Amazon is doubling down on its digital pharmacy service with a new benefit for Prime members announced on Tuesday (Nov. 17): two-day delivery of their prescriptions. The new Prime benefit comes care of the eCommerce giant’s new separate storefront: Amazon Pharmacy.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” Doug Herrington, senior vice president of North American consumer, Amazon, said in a statement.
“PillPack has provided exceptional pharmacy service for individuals with chronic health conditions for over six years. Now, we’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives and feel healthier,” he added.
Via Amazon Pharmacy, consumers will be able to tap into a new self-service platform via their computer or smartphone that will allow them to store payments and insurance information and manage their medication and refills. And Amazon will sell those medications at a vastly discounted rate for consumers who pay without using insurance. Brand-name medications will be priced at 40 percent off, and generics will be discounted 80 percent. Consumers will also be able to shop from over 50,000 participating drugstores.
“We designed Amazon Pharmacy to put customers first — bringing Amazon’s customer obsession to an industry that can be inconvenient and confusing,” said TJ Parker, vice president, Amazon Pharmacy.
Parker went on to note that the goal of Amazon’s Pharmacy platform is to inject transparency into the market so that any patient can easily understand their options. The company said that consumers can compare prices directly, place their orders for the lowest available price and have their medication delivered quickly to their front door.
It’s a big push, and an offer that will certainly be tempting to consumers. The news also sent immediate ripples through the entire pharmacy ecosystem, particularly in the stock market. Shares of Amazon’s new direct competitors – Walgreens Boots Alliance, CVS Health, Walmart and Rite Aid – all traded lower early Tuesday after Amazon’s announcement.
Shares of Walgreens Boots were down 11.6 percent and CVS was down 9.5 percent, while Rite Aid stock was off 13.9 percent. Walmart bucked the trend, likely because it announced its earnings on the same day and beat analyst expectations on both the top and bottom line.
But it bears remembering that despite the market's shock-reaction to the news, Amazon’s plan is still only a possible threat, not a certain one. Despite the myth of Amazon taking over every vertical it enters, pharmacy has a tough competitive landscape. And Amazon’s competitors aren’t laggards when it comes to adopting digital tools to enhance their services.
It was only a week ago that Rite Aid was announcing upgrades to its digital experience, including the relaunch of RiteAid.com and its mobile app. In addition to existing prescription delivery options, Rite Aid has invested in technology to offer customers more digital-first options, including a partnership with Instacart that made delivery of non-prescription items available across the chain’s entire retail footprint.
Rite Aid also offers prescription delivery at most locations, and says it will soon “announce a new partnership to expand this service.”
A week before that, Walmart-owned Sam’s Club announced a new partnership with DoorDash to offer same-day prescription delivery to customers in 41 states.
“Our partnership with DoorDash to launch this new service allows us to not only give our members more convenient healthcare options, but also delivers on our commitment to their overall wellness needs,” said John McDowell, vice president, pharmacy operations and divisional merchandise for Sam’s Club.
As of early 2021, the Sam’s Club app will have prescription delivery options available.
Go back another two weeks, and the Walgreens Boots Alliance was announcing its own slew of digital upgrades for the pharmacy experience, including the relaunch of its online Prescription Savings Club, offering lower prices on hundreds of medications.
According to Walgreens, average weekly enrollment in the club has increased by over 400 percent since the June relaunch, with members racking up $164 million in savings. The company also noted big growth in its Find Care platform, which connects patients to telehealth providers. Find Care grew by 36 percent year on year, reaching over 8.5 million visits.
“…We are stepping up our game in terms of what we're going to do to surround the consumer with a massive set of choices on how they want to enter our quarter, whether it’s physical or online or eCommerce, and it will be a totally omnichannel approach, both pharmacy and retail,” said James Kehoe, executive vice president and global chief financial officer, on Walgreens’ earnings call. “And this will be going on the entire year of 2021, and we will have successive strings of new news over the coming quarters on this.”
As part of the digital transformation, Walgreens also announced a relaunch of its loyalty program, now known as My Walgreens. The new program will simplify how customers accumulate and use rewards, setting up access to 5 percent Walgreens cash for owned brand products and 1 percent in all other qualifying purchases.
Amazon Has Been in the Sector for Years
Still, Amazon doesn’t enter this field totally fresh. The eCommerce giant first dipped its toe into the pharmacy market with its 2018 acquisition of PillPack, and its fuller entrance into the U.S. pharmacy market has been anticipated ever since. But Amazon doesn’t enter a field devoid of digitization: It faces off against a host of competitors that have spent the last half-year drastically raising the level of their digital game in terms of online and mobile experiences, delivery options, and loyalty and rewards offerings.
Amazon’s offering of big savings and price transparency is novel – particularly for the uninsured and underinsured – and will likely change the shape of the already intense competition. It’s probably not enough to guarantee a win for Amazon from the outset, but it does assure that the race for the pharmacy market just got a lot faster for everyone running in it.
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