Do You Know What Your In-Office Dispensary is Costing You?
Are online dispensaries as profitable as in-office dispensaries? While the markup of products on an online dispensary is typically less (~35% compared to ~50% in-office), online dispensaries can reduce overhead costs, reduce loss to stale products, and add recurring revenue through improved patient service and selections.
For most practitioners, both in-office and online dispensaries play important roles for their practice and patients.
In-office dispensaries allow us to have our most frequently recommended vitamins, supplements, and personal care products on hand for the patient to take home immediately after their visit, as well as a selection of clinically critical items where waiting a few days on shipping simply isn’t an option.
Online dispensaries balance in-office dispensaries with a larger catalog without having to worry about stocking, storing, or expiration dates. For your patients, your online dispensary offers the convenience they expect and a safer alternative to ordering their refills from online mega-retailers.
Because of how well they complement each other, I often talk about an online dispensary for your practice as a balance for your business. But many practitioners are concerned about the profitability of online compared to in-office dispensaries.
From a price markup of 50% for an in-office dispensary, a practice typically loses 3% right away for credit card processing fees, and staff costs are often underestimated. The average practice spends a minimum of 3 hours per week between checking inventory, ordering product, receiving and stocking product, and receiving and filling patient orders. That staff time adds up to about $200 per month (assuming you pay $15/hr). If you are selling $2,000 per month of supplements, that’s almost 20% of your profit to staff management of your dispensary (leaving you with only 27%)! There are additional costs with an in-office dispensary from anticipatory stocking, losses for expired products, or stocked products which never get recommended.
An online dispensary allows for a highly focused in-office dispensary so that you can reduce management time and focus more of your and your staff’s time on building your practice.
Our data shows that online dispensaries help patients reorder more reliably through your practice instead of through other online sources–bringing more reliable revenue with minimal (if any) staffing costs to ensure patients are staying on protocol and refilling on time.
Even in my own practice (where we kept staffing costs low—two front office staff for 8-10 practitioners), staffing could be more expensive than rent. Being able to focus more of that staff investment on building your practice and less on managing expanded dispensary stock can be essential to helping a practice support more patients’ healthy lives.
So with a 20,000 product increase in your dispensary options, less staffing needs, reduced stocking cost, no credit card transaction fees, no money lost to expired products—and all the while offering an easy way for your patients to reorder from you instead of an online mega-retailer—online dispensaries are a profitable balance for your practice’s in-office dispensary that offer your patients the online convenience they expect, even if the initial markup is a little smaller.
Jaclyn Chasse, ND
VP of Emerson Ecologics & Wellevate
and Practicing Naturopathic Doctor
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