Walgreen drugstore chain is buying Drugstore.com for $409 million. That's nearly 102% more than the company is valued at, but the move lets the traditional retailer gain a foothold on the Internet that it's been unable to do on its own.
"Drugstore.com significantly accelerates our multi-channel initiatives by expanding our product selection for our customers, adding new capabilities through their well-known beauty and skin care websites," said Walgreen's President of E-commerce Sona Chawla.Drugstore.com had $456 million in sales in 2010.
If like me, you've been shopping at drugstore.com to avoid the lines at the local drug or discount store, support an alternative to a big box chain, or simply to avoid paying sales tax on daily necessities: the party's over.
Walgreen's takeover of Drugstore.com means it will have to start collecting sales tax, since Walgreen's has stores in all 50 states (the District of Columbia and Puerto Rico). This mitigates some of the value many customers find in the site, although not the convenience factor.
It may have been a coincidence, but just days before the acquisition was announced, a mailer from Soap.com arrived, touting the website and offering 20% off the first two orders. Soap.com is part of Quidsi Inc. along with Diapers.com and BeautyBar.com, and was acquired by Amazon.com this month for $500 million. It's intended to help Amazon compete with traditional retailers like Target, Walmart and Walgreen. Soap.com has a similar selection to Drugstore.com.
With states pressing Internet retailers to collect sales tax, the days when buying online is cheaper may soon be over. But until it's official, Drugstore.com is at a disadvantage when there are people looking for the lowest possible price, rather than just the convenience of a multichannel retailer.
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