Amazon.com recently launched an online pharmacy that allows customers to order medications and prescription refills and have them delivered to their homes within days. The benefits of the new service, available in the US, Canada, Australia, New Zealand and the UK, are immediately felt.
The big chains rely on their pharmacies to reach shoppers who can get snacks, shampoo and groceries on the go. On Tuesday, the number of U.S. drugstores with online pharmacies fell to the lowest level in more than a decade.
Amazon.com has made some headway, however, and its online stores are infinitely larger, with millions of loyal shoppers already shopping at it. The ability to deliver prescriptions and other goods has been touted as a way to expand online services as the COVID 19 pandemic is driving more consumers to stay at home. But the news is a sign of the threat of competition that is likely to disrupt the retail channel, analysts at Citi Research said in a note.
Amazon has a history of upheaval: After launching as an online bookstore in 1995, it pushed other booksellers to sell online. Those who couldn’t keep up went out of business, like the Borders bookstore chain, which disappeared in 2011.
Supermarkets’ share has soared, with many taking on Amazon by offering home deliveries and grocery collection. Amazon has also become a threat to trucking companies, as it delivers more than half of its own packages. Deliveries bearing the Amazon logo are now as commonplace as the sight of a UPS truck.
The company says its online pharmacy in the US will offer a wide range of commonly prescribed medicines, including medications that need to be kept cool but won’t be delivered. Shoppers must set up a profile on the Amazon website and have a prescription sent there by their doctor.
Most insurance policies are accepted, according to Amazon, and Prime members who do not have insurance can also buy generic or branded medicines from Amazon at a discount. But those who get discounts have to sign up for insurance.
Amazon has been keeping an eye on the health industry for some time and its move would affect smaller drugstores that have had trouble striking deals with big drugstores with insurers to send patients to their stores to prescribe them, he said. That could be a problem for plans that make it harder for the uninsured or people with high deductibles to pay for their insurance before it starts, said Michael Pfeiffer, an analyst who advises Walgreens at Edward Jones.
Amazon said PillPack will continue to focus on shipping medicines to people with chronic diseases. Two years ago, it spent $750 million buying an online pharmacy called Pillpack, which packages medications for when and on what days they must be taken.
CVS and Walgreens, which have opened thousands of drugstores nationwide to get closer to customers, have tried to adapt. They also have delivery services that take a day or two, but not as long as Amazon’s PillPack.
Walgreens CEO Stefano Pessina told analysts in July that the company had monitored the COVID-19 pandemic earlier this year. CVS and Walgreens did not respond Tuesday to requests for comment on the impact of Amazon’s online drugstore delivery service on their business.
Amazon shares rose less than 1%, and Rite Aid Corp shares slumped more than 14%. Shares in both companies lost 7% and more than 8% respectively, while the broader index slipped.