Recently, Amazon launched pharma services adding to its ever-expanding product/service portfolio. Amazon has been expanding its offerings: books, devices (kindle, Echo), security products (Ring), cloud services (AWS)…and now Pharma. Of course, not to mention Blue Origin, pioneered by Jeff Bezos in his personal capacity. For now, the juggernaut seems unstoppable and unchallenged.
What does this new offering mean for competition? Is Amazon going to build a Healthcare behemoth challenging the long-established players?
A brief recap of Amazon’s impact on Retail business
With a turnover of around USD 300 billion and growing at an amazing pace, Amazon is certainly grabbing market share in retail.
When Amazon started selling books and slowly started expanding to other categories few foresaw what was coming. Today many traditional books retailers are bankrupt or non-existent. We keep hearing every month about physical retail stores closing; big names like Macy’s have closed many stores; many stores filed bankruptcy.
How did Amazon come to dominate this way?
Amazon planned for the long haul. They built amazing logistics capabilities to create a differentiator that no competitor could beat. Amazon foresaw the emergence of digital channel as the primary retailing channel and built peerless digital experiences. Over time this has become an unbeatable combination!
Is Amazon going to repeat its eCommerce success in the Pharma space too?
We are seeing a huge disruption in the health tech of late. Is Amazon slowly building a digital health ecosystem that may disrupt the existing players? Today, the healthcare system is organised into discrete entities with distinct roles – insurance, healthcare providers, pharmacies. Will Amazon build an A to Z store for all healthcare-related products & services?
Amazon has teamed with JP Morgan Chase and Berkshire Hathway for setting up a Health Insurance company “Haven”. It acquired PillPack, an online pharmaceutical company that is now small, but may grow multifold with Amazon’s might.
As it acquired Whole foods in physical retail, is there a possibility that it may acquire some Pharma retailer? Maybe Walgreens or CVS? These acquisitions will enhance the range of service that can be offered. For eg: the CVS minute clinic can add healthcare provider services too. There could be a potential healthcare device play; something like Fitbit is a good target for acquisition.
How the pharma retail majors like Walgreens, CVS will respond to this competition is interesting to be seen. Retailers like Walmart will also see a significant impact on their in-store pharmacy sales. The insurance sector may also face a jolt.
Healthcare in the US is quite expensive even compared to most other developed countries. There could be phenomenal outcomes for Amazon if it can pull off a massive disruption in this sector. Going by experience in retail, we may not be surprised if this comes true!
Atmakur is a senior executive with passion for marketing and digital transformation.