It’s hard to believe that Amazon started as a humble online bookstore in 1994. Flash forward 26 years and it has now transformed into the world’s largest eCommerce retailer (by online revenue). No wonder really, as you can buy anything from baby food, to clothing and home cleaning solutions.
Pair this capacity for huge lines of stock with its technological prowess, such as the Alexa smart speaker assistant – who can imagine life without her? – and Prime Air (where people receive their deliveries via drones), and it’s no wonder that Amazon plays a huge part in our daily lives. Yet Amazon isn’t satisfied. They want to play an even bigger role, and they want to do this by entering into the pharmaceutical industry.
Let’s rewind to 2018 when Amazon purchased PillPack (an online mail-order pharmacy based in America) for the princely sum of one billion dollars and beat its close rival, Walmart, in the process. Not content with this as an entry to the US healthcare industry, Amazon then went on to show it meant business and changed PillPack’s name to ‘PillPack by Amazon Pharmacy.’ This was a clear indication that Amazon plans on becoming a serious player in the pharmaceutical industry – but why would they want to do that?
The Pharmaceutical Industry
As it stands, the pharmaceutical industry is generally a force to be reckoned with. In the US alone, IbisWorld reports that the pharmaceutical market is worth $318.9 billion dollars – which is an increase of 2.2% over the last twelve months. In the UK, by comparison, it is estimated to be somewhere around $16 billion and is also growing at a rate of around 2% annually.
The online pharmaceutical industry is worth a lot of money, and it’s no wonder that Amazon wants a slice of it. Purchasing PillPack was therefore a really smart move. PillPack already held a pharmaceutical licence in each of the 50 states, which meant that if Amazon wanted to look at physical brick and mortar stores, they can now do so much quicker. Amazon is also the owner of the American grocery chain, Whole Foods, which means they can easily open a PillPack pharmacy in each store location.
The big question is: how will Amazon Pharmacy differ from existing pharmaceutical companies?
#1 They already have a loyal customer base
Amazon’s current market value is $1,887 trillion and with current estimates of active customers sitting around the 310 million mark, they’re surely doing something right. Amazon also states that their aim is to help its customers to ‘discover anything they want to buy online.’ Its foray into the world of pharmaceuticals makes sense.
Amazon customers also tend to be fiercely loyal. They have over 100 million active Prime members which indicates that their business model is working. They don’t need to waste cash on recruiting customer research agencies to find out what online pharmacy customers want. They can simply reach out to their existing customers for honest feedback and interaction.
#2 Their delivery network is second to none
Looking at only the US for a moment, just under 78 million Americans live in an area which is covered by same-day delivery under Amazon Prime. 78 million! This is fantastic news for people who are looking for the speedy delivery of their medicine. Plus, this allows Amazon to completely remove the middleman from the pharmaceutical supply chain.
Amazon can ship drugs directly to those who require them. People will no longer need to attend a pharmacy or to pick up their prescription from a drop-off point. As a result, Amazon has a huge advantage over other pharmacy businesses, and has a head start in the online pharmacy market as a whole.
#3 They have the ability to offer discount drug prices
One thing that sets Amazon apart from other online retailers is the ability to offer cheaper pricing – which it has managed to do since the day it started. They are well known, for example, for destroying the market for expensive textbooks and making them more affordable for college students. Disrupting drug pricing won’t be difficult for them.
Due to the size of Amazon, when it comes to negotiating prices with drug manufacturers and health insurance companies, it has the upper hand. In turn, Amazon can use this to its advantage when offering discounted prices on brand-name and generic medications.
#4 Offering a superior customer experience
Amazon is already well known as offering a superior customer experience, and this will really play to its advantage when it comes to the pharmaceutical market – especially in the United States.
The pharmaceutical market is becoming increasingly sophisticated as patients are starting to view themselves as healthcare consumers rather than patients. They want to feel part of the healthcare brand. Amazon already has a huge amount of technology at its fingertips that can help it to achieve this, including offering virtual care through Amazon Care clinics and home delivery of medication through PillPack.
#5 A holistic approach to healthcare
In America, the healthcare system is very disjointed with many people having to get their drugs and care from different companies. This is where Amazon definitely has an advantage, as it can create a one-stop shop for all patients’ needs.
Amazon will work around the clock to ensure it has the team in place, as well as the technology to be able to cater for everything – from diagnostics to recovery. PillPack, for example, allows them to automate medication for customers, while Alexa can draw on AI to help with chronic disease management.
#6 Alexa
Since we’re on the topic of Alexa, Amazon’s voice assistant, “she” is going to be hugely influential in their bid to disrupt the pharmacy market. Once Alexa has HIPAA compliance (which Amazon is working towards), the customer will be able to request or buy prescription refills.
Amazon is going to play a huge role in the future of the pharmacy business, especially as they’ll encourage customers to start shopping around for better-priced prescriptions. They’ll also appeal to customers with their next-day and even same-day delivery options.
No matter what your feelings are regarding Amazon entering the pharmacy market, if you’re in the pharmaceutical industry, you need to take the right measures. Make sure that your branding is on point and that your website is clear, informative and easy to navigate. Plus, ensure you’re clearly communicating your unique selling points to your customers. These are things that the team at Zool can help you with.
What plans does Amazon have to disrupt the pharmaceutical industry?
Digital Life Science / May 4, 2020
It’s hard to believe that Amazon started as a humble online bookstore in 1994. Flash forward 26 years and it has now transformed into the world’s largest eCommerce retailer (by online revenue). No wonder really, as you can buy anything from baby food, to clothing and home cleaning solutions.
Pair this capacity for huge lines of stock with its technological prowess, such as the Alexa smart speaker assistant – who can imagine life without her? – and Prime Air (where people receive their deliveries via drones), and it’s no wonder that Amazon plays a huge part in our daily lives. Yet Amazon isn’t satisfied. They want to play an even bigger role, and they want to do this by entering into the pharmaceutical industry.
Let’s rewind to 2018 when Amazon purchased PillPack (an online mail-order pharmacy based in America) for the princely sum of one billion dollars and beat its close rival, Walmart, in the process. Not content with this as an entry to the US healthcare industry, Amazon then went on to show it meant business and changed PillPack’s name to ‘PillPack by Amazon Pharmacy.’ This was a clear indication that Amazon plans on becoming a serious player in the pharmaceutical industry – but why would they want to do that?
The Pharmaceutical Industry
As it stands, the pharmaceutical industry is generally a force to be reckoned with. In the US alone, IbisWorld reports that the pharmaceutical market is worth $318.9 billion dollars – which is an increase of 2.2% over the last twelve months. In the UK, by comparison, it is estimated to be somewhere around $16 billion and is also growing at a rate of around 2% annually.
The online pharmaceutical industry is worth a lot of money, and it’s no wonder that Amazon wants a slice of it. Purchasing PillPack was therefore a really smart move. PillPack already held a pharmaceutical licence in each of the 50 states, which meant that if Amazon wanted to look at physical brick and mortar stores, they can now do so much quicker. Amazon is also the owner of the American grocery chain, Whole Foods, which means they can easily open a PillPack pharmacy in each store location.
The big question is: how will Amazon Pharmacy differ from existing pharmaceutical companies?
#1 They already have a loyal customer base
Amazon’s current market value is $1,887 trillion and with current estimates of active customers sitting around the 310 million mark, they’re surely doing something right. Amazon also states that their aim is to help its customers to ‘discover anything they want to buy online.’ Its foray into the world of pharmaceuticals makes sense.
Amazon customers also tend to be fiercely loyal. They have over 100 million active Prime members which indicates that their business model is working. They don’t need to waste cash on recruiting customer research agencies to find out what online pharmacy customers want. They can simply reach out to their existing customers for honest feedback and interaction.
#2 Their delivery network is second to none
Looking at only the US for a moment, just under 78 million Americans live in an area which is covered by same-day delivery under Amazon Prime. 78 million! This is fantastic news for people who are looking for the speedy delivery of their medicine. Plus, this allows Amazon to completely remove the middleman from the pharmaceutical supply chain.
Amazon can ship drugs directly to those who require them. People will no longer need to attend a pharmacy or to pick up their prescription from a drop-off point. As a result, Amazon has a huge advantage over other pharmacy businesses, and has a head start in the online pharmacy market as a whole.
#3 They have the ability to offer discount drug prices
One thing that sets Amazon apart from other online retailers is the ability to offer cheaper pricing – which it has managed to do since the day it started. They are well known, for example, for destroying the market for expensive textbooks and making them more affordable for college students. Disrupting drug pricing won’t be difficult for them.
Due to the size of Amazon, when it comes to negotiating prices with drug manufacturers and health insurance companies, it has the upper hand. In turn, Amazon can use this to its advantage when offering discounted prices on brand-name and generic medications.
#4 Offering a superior customer experience
Amazon is already well known as offering a superior customer experience, and this will really play to its advantage when it comes to the pharmaceutical market – especially in the United States.
The pharmaceutical market is becoming increasingly sophisticated as patients are starting to view themselves as healthcare consumers rather than patients. They want to feel part of the healthcare brand. Amazon already has a huge amount of technology at its fingertips that can help it to achieve this, including offering virtual care through Amazon Care clinics and home delivery of medication through PillPack.
#5 A holistic approach to healthcare
In America, the healthcare system is very disjointed with many people having to get their drugs and care from different companies. This is where Amazon definitely has an advantage, as it can create a one-stop shop for all patients’ needs.
Amazon will work around the clock to ensure it has the team in place, as well as the technology to be able to cater for everything – from diagnostics to recovery. PillPack, for example, allows them to automate medication for customers, while Alexa can draw on AI to help with chronic disease management.
#6 Alexa
Since we’re on the topic of Alexa, Amazon’s voice assistant, “she” is going to be hugely influential in their bid to disrupt the pharmacy market. Once Alexa has HIPAA compliance (which Amazon is working towards), the customer will be able to request or buy prescription refills.
Amazon is going to play a huge role in the future of the pharmacy business, especially as they’ll encourage customers to start shopping around for better-priced prescriptions. They’ll also appeal to customers with their next-day and even same-day delivery options.
No matter what your feelings are regarding Amazon entering the pharmacy market, if you’re in the pharmaceutical industry, you need to take the right measures. Make sure that your branding is on point and that your website is clear, informative and easy to navigate. Plus, ensure you’re clearly communicating your unique selling points to your customers. These are things that the team at Zool can help you with.
