Selling online with video Seattle Direct Marketing Association January 8, 2009 Alison Jeske Director, Product Management drugstore.com

Introductions: Alison Jeske With a decade of experience in eCommerce, Alison Jeske has worked in customer acquisition, retention and customer service aspects for online retailers. Alison is currently Director of Product Management for drugstore.com, inc., where she is responsible for defining site strategy, and implementing new site features to deliver an exceptional personalized shopping experience. Prior to joining drugstore.com Alison was a senior member of the eCommerce team at Cingular and AT&T Wireless. drugstore.com, inc. (NASDAQ:DSCM) is a leading online retailer of health, beauty, vision and pharmacy products. Our portfolio of brands include: drugstore.com™, Beauty.com™ and VisionDirect.com™. All are accessible from http://www.drugstore.com and provide a convenient, private, and informative shopping experience while offering a wide assortment of more than 35,000 products at competitive prices.

Alison Jeske

With a decade of experience in eCommerce, Alison Jeske has worked in customer acquisition, retention and customer service aspects for online retailers. Alison is currently Director of Product Management for drugstore.com, inc., where she is responsible for defining site strategy, and implementing new site features to deliver an exceptional personalized shopping experience.

Prior to joining drugstore.com Alison was a senior member of the eCommerce team at Cingular and AT&T Wireless.

drugstore.com, inc. (NASDAQ:DSCM) is a leading online retailer of health, beauty, vision and pharmacy products. Our portfolio of brands include: drugstore.com™, Beauty.com™ and VisionDirect.com™. All are accessible from http://www.drugstore.com and provide a convenient, private, and informative shopping experience while offering a wide assortment of more than 35,000 products at competitive prices.

Overview of drugstore.com’s entry into video – where did we start? Launch of new Beauty.com site in November 2007 – included video Video library (self-produced and vendor videos) Brand boutique videos Objectives: Increase basket size Increase time on site Provide enhanced shopping experience for prestige beauty customers What did we achieve? Basket size and time on site difficult to directly correlate to video viewing (new features also launched w/ new site) but noticeable improvements Positive feedback from customers

Launch of new Beauty.com site in November 2007 – included video

Video library (self-produced and vendor videos)

Brand boutique videos

Objectives:

Increase basket size

Increase time on site

Provide enhanced shopping experience for prestige beauty customers

What did we achieve?

Basket size and time on site difficult to directly correlate to video viewing (new features also launched w/ new site) but noticeable improvements

Positive feedback from customers

Pop up window displays video

Overview of drugstore.com’s entry into video – what are we doing now? New tools and expansion of video into drugstore.com Partnered with Liveclicker to provide rich tools for bridging video and commerce Launched Beauty.com new video site in July 2008 Launched drugstore.com video site in Sept. 2008 Securing content from vendors and producing our own videos Expanding distribution to our affiliate network as well as Twitter, YouTube, Google Video, etc. Measure, measure, measure!

New tools and expansion of video into drugstore.com

Partnered with Liveclicker to provide rich tools for bridging video and commerce

Launched Beauty.com new video site in July 2008

Launched drugstore.com video site in Sept. 2008

Securing content from vendors and producing our own videos

Expanding distribution to our affiliate network as well as Twitter, YouTube, Google Video, etc.

Measure, measure, measure!

Liveclicker tool provides many features: -’buy’ just one click away -product links in video -product listings and reviews -sharing -rating of videos -customer generated comments videos -access to related videos/whole library -push to YouTube, Twitter , Viddler, Linkshare, Google Video

Over 45 videos on Beauty.com, 60 on drugstore.com Monitoring impressions, page views, viewing time (10 sec, 60 sec, full view), click through on buy button Note: Spikes in impressions correspond to industry blogs, emails

Other exciting metrics – majority of Beauty.com videos have 10-sec play through greater than 70%! (that tells us our customers are engaged and responding to the video content)

Affiliate distribution launched in Dec. and page views have been increasing steadily (monitoring impact to orders, but too early to tell)

Initial drugstore.com launch of video site was heavily focused on toys and games

Expanded video to product details pages in December Placement on product details page is to aid customer in purchase decision (like reviews)

Results? Continue to see increases in page views, impressions, time on site Positive feedback from customers Enthusiastic response from vendors – finding content is not a roadblock Analyzing benefits from video placement on product details pages (launched in 4 th quarter) Also analyzing benefits from distribution of videos across social media sites, affiliates, partners (launched in 4 th quarter)

Continue to see increases in page views, impressions, time on site

Positive feedback from customers

Enthusiastic response from vendors – finding content is not a roadblock

Analyzing benefits from video placement on product details pages (launched in 4 th quarter)

Also analyzing benefits from distribution of videos across social media sites, affiliates, partners (launched in 4 th quarter)

What’s in our future? Continue to broaden access to video throughout the site (product details pages; tutorials on new site features) Expand adoption with our affiliates and partners Focus on customer generated videos (contests, etc.) Develop in-house videos (videos for our “brand”) Addition of video sites Continue to monitor and analyze results (customer satisfaction, orders!)

Continue to broaden access to video throughout the site (product details pages; tutorials on new site features)

Expand adoption with our affiliates and partners

Focus on customer generated videos (contests, etc.)

Develop in-house videos (videos for our “brand”)

Addition of video sites

Continue to monitor and analyze results (customer satisfaction, orders!)