The best medicine

INTERVIEW:JAMES McKAY still remembers it: the lecture on e-commerce during his MBA at the University of Wales that inspired him to plan an online arm for his family's 30-year-old pharmacy chain in Northern Ireland.

“I have absolutely no idea who delivered the lecture, but I know that it was someone from an online retailer named Blushingbuyer.co.uk – and it really got me thinking about how we could apply the online model to our own business,” he recalls.

McKay’s MBA was followed by a year working with a community pharmacy in Bay of Plenty on New Zealand’s North Island – and, even there, the possibilities of a parallel internet business continued to nag at him.

“There were quite a few online pharmacies in New Zealand, so I took a closer look at them and came to the conclusion that there had to be a market for something similar in Northern Ireland, in the Republic and throughout the UK.”

The McKay Pharmacy group was set up in 1976 by James McKay’s father and mother, John and Ina. By 2000, the business had grown to a chain of 10 shops based in Newtownards, Co Down, and spread across the North, including one on the Isle of Man.

Over the following six years, pressure on the community pharmacy sector convinced John McKay to sell seven of those stores, regrouping around three in the best locations, and investing in a health centre and two beauty salons.

It was a timely restructuring which left the company stronger and more focused, says James McKay (28). “In the last phase in 2006, for example, we sold three of the remaining six stores and still managed to maintain three-quarters of our turnover with half the number of staff – that shows how effective it was.”

So the McKay Pharmacy group was ideally positioned when he took over as managing director in 2007 – and set about making his online plans a reality. The website, www.lifeandlooks.com, went live in October 2007, and www.lifeandlooks.ie was launched in the middle of last year.

Looking back, McKay notes that key elements of the online business were already in place thanks to the company’s retail business: “We already had successful long-term relationships with our suppliers on the beauty and skincare side as well as on the medicines side, so that was not something we had to start to build.

“Also, we already had a warehouse for which the overheads were being paid by the retail business, and that significantly reduced our start-up costs. We have more than 2,500 products on our website, and again the underlying retail activity allows us to stock that number of lines.”

But no business is all upside. “The downside, I suppose, was our lack of knowledge of the technical aspects of running an online business,” says McKay.

“But we got specialist advice from Origin Partners in Belfast, which provides online hosting and a back-office platform, as well as design and marketing.”

Still, there has been a considerable learning curve. “We have made some mistakes,” says McKay. “I would say, for instance, that we’ve wasted money on offline advertising, specifically print advertising.

“Online advertising is different. You already have the customer there, probably looking for the type of product you’re offering, just one click away. So we do our marketing mainly through pay- per-click campaigns and through online affiliate marketing, where a business rewards its affiliates for any custom they generate.”

The result, says McKay, has been rapid growth, with sales increasing by roughly 50 per cent a month and a client base of some 10,000 registered users.

“The past 18 months have been fantastic,” he says. “Turnover has more than matched expectations. We put in place what we considered aggressive targets at the start of 2009, and we’ve already exceeded two of them.

“But then,” he adds confidently, “when it comes to running a pharmacy, whether it’s online or offline, if we can’t do it, nobody can.”

ON THE RECORD

Name:James McKay.

Company:McKay Pharmacy group and lifeandlooks.ie

www.mckaypharmacy.com

www.lifeandlooks.ie.

Job:managing director.

Age:28.

Background:Graduated with a degree from the Welsh School of Pharmacy in Cardiff in 2003 and worked for a year with a family pharmacy. MBA from the University of Wales in 2005, followed by a year in New Zealand working with a community pharmacy.

Took over as managing director of the family business, McKay Pharmacy group, in 2007. Launched the website, www. life andlooks.com, in 2007, followed by www.lifeandlooks.ie mid-2008.

Inspired by:His parents, John and Ina, and, of course, that MBA lecturer from Blushingbuyer.co.uk. "My mother has been tireless over the years in developing relationships with the skincare and cosmetics houses. My father has always been very innovative in his thinking about the business, very good at stepping back and taking a strategic view."

Challenges:"We've felt the downturn to an extent with our high-end products such as skincare and perfumes. However, we've added two beauty salons, which haven't been affected, and the internet is a huge growth area."

Most important thing learned so far:"Like a lot of other businesses, I believe we're learning some very important lessons at the moment. In particular, I'd say we're learning how to see the wood from the trees – distinguishing the profitable areas from the rest."