Amazon Pharmacy Won’t Be a Disrupter Now, But It Could Be Later

It won’t change the game of online medicine today, but the experience could help improve it tomorrow

Dylan Hughes
Nov 26, 2020 · 3 min read
Photo by HopeMedia Stock Photography of Flickr

Amazon has mastered the art of delivering well-priced products to customers at a fast pace, making them the favorite retailer of people of all economic levels. Rich, poor, or in between, it is hard to deny a cheap and convenient service without having to sacrifice quality.

Thanks to this level of service, Amazon has amassed an insane amount of customers and is currently worth $1.56 trillion. This massive valuation isn’t just from online retail, though. The company has entered many different markets over the years, including entertainment, grocery stores, and cloud computing.

In 2018, Amazon also entered the pharmacy game, acquiring PillPack for $1 billion.

PillPack is an online pharmacy that fills prescriptions and delivers them to your door. As recently announced, Amazon will now be adding to this service through Amazon Pharmacy.

PillPack is not a unique business. Companies like Hims can prescribe medicine online and deliver those drugs to your doorstep. GoodRx offers discounted medicine just as Amazon is with Amazon Pharmacy.

The one advantage Amazon has over these competitors is its huge customer base and overall reach.

Amazon shoppers are accessing the website or app on a daily or weekly basis, adding things to their cart and making purchases. The really committed customers are Prime members, paying $12.99 a month for free two-day shipping and access to certain deals. There are upwards of 126 million Prime members.

Prime members will benefit more than anyone with the Amazon Pharmacy: members will receive up to 80% off generic drugs and 40% off name-brand medications as well as a savings card to use at up to 50,000 pharmacies. They will also receive the typical free two-day shipping of Prime purchases.

One of the issues with packing all these benefits into Prime membership is that it excludes the people that need cheap medication the most.

While a Prime membership is just a drop in the bucket for middle- and upper-class U.S. citizens, the uninsured and underinsured would likely have a tougher time putting up $13 a month for the service.

Non-Prime members can still access the Amazon Pharmacy, they just won’t receive the same discounts or quick delivery (free five-day delivery instead of two). Amazon will accept most health insurance or paying without it.

The telehealth industry is coming along and perhaps Amazon’s increased effort in it will help it grow that much quicker. For many, however, being able to pick a prescription up on the same day of seeing the doctor is the preference.

Unless Amazon is able to offer such a drastic difference in price than what GoodRx can get you at a pharmacy counter or promise same-day delivery of all medications, they won’t gobble up market share like they would in most industries.

The retail goliath’s entry into this space is ultimately a good thing as it should help continue driving down drug prices. Over time, as Amazon’s pharmacy gains experience, perhaps it will kill off other telehealth competition and brick-and-mortar as we know it.

For the foreseeable future, however, your local CVS, Walgreens, or Rite Aid will still most likely be the preferred option of most Americans.

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Dylan Hughes

Written by

Writing on business, electric vehicles, crypto, and more. Read my book: From One Young Soul to Another. My free newsletter: https://dylanhughes.substack.com.

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +800K followers.

Dylan Hughes

Written by

Writing on business, electric vehicles, crypto, and more. Read my book: From One Young Soul to Another. My free newsletter: https://dylanhughes.substack.com.

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +800K followers.

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