by Jim Lundy

Last week, Amazon put the pharmaceutical industry on notice with the announcement of Amazon Pharmacy, based on its acquisition of PillPack several years ago. This blog discusses some of the implications of Amazon’s moves.

Amazon Pharmacy: It’s About Making Amazon Prime All-Inclusive

Amazon has wanted to be in the pharmaceutical business and the industry’s business model fits their classic distribution approach. However, today many prescriptions are filled face-to-face rather than via mail so there’s still some hiccups in Amazon’s approach. Some CEOs, however, such as the leader of GoodRx have commented on Amazon and said that they are not worried. However, the reality is that many CEOs should be worried.

Amazon and the Rise of Digital Disruption

The importance of this announcement isn’t just about the pharmacy business, it’s about the possibility of many new entrants in multiple markets disrupting existing distribution methodologies. The growth of e-commerce and the ease of distribution means that many industries will be under pressure to change how their products and services get sold and consumed.

What Amazon is doing is leveraging its core capabilities of e-commerce, logistics, and shipping in an attempt to disrupt a traditional industry that is dominated by a few, but still has a large number of independent pharmacies around the US and around the world.

The Amazon marketplace now offers pharmaceuticals, taking advantage of the amazon.com e-commerce consumer funnel to offer a new customer experience that takes on competition in the form of FedEx customer care and others. 

Challenging UPS and FedEx

Amazon is also already becoming one of the largest distributors and vehicles, it is now in a position to challenge FedEx and UPS on overall shipping. In fact, Aragon is predicting that Amazon will enter the direct shipping business by year end 2023.

Preparing Now to Be Fully Digital

Enterprises need to make plans to be ready for going fully digital and not wait until 2025. This means not just strategic planning but tactical planning on how to offer goods and services or directly improve the overall customer experience. In the market it has been proven that customers will always go for the easier experience rather than the more complicated one.

Examine Customer Journeys

No one likes a challenging purchasing process. That is why it’s incumbent on enterprises to review all the steps that customers go through to buy a product or service, and to work on streamlining them so that others cannot come into their market and disrupt them.

This is an area where Aragon excels, and if you are not a client you should have a call with us to discuss how you could streamline some of your current customer journey analysis.

Bottom Line

Amazon has become a disruptor of traditional industries. And we feel they are just getting started. However, it is not just Amazon, but also others such as Carvana, which is disrupting the car distribution business. Time is of the essence as e-commerce spend is expected to double by 2025. The beginning, middle, and end of the customer journey are all areas that could be disrupted—don’t wait to start planning. Talk to Aragon about how you can become the disruptor and not the disrupted.