Books, baseballs, . . . and now benzonatate. Amazon delivers (nearly) everything. The retail giant’s new online pharmacy allows customers to order medication—and have it delivered quickly to their doorsteps. And that new service has experts wondering how the online powerhouse will affect brick-and-mortar pharmacies big and small.
Amazon has conquered the book buying and household goods delivery industries. The impact of its recent entry into the drug world is rippling through the pharmacy sector. Stocks of CVS Health Corporation, Walgreens, and Rite Aid all tumbled at the news.
Here’s why: Drugstores rely on pharmacies for a steady flow of customers. That’s because those same shoppers often also grab snacks and sundries such as cosmetics or gift cards while they wait. With no one buying candy, magazines, hand soap, and so on at the checkout counter, business will suffer.
To cope, several pharmacy chains added or improved online services during the pandemic. They began offering prescription and goods deliveries.
CVS and Walgreens currently offer same-day delivery in many markets. Walgreens has a partnership with FedEx for one-to-two-day service. Both companies now help customers monitor chronic conditions like diabetes—with services that can’t be delivered by competitors such as Amazon.
Even so, Amazon’s online reach is much, much longer. The brand already has millions of loyal shoppers. Those consumers buy toys, TVs, and just about everything else with one click.
The company’s online pharmacy will offer commonly prescribed medications, including refrigerated medications like insulin. It will not offer drugs with a high abuse risk.
Health economist Craig Garthwaite sees several reasons why Amazon may become an attractive option for patients looking to fill prescriptions.
First, the retailer is known and used by many people already. It may also be able to make price shopping for prescriptions more pleasant and competitive, says Garthwaite. Further, Amazon’s prescription business could appeal to the uninsured or those who pay high out-of-pocket charges.
Analysts at Citi Research say, “[Amazon’s pharmacy] news represents a disruption to the system and competitive threat.”
Analyst John Boylan believes Amazon’s latest venture will mostly affect smaller drugstores. After all, mom-and-pops usually don’t have the purchasing power of national chains. They also can’t strike deals with insurers to funnel prescriptions and customers to them.
CVS spokesman T.J. Crawford says the pharmacy battle is no surprise. But he insists CVS Health has become “so much more” than a corner drugstore. Whether “more” is enough to win this drug war remains to be seen.