Walgreens Opens Up to External Mobile Apps

Walgreens, the drugstore chain and $71.6 billion retailer, builds an open API layer that lets mobile app developers connect to its corporate systems. For example, Instagram app users can send their photos to Walgreens for printing.

The Project: Open Walgreens’ application program interfaces (APIs) to third-party mobile apps. By building an “open API layer,” companies can let external developers connect mobile apps to corporate systems and create new capabilities for customers.

The Business Case: Walgreens.com gets 12 million visitors per week, 36 percent of whom head directly to a local store. And those online visits are increasingly originating from mobile devices. “It’s the perfect multichannel device,” says Abhi Dhar, Walgreens’ CTO of online technology. “Customers initiate a conversation and communicate an intention with the brand on the mobile device and finish it in the store.”

The retailer had its own mobile development program, but Dhar wondered, “what if we could take any developer out there with a consumer engagement model and some creativity and enable them to send a customer to our store? We could expand that 12 million reach and expand that 36 percent.”

First Steps: Walgreens partnered with Apigee to manage third-party developer interactions and launch its developer portal. The pharmacy chain’s first open API, released in July 2012, was Walgreens QuickPrint, which lets customers send digital photos directly from popular apps like Instagram to a Walgreens store for printing and pickup. Another open API, which debuted in February, lets customers order prescription refills on their mobile devices.

Walgreens is considering other API opportunities as well. “Anything that can be initiated from the digital channel in a reliable, customer-friendly way–that’s all on the radar,” Dhar says.

The technology process was relatively straightforward, taking the interfaces used internally for mobile app development and recasting them for third-party use. “We had a lot of experience with what it meant to test, launch and operate them because the Walgreens app itself is a client,” Dhar says.

What took more effort was attracting the external developer community. Dhar appointed evangelists to forge relationships with developers around the world, participate in related events and host hackathons.

The drugstore chain is already seeing incremental revenue increases from the open APIs, says Dhar. But there’s been a more important benefit. “[It] builds innovation capital around our 110-year-old brick-and-mortar brand,” Dhar says. “That’s useful in the context of the investment community, but it also builds the cachet we need to attract the young talent we would not otherwise have.”

What to Watch Out For: Open integration with third-party apps creates “some brand issues you have to worry about,” says Dhar. “But the big risk is making sure that the checkout process in the store remains stable.”

Developers can integrate Walgreens APIs into their apps any way they want, so testing the physical output–for example, photos in the case of in-store printing–for each app is time-consuming, but critical.

Collaborating with app developers requires keeping up with their rapid development cycles, Dhar notes. But he says his e-commerce operation faces the same time pressures from internal customers, so over the past three years he has shortened development cycles. “It wasn’t a huge cultural challenge for us because now we can run as fast as anyone else.”

Stephanie Overby is regular contributor to CIO.com’s IT Outsourcing section. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.