It almost seems like a myth at this point, some tale that grandparents will tell their grandchildren.
They will listen to this too-silly-to-be-true story of the olden days with polite skepticism as they cuddle their Alexa-enabled robot pets in their laps. They will pretend to hear, as they sketch out their Christmas lists in their minds, the bio-electric signals transmitted to the silver orb in the living room that connects instantaneously to Bezos Satellite No. 13 in geosynchronous orbit above the tidy little ranch house. That satellite in turn will direct the mechanical warehouse humanoids to start assembling an order for young Johnny and Suzy.
“There was a time,” Grandfather will say, “when Amazon sold only books.” He will sit there, expecting some surprised, even awe-soaked response from the grade schoolers. But the statement will not seem to register with them, and before he can think too much about the meaning of that, a soft alarm will sound in his hearing aid, reminding him it’s time for his next dose of the new Amazon-supplied pill that will prevent him from getting Alzheimer’s, the disease that claimed his dear mother.
Get past the benign silliness of that retail and fulfillment dream and you’ll be reminded that Amazon is always pushing at the commerce and payments frontier. A look at some of its latest moves — a survey backed by fresh PYMNTS data and statistical analysis of Amazon’s strength in consumer spending — gives strong ideas of where the eCommerce operator is headed.
Healthcare is among the biggest areas of interest for Amazon watchers these days.
This look comes as Amazon seeks to make the most of its recent big step into healthcare, one of the most lucrative sectors of the U.S. economy. In June, Amazon said it would buy PillPack, the pharmacy focused on people in the U.S. who take multiple daily prescriptions. PillPack packages and delivers medications in pre-sorted doses, coordinates refills and renewals and ensures shipments are sent on time.
The deal caused a wave of existential consideration in the pharmacy and retail world, with executives and observers wondering about the scope and speed of Amazon’s other plans for medicine and medical products.
Since announcing the acquisition, news emerged that Amazon has filed a patent to make Alexa, its voice-activated personal assistant, act as a doctor or nurse, detecting illness by a change in the user’s voice. According to a recent analysis from MedicalDevice-Network.com, “this technology has the potential to reduce healthcare costs for patients while being less time-consuming than a visit to the doctor. Additionally, this may help reduce the strain on the healthcare sector by reducing physicians' contact hours with patients for issues that do not require intervention.”
And Amazon has a joint healthcare venture with JPMorgan Chase and Berkshire Hathaway, further underscoring that the eCommerce operators don’t just intend to play dilettante in this sector.
Amazon Healthcare Growth
According to new PYMNTS research — the Amazon Paycheck Index — Amazon’s total gross sales in health and personal care products has increased since 2014 at a compound annual growth rate (CAGR) of 43 percent. The eCommerce operator will account for an estimated 2.2 percent of consumer spending on health and personal care in 2018, up from 1.7 percent in 2017 and 1.3 percent in 2016. And as a share of eCommerce, Amazon this year will command an estimated 32.5 percent of health and personal care sales, up from 27.9 percent last year.
Amazon’s healthcare ambitions are likely even wider in scope than current product sales, PillPack and earlier moves, according to industry executives and analysts. And the frontier will keep expanding.
One possible new healthcare area for Amazon involves non-emergency medical transportation – at least according to Robin Heffernan, CEO and co-founder of the Boston-based Circulation, whose software coordinates rideshares and other forms of transportation for patients in need of non-emergency care. Circulation was recently bought by LogistiCare, a competitor, in a $57.5 million deal.
The potential opportunity for Amazon?
Some 3.6 million U.S. consumers miss medical appointments each year because of a lack of transportation, according to estimates. Missing an appointment increases the odds that a person will later need a deeper level of care in a hospital. In a recent interview, Heffernan said Amazon could gain a hold in this sector of healthcare, given its logistical and software expertise along with its growing fleet of delivery vehicles, including cars, trucks and vans. Such an operation could also result in providing transportation for doctors, nurses and other medical professionals from central city locations to hospital campuses.
As well, such an operation would function as another part of Amazon’s expanding healthcare infrastructure.
Whether Amazon would actually decide to launch or buy such a service, it seems clear that the eCommerce and cloud computing operator has big plans for healthcare. "Healthcare is so big and so complex,” former Apple CEO John Sculley recently told a reporter. It's not surprising that Amazon will probably take a little time to decide what they specifically want to do, but I cannot imagine they won't find some way to play a significant role in healthcare at some point, whether it happens in the next year or two or whether it takes longer.”
While Amazon’s ideas for the healthcare sector sparked endless discussion in recent months, it also pays to focus – at least briefly – on how the company is pushing the frontier in grocery and food.
According to the PYMNTS Amazon Paycheck Index, the share of eCommerce for Amazon in food and beverages will grow to 27 percent this year, up from 24.6 percent in 2017. Amazon this year will command an estimated 1.8 percent of consumer spending on food and beverages, that research showed, up from 0.8 percent in 2017.
Over the last four years, Amazon has seen its sales of food and beverage products grow by 106 percent — with most of that growth happening in the aftermath of the Whole Foods acquisition in 2017. Amazon has opened Amazon Go stores in several cities to capture the food sales that now go to convenience stores. Reports say that 3,000 more will open over the next several years.
Groceries represent the largest single driver of consumer spend in the retail segment, and Amazon doubled its food and beverage sales from 2017 to 2018 after quadrupling them the year prior. According to the new PYMNTS research, food is a category with the potential to capture more of the consumer’s spend over the next several years.
The eCommerce giant famously plays its cards close to its vest, making Amazon-watching roughly akin to figuring out which elderly Communists were running the Kremlin back in the Cold War days. But it seems more than clear that when it comes to healthcare, grocery and food, Amazon is intent on pushing the retail and services frontier much more in the coming years.