Amazon Pharmacy Article

Amazon’s Next Trillion Dollar Opportunity

A Push into Wellness

Office

  • United States

Services

Author

  • Eric Heller

Amazon’s announcement this week that they’ve launched a long-expected direct-to-home prescription drug delivery program, Amazon Pharmacy, came as no surprise to many in the industry.

In fact, this is only the latest development in what can be traced back several years as they’ve pursued the trust and opportunity in the wellness industry. When Amazon purchased Whole Foods, many people thought it was to get access to their physical stores and shopper base, which of course was a factor. But Kantar released some compelling data that year that showed another reason:

Amazon Pharmacy Article Shopper Assessment

The Whole Foods acquisition gave them a platform to break into Wellness both with their own brands and with the existing Whole Foods private label portfolio. It also created a space for the PillPack acquisition which made perfect sense over the long run, incorporating regular, repeating prescription and vitamin purchases under the same roof as Prime and Subscribe and Save.

But Amazon wasn’t done, they also became dissatisfied with the high cost of employee healthcare and rolled out a joint venture, Haven Healthcare, with Chase and Berkshire Hathaway called Haven and then created a B2B marketplace for Hospital supply and restock.

Pill Pack

The net result of this is a carefully crafted healthcare offer to consumers and businesses, built over a series of years. Amazon Pharmacy will take the expertise they’ve built in terms of recommendations and opportunities with customer data and will be able to turn that into a wide-ranging set of offers that benefit consumers and we can assume brands. One can easily imagine that, once the pharmacy knows I am diabetic, why shouldn’t the website or, for that matter, the instore activation of the Whole Foods app, show me healthy or low sugar snacks? While some Americans might perceive this as an invasion of privacy, there are many ways to make helpful offers for what a consumer really wants or would prefer to buy and, as long as no one is prevented from buying product if they want it, we expect most will value the product of shared data.

Some other possibilities might easily come from integrations with Halo or even insurance companies. My Apple Watch tells me know when I am not active enough. Why not have my Halo connect with Alexa, match my schedule with the optimal time for a run, and suggest that? And when it comes to prescriptions, samples of appropriate products for my specific health conditions arrive on my Amazon Day?

Finally, expect to see real disruption in the drugstore industry. This industry is ripe for innovation and has relied for far too long on high-margin purchases from consumers coming to pick up prescriptions. Drugstores will be forced to become more customer-centric, as we are seeing with some CVS Care Hubs. They will need to innovate to survive in the face of this inevitable disruption.

The one thing we can say for sure here: Amazon is just getting started with this sector. There will be far more innovation to come. It is still Day One.

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