Originally published on Jan 9, 2018.
Companies across the United States have been on edge over the last couple years as Amazon continues to win the hearts and wallets of consumers. Amazon recently obtained wholesale drug licensing which has fueled rampant rumors and sent ripples of fear across the pharmaceutical industry. Throughout the supply chain, companies are either ignoring the elephant in the room or are starting to implement drastic changes to their business models and operations such as building delivery competency (Target acquires Shipt, Walgreens partners with FedEx).
So why is HealthWarehouse.com the perfect acquisition for Amazon? Because HealthWarehouse fits perfectly with Amazon’s current consumer-centric Prime program and can build to be a comprehensive platform to launch other initiatives. Let’s take a look!
Strategy Alignment – “Prime Prescriptions”
Amazon focuses on cash sales to consumers – it is the one-stop shop for everything any consumer and, more recently, every business needs. A key to their rampant growth is Amazon Prime, a subscription service started in 2005. Over 13 years, Amazon has built out a bevy of perks including two-day shipping, Prime Music, Prime Video, Prime Reading and Prime Pantry. Each service was built and designed to build consumer loyalty.
Currently able to ship into all 50 states and D.C, HealthWarehouse could be the perfect opportunity to scale “Prime Prescriptions” (my idea!). If the model is made available to Amazon’s 58 million members with this turnkey operation, and countless others who might share their Prime membership (myself included…), it will result in immediate and substantial growth with the division. This will result in increased loyalty and growth in top-line revenue. VIPPS Accreditation through the NABP concretes their legitimacy and confirms their compliant operations – relatively safer than building the competency in-house.
HealthWarehouse is also looking toward the future as it further invests in new equipment and establishes operational efficiencies. The company recently invested in a $1M robotic worker which may reduce the cost to fill a prescription by 40%. We reported in September 2017 on how there are rumors that Amazon is headhunting in the pharmacy automation space: read here.
Last, but not least, 20% of HealthWarehouse’s current $15M revenue consists of OTC volume to consumers. Additionally, the company has a current Seller’s account on Amazon with 94% Positive ratings. Their OTC volume would complement Amazon’s growing dominance in the space.
The Perfect Vehicle for Future Initiatives
As Amazon continues on their impressive path, HealthWarehouse could become the perfect platform for other initiatives in the pharmaceutical industry. With their committed loyalty from consumers, Amazon can become the end-all be-all force. For example, specialty distribution relies on winning the patient for the long-term while having the volume to be able to accept insurance and negotiate with PBMs. Other initiatives could include private-labeling / virtual manufacturing to reduce costs and increase profits.
In closing, Amazon should look to make move before other players jump into the online cash pharmacy space – it just makes too much sense!