Newpharma is an online pharmacy and parapharmacy that has made a name for itself operating online but offering a real pharmacy experience. When we spoke to them last year, the company was implementing its Goods-To-Man technology, developed by Scallog and implemented by Smart Technics, their technology partner from the Colruyt Group. The system implemented an automated 
pharmaceutical shelves system. Under this system, the appropriate shelves come to the operators’ stations so they can pick and replenish products as needed.
It was an exciting system, but in the year since then, Newpharma has only continued to explore and invest in new possibilities.
“We had a very good year in 2022,” says Pierre De Lit, Chief Operations and Chief Technology Officer of Newpharma. “We saw continuing growth across all of our activities in general. It was much less hectic during the end-of-year period compared to that same period in 2021. We were well-prepared and the sales period around Black Friday ran much more smoothly on the operational side. Meanwhile, on the commercial side, we are continuing our growth and we are happy about the results we are seeing.”
Under One Roof
Since we last talked with Newpharma, the company has undergone a transformation. Where before its operations were disparate across several locations, that has all changed.
“The biggest achievement of 2022 has been bringing all of our operations under one roof. When you last spoke with us we had operations scattered over three locations,” De Lit tells us “I would say the key achievement of 2022 has been to group all of our operations, allowing further automation and enabling further growth.”
Now that the company has achieved a more settled position, it is able to begin improving processes continuously. Ironically, by bringing everything closer together, Newpharma has found space to breathe.
“Before we consolidated everything into one location, we always lacked space. We had logistics flows between buildings which made it difficult to optimise,” De Lit tells us. “Settling into a single facility has helped us to say ‘Now we’re home’ and now we can really start improving processes and working methods day-by-day.”
Protecting the Margins
That kind of consolidation can boost efficiency, but it can also be costly to implement. Fortunately, Newpharma has made impressive progress on that front as well.
“We have been able to keep costs under control despite very difficult inflation circumstances,” De Lit says. “We did this by increasing productivity by 30% over the course of the year. Preserving our cost per order was only possible thanks to regrouping our operations.”
The last year has seen cost factors that increased by more than 10%. Manpower costs were soaring, along with the prices of cardboard, paper, and the products themselves.
“When that happens, it means the budget you planned doesn’t hold anymore. Retail is based on thin margins, so if you lose 5% of your margin it is game-changing,” De Lit says.
To protect those margins, Newpharma has been using its newfound consolidation to improve its operations, bringing down the costs of preparing orders.
“We have for instance renegotiated on the basis of growth with our delivery partners to keep costs under control,” De Lit says. “We have also taken a look at inventory management. We minimized low rotating inventory. We really forced ourselves to spend every cent wisely, putting all our expenses under scrutiny.”
As well as looking at the stock side of things, Newpharma is also paying close attention to customer behaviour, using the wealth of tracking tools it has access to in order to gain a greater understanding of what its customers do on its website.
“We are using our data, applying data science to address each customer with the right promotion, at the right time, with the right products,” De Lit says. “We are pushing segmentation to micro-segmentation. Ideally, we go down to segments of one. We are asking ourselves, ‘If I want to talk to you specifically, what would I tell you?’ We have no magic wand, we are just being even more stringent in the way we sell and spend our money.”
A Constellation of Health
But while Newpharma is working hard to adapt to a changing economic environment, it does not stand alone. The company operates as part of the Health “vertical” of the Colruyt Group.
“We strive to make sure people take care of their health and to make more conscious choices when consuming, encompassing a fitness chain called JIMS and an app called SmartWithFood that helps you make healthy menus and address problems with appropriate food habits. The digital program ‘Hello Health’ gives users specific tips to achieve health objectives like losing weight or exercising more,” De Lit explains. “Newpharma clearly has a role to play in the Health vertical, and being part of it is a major achievement for us while we are still continuing to grow and fighting the risk of a downturn.”
At the same time, the Goods-to-Man system that we looked at last time has turned out to be the first step in an extensive automation process.
“The next move for us is automating our packaging,” De Lit explains. “Packaging is a huge consumer of resources and people, so in the context of a shortage of manpower in the region, it is a natural next step. We are expanding the Scallog system, and automating our packaging will free up people who will be able to help work on the new orders so we can cope with our growth.”
Automatic packaging has value for customers, and by next year, Newpharma aims to have an automated line in place which will make yet further savings while increasing quality.
Looking forward, De Lit intends to continue focusing on growth, both in its mature markets such as Belgium, but also in still developing ones.
“We are continuing to explore growth opportunities in newer markets for us, such as France or Switzerland,” De Lit points out. “In our most mature markets, a key focus for 2023 will be to limit churn as much as possible, and encourage customers to repurchase our products regularly.”
Newpharma’s use of data will be a valuable tool in that expansion.
“It means we are ready to move to new countries, proposing new products depending on the specificities of that country and the assortment of products that customers need,” De Lit says. “We have been expanding across Europe for several years. We are now part of a health ecosystem, really leveraging the synergies and potentialities of being part of a large, listed Group. It is a game-changer.”
