Retailer Readiness Report: CVS.com

While Amazon dominates the news cycle, 40% of US online growth through 2020 will still occur on other retailer websites, according to PlanetRetail RNG. CVS is the 13^th largest global and 7^th largest US retailer and a crucial sales channel for brands specializing in over-the-counter (OTC) drugs, beauty products, and health and personal care.

Though CVS.com currently represents a relatively small portion of the total business, CVS is rapidly investing in digital initiatives to create a more seamless and convenient customer experience that will drive future online sales growth. The health accountability and trust that CVS brings will be a critical differentiator in the looming healthcare competition with Amazon, making the retailer an important partner for manufacturers growing online.

Beating Private Brands

As one of the largest retail channels in the category, CVS is very important for drugstore product brands. Unfortunately, CVS.com is also one of the most challenging eCommerce environments to break into. This is because of the company's major – and well-publicized – push into private brands, with a particular focus on the online channel.

Private bands are very common in this space, with nearly every major OTC retailer selling white-label products alongside higher-priced name brand equivalents. Walgreens has their eponymous brand, Walmart has Equate, and more recently Amazon has introduced Basic Care. CVS is one of the most successful retailers in controlling share of shelf with private label items: for the search term "headache", 7 of the top 9 results are CVS brands, with similar success for key generic terms such as “stomach”, “flu” and “cold”.

CVS' items account for 20% of the retailer's product assortment (up from less than 10% in 2015) and outperform some of the major name brands. This high share of shelf makes it especially challenging for competitive brands to gain visibility on CVS.com, and all the more important for brands to understand how to be uniquely "CVS ready".

Content Conversion

The problem with private labels is that independent brands can rarely compete with them on price. So brands need to find another way to sell the value proposition.

Content is the key to conversion. CVS-branded items rank very well for having multiple, high quality images, but shoppers look at up to 10 sources of product content – including product descriptions images, reviews, videos, etc. – before making a purchasing decision. Brands can compete by using A+ content and videos (which CVS lacks) and striving for the perfect page.

For example, the pages for Listerine and Pepto Bismol have excellent A+ content (which appears toward the middle of the page), including a video on the Listerine page. Both of these brands are using content to provide a compelling and enriched customer experience, influencing consumers to purchase name-brand products despite their higher price points compared to generic alternatives. 

Content Example – Hershey on Amazon

In brick-and-mortar retail, the name and appearance of the product is often all that consumers have to go on. But in eCommerce, product pages are like their own little store. Brands can showcase value in a way they never could in-store by using videos, images, text, gifs, charts and more that both show the product and its packaging and demonstrate use cases in a relatable context.

One of our favorite examples comes from Clavis Insight client Hershey’s, which uses its online channels to highlight compelling use cases of their product. This not only drives conversion, but can also greatly impact in-store sales by improving brand sentiment among consumers.

Ordering from CVS

Like most retailers, CVS offers free shipping for larger orders. Orders qualify for Free 2-5 Day Shipping if they total at least $49 (after all coupons and discounts are applies) and the weight does not exceed 50 pounds. These restrictions are higher than most competitors including Walgreens and Amazon, so brands should take them into account.

Free shipping is a very powerful force in eCommerce, with most consumers willing to spend more than they intended in exchange for free shipping. The relatively high free shipping minimum at CVS means that more shoppers are spending time browsing for additional items to fill their cart. Compared to other retailers, the potential for brands to drive sales by upselling and capturing impulse purchases is higher on CVS, making the following tools especially powerful:

• Appearing under "Frequently bought together" and "Related items"
• Sponsored search
• Banner ads

CVS also offers an auto re-order option for participating brands, which can help keep sales steady and predictable by encouraging consumers to become "locked into" regularly-scheduled reorders. Many drugstore products are ideal for this purchase method, for example vitamins and supplement which consumers typically take on a regular schedule and can therefore easily estimate how often they need a refill. Leveraging auto re-order to gain customer loyalty is very important in this category as it can reduce the likelihood that shoppers will experiment with alternatives from competitive brands.

Shop by Health Goal

In brick-and-mortar stores, every brand is hyper-aware of the importance of shelf placement. The first items to catch the shopper's eye are the most likely to be bought, and items that are easy to miss are often left to collect dust. Placement is no less important on the digital shelf: where an item sits within an eCommerce retailer's hierarchy has a strong impact on sales. Understanding how different retailers approach category management is an important part of retailer readiness.

CVS offers a unique form of category management: Shop by health goal. Consumers can choose from 14 different top-level categories designed to address specific health conditions. This is an opportunity for brands to put their products right in front of their target audience – as long as they ensure their products are accurately labeled and associated with all appropriate categories. 

Driving Sales on CVS.com with the 6Ps of eCommerce Best Practices

Though small variations make big differences between online retailers, there are certain tried-and-true best practices that apply throughout the digital marketplace:

Titles – Product titles are the first text the shopper reads and have a major impact on whether they click through to the product page. Titles should follow a few rules of thumb:

• Be informative: Clearly state what the product is.
• Be searchable: Include relevant, high-volume keywords.
• Be readable: Don't spam the title with too many keywords.
• Be consistent: Use the same format for all products from the same brand.

Primary Images – Though titles are the first text that shoppers see, studies have shown that most people look at images before reading any text. An item's primary image has to be eye-catching, attractive, and clear enough to encourage potential buyers to click through to the product page.

Ratings & Reviews – Once on the product page, many shoppers scroll right to the reviews. Shoppers are far more likely to trust a product review than the brand's description of the product, so shopper-generated content is critical to creating the perfect page. High review counts and ratings drive search performance and conversion.

Stock – When items go out of stock they lose sales, and when they remain out of stock their rank starts to fall. To maintain visibility and a steady stream of sales, brands need to obsessively monitor their in-stock rate and reduce, shorten or eliminate out-of-stock periods as much as possible.

CVS Readiness Checklist

• A+ content

• Engaging photos and videos

• High visibility of add-on items for consumers trying to reach the free shipping minimum
• Items accurately categorized within the "Shop by health goal" hierarchy
• Optimized titles
• High ratings & reviews count
• Items consistently in stock

Brands should always keep a short Retail Readiness Report on hand for reference. Understanding how CVS connects brands to their audience can help brand manufacturers identify the actions they can take to optimize the placement, performance and profitably of their products in this key online retail channel. By checking every box, brands will be customer loyalty, repeat shoppers, higher engagement, and greater sales.

About Retailer Readiness

What is retailer readiness? In short, it's a comprehensive understanding of the unique ways that brands need to adapt their go to market strategy to suit each individual sales channel.

Today, consumers are looking for an omnichannel experience. Shoppers are channel-agnostic – they often engage with multiple channels at different points in their path to purchase. Retailers, however, are decidedly not channel-agnostic. They want consumers to buy from them, not their competitors. Naturally, competing means doing something different from (and hopefully better than) what everyone else is doing. And that has consequences for brands.

About Clavis Insight

Clavis Insight is a global leader in online channel insights for product manufacturers, and a principal innovator at the forefront of the eCommerce analytics revolution. The company has developed a powerful framework - 6Ps eCommerce Intelligence™ - for organizing and prioritizing eCommerce analytics and actions to drive online channel success for brands. Global manufacturers use their daily eCommerce analytics and insights to drive sales in their categories online, to optimize content for brand equity enhancement, protection and product information compliance, and to deliver consistent, unified reporting on online retailer brand presence and performance.