SPOTLIGHT ON BUSINESS MAGAZINE MAY 2016
Andrew Vagenas, CEO and Co-founder of Pharmapacks, has a knack for sensing the winds of change. He knew when it was time to experiment with a basic Ecommerce platform at the small – and successful – retail pharmacy in the Bronx, N.Y. that he and an associate operated until 2010. He knew when it was time a year later to invest in a small warehouse to increase their sales capacity. He knew when to team-up with digital media and graphic design specialist and entrepreneur, Jonathan Webb, to build their brand online. And he’s not ashamed to admit that, despite his prudence and persistence, the “first few years were pretty tough.” Now, Vagenas and his partners at Pharmapacks have become multi- platform retailers whose nutrition, home medical, health and beauty, hair care, makeup and nails, baby and children, and household merchandise is featured prominently by the likes of Amazon, EBay, Jet, Overstock, and Walmart – oh and of course Pharmapacks.com.
SPOTLIGHT ON BUSINESS • MAY 2016
By David MacDonald J ust fourteen months ago, Vagenas and the Pharmapacks team were buyers in what has become for them the familiar market of commercial real estate. In order to accommodate the inventory that went hand-in-hand with the $32 million in revenue Pharmapacks saw in 2014, a 32, 000 square feet warehouse was a necessity, not a luxury. It was moving day again. By this summer’s end, Vagenas and his team will store their wares in and ship them from yet another location: a new 142, 000 square feet location (that’s roughly the same square footage of the base of the Egyptian Pyramid of Djoser) and their projected revenue could exceed the $1 million per 1,000 square foot ratio seen in 2014. Now that Pharmapacks is Amazon’s largest retailer in the U.S. for health and beauty products, revenue projections are “somewhere between $140 and 160 million this year and,” Vagenas adds, “we’re projected to do close to $300 million next year.” This pay dirt is worlds away from the company that six short years ago was hemorrhaging money during what Vagenas calls, “the trials and tribulations.”
MAY 2016 • SPOTLIGHT ON BUSINESS
culture, company culture,” Vagenas stresses. “And we’re working on creating an environment that is increasingly one big team of interconnecting departments.”
While many Ecommerce competitors see the decades-long decline of the Big box store as an eventual void to fill, Vagenas and his team are trying to prop-up some of these slumping giants now rather than getting in line to stand on their shoulders later. “Big box stores seem to be moving in the markets recently; they are declining year-after-year in every category,” Vagenas explains. “Now, a lot of these Big box stores are focusing their attention online – Ecommerce. Whether it’s an independent Ecommerce platform, or whether it’s their own website, they’re really trying to latch-on to change. You see it happening with Sears, K-Mart (which is a Seas company), and Walmart, which has been increasingly engaged in this process for years and has a done a good job of that. Target is starting the process. Everyone’s shifting to online now. And some of them are far behind because Amazon has already taken up so much market space.” Enter Pharmapacks. “We’ve never bought a box solution. We build everything in-house. Whether it’s customer service platforms, accounting platforms, logistic platforms, our own internal sales channel, we build it at our own house and I think that’s what makes us unique.” “That’s our future. Keep adding sales channels and distribution channels and just continue on what we’re doing, expanding into new categories and keeping up with the product line,” Vagenas calcu- lates. He humbly credits a healthy market place for Pharmapacks’ ability to wage the kind of pricing wars that help build their brand on Amazon. “We have a following of customers through Amazon that when they shop through Amazon and they’re looking for health and beauty products, they’re looking at Pharmapacks first.” What’s even more encouraging – and speaks to the probability of Vagenas’ latter revenue projection for 2017 – is Pharmapacks’ impressive Amazon customer rating that ranges from 98 to 99 percent. Happy customers, like employees, are active ones. “We get a lot of free publicity coming our way like this,” Vagenas boasts.
What puts Pharmapacks among the fastest growing retailers in North America is a two-part business identity. The first component of this identity is Phar- mapacks’ unwavering diplomacy in the spirit of commerce. “Their growth equals our growth,” Vagenas says. “Many companies out there will try to compete against Amazon and compete against these other web retailers and our goal was to work with them.” This con- nectivity in the business community is a mac- rocosm of what Vagenas and his team strive for in their workplace. “Our goal is employee
The second – and ineffaceable – part of Pharmapacks’ business identity is their in-house inge- nuity. “Our company has grown because of the technology we built,” Vagenas asserts. “We built
“People find it more convenient to shop online, to shop on their phone, to shop from their couch.”
two platforms; one of them is a warehouse logistics and processing platform. It includes inventory management, warehouse management processes, etc. The other platform that we built is called “The Brain.” This platform is software that’s tied into our distributers, our shippers, and all of our sales channels – our website, Amazon, Walmart, and so forth. Within that platform [The Brain] there are algorithms that allow us to process consumer data like shopping patterns so that we are able to price accordingly on each sales channel and kind of take over the health and beauty category.” Vagenas boasts that “Our company morale is to promote from within if possible rather than going out to hire someone new. We’ve never bought a box solution. We build everything in-house. Whether it’s customer service platforms, accounting platforms, logistic platforms, our own internal sales channel, we build it at our own house and I think that’s what makes us unique.” Now that brand recognition is a done deal – the size of your blue and white Pharmapacks parcel, if not its contents, is an instant reminder of their free shipping offer on all orders over $50 – future growth is prac- tically organic. “People find it more convenient to shop online, to shop on their phone, to shop from their couch,” Vagenas says. “We’re taking that pretty seriously and making sure our technology is constantly evolving with the changing in shopping channels. And there are new sales channels opening up literally every month online and we’re ahead of the game a far as understanding the marketplace model, having the technology to fit the marketplace model, and being able to provide sales to customers through the marketplace model.” Looking beyond 2017, Vagenas believes, “If Pharmapacks can continue doing what we’re doing we can possibly reach half a billion to a billion dollars in three to five years. And we really see that happening. Doors are opening for us so we are in a position to do something unique that hasn’t been done before.”
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as spotlighted in the MAY 2015 issue of SPOTLIGHT ON BUSINESS MAGAZINE
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