Amazon’s expansion into healthcare comes at a time when the e-commerce giant is facing one of the most difficult times in its history. Last year, the company witnessed a slowdown in its core e-commerce business and also began a major cost-cutting review, signaling that the business is preparing for a further slowdown.
Experts told Modern Retail that the new subscription drug offering shows an acknowledgment of Amazon’s evolving customer base. One expert told Modern Retail that Amazon hopes to grow its wallet share by adding this new benefit for Prime members. More broadly, Amazon’s offering represents a bigger change to bring down drug prices ahead of the introduction of the 2025 Inflation Control Act. Specification.
“I think part of it is recognizing what’s happening demographically in this country. We’re all getting older and sicker. If you’re Amazon and If we want to remain dominant for the next 20 years, we can no longer afford to ignore healthcare.
“There is pressure on the drug and drug industry to bring down drug prices. There is pressure to bring down the prices of consumer medicines,” said Kate McCarthy, vice president of Gartner’s Healthcare and Life Sciences industry research team.
Amazon first entered the prescription space in 2018 with the acquisition of online pharmacy PillPack. Amazon finally launched his own pharmacy service in 2020, leveraging the ease of use of the Prime shipping service to attract customers accustomed to visiting their local pharmacy. A customer uses his Amazon service to manage prescriptions and choose a payment method. Amazon has also made its prescription drug ordering and fulfillment service available on mobile devices.
“they [Amazon] There just wasn’t as much pharmacy business as they would have liked. We may be able to use the service,” McCarthy said.
Meanwhile, Farr said the launch of RxPass and Amazon’s efforts in the broader pharmacy space should all be seen as part of an integrated strategy to become “the digital front door to healthcare.” I was.
Over the years, Amazon has doubled down on its forays into healthcare in other ways. bottom. In 2019, the company launched Amazon Care, a telemedicine and primary care service. Initially, it was only for Amazon employees. But Amazon tried to offer it to other corporate customers. Ultimately, Amazon closed the Care Services division at the end of 2022 as it was not a sustainable, long-term solution for its enterprise customers.
Separately, last year the company also launched Amazon Clinic, a message-based telemedicine service that offers remote treatment for allergies and heartburn.
“I think the reason pharmacies were the first space retailers entered, whether they were CVS, Rite Aid, or just about any other retailer, is because it’s a supply chain business. Retailers already manage the supply chain as part of their operations, which is the closest thing to their business, and if they feel they have a sense of the pharmacy business, And once we understand how to handle patient data securely, we move directly to treatment and so on,” McCarthy explains.
Farr added that part of the reason Amazon entered the healthcare space was to meet the changing needs of shoppers, especially millennials who use Prime services. We are transitioning into our 30s and 40s and taking more and more medications, so for me this is about recognizing the needs of our core customer base and adapting to them,” Farr added. rice field.
McCarthy said Amazon’s new program will help transform the economy in prescription drug delivery at a time when the market is flooded with new products from other competitors ahead of the 2025 Inflation Reduction Act. It added that it was a “substantial effort.”
For example, McCarthy pointed out that billionaire Mark Cuban’s latest effort to disrupt the pharmaceutical industry through his Cost Plus Drug Company could compete with Amazon’s latest offering. . In October 2021, Cost Plus Drug Company launched a new pharmacy benefits management business with nearly 40 large public and private employer nonprofits to manage prescription drug benefits . Separately, Mark Cuban Cost Plus Drug Company announced a partnership with RxPreferred Benefits in January. It focuses on improving access to healthcare and reducing prescription drug spending.
Challenges Amazon will have to deal with going forward include whether the company wants to expand into more expensive drugs for rare diseases. how to deal with
“Is it cheaper to use insurance or not? I might see you fight back [Amazon]’ pointed out Farr.
Amazon’s new service is another way to get Prime members to spend more money. Amazon launched his first Prime subscription in February 2005 for $79 a year and offered unlimited his two-day delivery. But today, the Prime membership program has evolved beyond just a shopping and shipping program. The company recently changed its strategy, building out a series of softer features and benefits related to shaping the media consumption habits of its members.
Ultimately, McCarthy said the new service is Amazon’s way of getting existing customers to spend more money on the e-commerce giant. “They certainly want new customers, but mostly they want their loyal customer base to spend more money,” she said.
