted the importance of collaboration between various teams, including sales and marketing, for effective procurement.

Regarding the company's growth, Katrin shared that in 2022, the company had "turnover of 1.2 billion euros" and an active customer base of "9.3 million." She also discussed the company's presence in various countries, including Germany, Austria, Belgium, Italy, France, Switzerland, and the Netherlands, and highlighted their commitment to sustainability, stating that "by 2040, we want to be completely... net-zero in alignment of the 1.5 Paris climate agreement."

Katrin said that the company has started displaying the CO2 footprint of their top SKUs on their e-commerce portal to raise awareness among customers. However, she pointed out that suppliers are struggling to track the carbon footprint of their products, which slows down the rollout of this feature on product detail pages. She optimistically said, "I think, it's a topic on the agenda of many companies, and I hope in the next months, we will see a lot of movement."

Essential Pillars of Success

In the world of e-commerce, efficient procurement and inventory management are crucial to success. According to Katrin, fast and accurate information flow is vital for procurement, as suppliers continually adjust their prices to align with market conditions. When the procurement team receives information about price changes, timely communication is of high importance and enables each team to take appropriate actions, such as adjusting pricing or promotional strategies to respond to changing market conditions.

Katrin added that the Executive Director of Category Management oversees pricing. With the supply market information provided quickly, they can react accordingly. Sales and Marketing teams may decide to focus on promoting neighboring products if there's an increased demand for a particular item. Overall, it’s imperative to keep communication lines fast and efficient.

Katrin explained that working capital is a significant focus for her company, as they strive to keep it as low as possible. She mentioned that they constantly seek a balance between having enough stock to meet demand and avoiding excess inventory.

"We are really investing a lot of time, together with the business analyst team, to take a look at each category, not just on a high level,” she said while emphasizing the importance of detailed planning and working closely with the business teams to assess each category's plans.

Despite the challenges faced by the pharmaceutical industry in the past year, such as supply chain disruptions and unavailability of certain products, Katrin highlighted her team’s strong cooperation with suppliers. In cases where specific products were unavailable, the company’s algorithm on the e-commerce portal helped customers by suggesting alternative products with similar benefits.

Inventory management is equally critical, as it directly impacts a company's profit margins. Katrin cited the example of COVID-19 tests during the early stages of the COVID-19 pandemic when prices were highly volatile and availability was uncertain. Shop Apotheke Europe was able to navigate this challenging period by maintaining low working capital and avoiding speculative buying. Instead, they focused on purchasing at market prices and ensuring quick turnover.

On the question of managing receivables, Katrin said: “Receivables matter to us because we offer a variety of payment options, providing customers with the flexibility to choose their preferred method. We've conducted numerous tests to optimize the process, resulting in increased conversion rates. Our diverse payment options cater to individual preferences, allowing some to pay directly via credit card, while others prefer to receive the goods first and then pay the invoice. By offering these choices and building trust with our consumers, we have seen positive outcomes and the system continues to work well.”

Risk Management: Addressing Challenges and Ensuring Stability

Risk management is a vital component of Shop Apotheke Europe's procurement strategy. Potential risks include losing relationships with premium suppliers or wholesalers, which could result in higher procurement costs and a reduced product assortment. To mitigate these risks, the company conducts annual risk assessments and quarterly reviews, ensuring that any potential issues are promptly addressed.

Katrin believes that building strong relationships with suppliers and engaging in transparent communication helps to minimize the risk of suppliers discontinuing their partnerships with Shop Apotheke Europe.

“I don't see a significant risk in suppliers suddenly stopping their partnership with us. In my opinion, working with our company as a supplier is a positive experience because we are fair, clear, and communicative. Suppliers often remark on our fairness and honesty, and we don't engage in deceptive practices.

“Since I started, we have shifted most important suppliers to direct delivery. Suppliers appreciate working with us directly, without needing a wholesaler in between, which demonstrates mutual trust. We are also an essential part of their business plans and targets, as we are transparent about our goals," Katrin said.

To minimize the risks associated with disruptions in the supply chain, Shop Apotheke Europe has diversified its sources for essential items, such as packaging materials. By reducing its dependency on a single supplier, the company can better navigate any potential challenges that may arise.

Company Culture: The Driving Force Behind Success

A critical factor in Shop Apotheke Europe's success is its family-like culture, which promotes open and honest communication among team members, according to Katrin. She emphasized that the company's flat hierarchy contributes to its agility and growth. The close relationships maintained between board members and employees foster a collaborative environment in which individuals feel comfortable sharing ideas and opinions.

“Coming from big companies, I've experienced how much time can be wasted on internal politics. Our success at Shop Apotheke Europe can be attributed to our willingness to communicate openly with one another, including regular interactions with our management board whose members are approachable and engaged. Our challenge, as we strive to reach the next billion euros in revenue, is to preserve this culture.

“Working at Shop Apotheke Europe is enjoyable due to the positive spirit and energetic environment,” Katrin concluded.