News Feature | August 4, 2016

Walgreen Boost Alliance Announces That Drugstore.com And Beauty.com Will Be Shut Down

Christine Kern

By Christine Kern, contributing writer

Walgreens Cost Reductions

Websites will be shuttered by the end of September as part of cost reduction strategy.

Drugstore.com and Beauty.com, two websites acquired by Walgreens Boots Alliance, will be shut down by the end of September, according to the Wall Street Journal. The move is part of a cost reduction strategy that aims to cut annual costs by $1.5 billion by the end of the fiscal year. The company will incur a $115 million pre-tax charge as part of the shutdown. A regulatory filing notes that the shutdown is part of Walgreens’ “initiatives to greater focus on the development of Walgreens.com.”

Walgreens acquired the two websites and VisionDirect.com for $429 million in 2011, when Drugstore.com and affiliated sites were the eighth largest pureplay online retailer in the U.S. in sales. VisionDirect.com will remain an active site. While the acquisition of Drugstore.com was closely aligned to Walgreens’ vision in 2011, developments in retail have made the website less than successful in helping to attain company goals.

Drugstore.com isn’t the first e-commerce acquisition by Walgreens that didn't pass muster. According to the Wall Street Journal, Walgreens sold Skinstore.com earlier this year to U.K. online retailer Hut Group. The decision to divest these websites represents one prong of a broader strategy by Walgreens to cut costs and focus on its own omnichannel.

Spokesman Phil Caruso explained that Walgreens has been strategically focused on developing new omnichannel capabilities on its own website for the past year. In a company statement, he said, “We have been focusing on building new omnichannel capabilities on Walgreens.com with initiatives that improved assortment and website user experiences enhanced our digital coupon capabilities to provide more customer value and added digital tools into our stores to elevate our shopping experiences. Expanding on these efforts is an important part of our strategy.”