Just what the doctor ordered? Co-op to launch online pharmacy

When The Co-operative Group’s new Co-op Ventures division acquired healthcare technology start-up Dimec in September it wasn’t overtly clear how it was going to be integrated and used.

But the reasons behind that move are starting to become clearer, with the Ventures arm – which runs alongside Co-op Digital in the Federation Building down the road from the main group headquarters – now mapping out the launch of a new online pharmaceutical play.

Tim Davies, director of Co-op Ventures, explains that there should be a new digital pharmacy service available by the end of first quarter 2019, taking the Co-op back into a field where it has years of experience. But without stores in tow.

Tim Davies, director of Co-op Ventures
Tim Davies, director of Co-op Ventures

Rip it up and start again

Until four years ago, The Co-op operated 774 pharmacies across the UK but sold them to Bestway group in a deal worth £620 million. It was a much-needed cash injection at the time for the group, which had found itself in a Co-op Bank-influenced financial crisis.

Now, there is a chance to make the most of what Davies describes as Co-op’s respected name in pharmacy, but without legacy systems to hold it back. And, with it, there’s a chance to bring the selling of pharmacy goods and services into a digital age in the UK.

“It’s going to be incredibly difficult for an existing operator in the pharmacy industry to disrupt themselves – it’s a very hard thing to do,” he notes, adding that Amazon’s recent foray into the space highlights how the sector is ripe for disruption after operating so similarly for decades.

“What we’ve done is something not many people do. We still have loyalty to our pharmacy business even though we no longer run it in our group [it is now known as Well Pharmacy and owned by Bestway], but can we reinvent it?”

The plans are to develop a digital healthcare platform. It will start as a transactional website that distributes typical pharma goods, but it will look to leverage Dimec’s technology, which was developed to make ordering prescriptions more straightforward.

It could then expand to online doctor services, health advice, and healthy eating guidance, according to Davies.

“We started with traditional bricks and mortar pharmacy, sold it at top of the market, and now we’re reinventing it as a digital business. We know our customers loved it, but now we are trying to modernise it for the 21st century.”

Click & collect services from Co-op Food stores are all part of the plan to evolve the digital pharmacy offering into a multichannel and connected proposition.

Davies added: “Crucially we have the food stores and I think a lot of businesses would kill to have that sort of distribution. For us, the test is how we leverage our assets.”

Team behind the technology

In early October, Co-op Ventures registered its pharmacy fulfilment centre with the regulator but a name for the new digital business is still to be decided. There are tests under way with customers to see what name resonates with them.

On Dimec, Davies says: “It had specific technology that we felt was vital for the healthcare proposition we’re building out”. The founders Chris Turner and Andrew Bailey have joined the Ventures team as part of the acquisition process.

“One of the pleasing aspects of the acquisition is getting talent on board and the founders already in the space of a matter of weeks have brought some nice new thinking to the team,” Davies notes, adding that Ventures – which was established at the start of 2018 – operates with a very small team and acts like a start-up in a corporate world.

“We’re making sure we don’t fall in love with the solution – just focusing on the problem and iterating towards it.”

As it brings the new platform to fruition, the team is working with Manchester-based app development agency Apadmi and others – but there are additional partners Ventures wants to work alongside. That is its raison d’etre: to foster partnerships with start-ups that can help drive the Co-op in new directions.

Other ventures from Ventures

It’s early days for Co-op Ventures but alongside the more strategic focus on developing a health and wellbeing proposition, it has also launched a beta mode online marketplace for independent retailers and brands.

The Local.co.uk site is described by Davies as a “from-the-ground-up, start-up marketplace”, separate from Co-op Food, aiming to investigate if there is an appetite among consumers for purchasing goods with provenance in the local Manchester area where it resides.

Davies says it took just eight weeks to code the site and bring it to life for a September launch, and its initial purpose is to learn about sellers and customers. It could lead to click & collect partnerships with Co-op stores, but any such integration is some distance away.

“It’s not enterprise level yet – it’s effectively an experiment,” he adds. “It follows our newly established agile working method, and if the hypothesis is proved out we can build on it from there.”

Expect more such developments from the Co-op in the months ahead, as Ventures finds its stride and continues to help the organisation explore new opportunities. Health and wellness disruption is the first target in its sights.