Amazon.com Inc (NASDAQ:AMZN) launched its online pharmacy on Tuesday. This is for delivering prescription medications in the United States. This increases competition with drug retailers such as Walgreens, CVS and Walmart (NYSE:WMT).
With the new online store, customers can price-compare as they buy drugs on the company’s website or app. The store is called Amazon Pharmacy.
Buyers can toggle at checkout between their co-pay and a non-insurance option heavily discounted for its loyalty club Prime members.
This concept builds on the web retailer’s 2018 acquisition of PillPack. Amazon said it will remain separate for customers who need pre-sorted doses of multiple drugs.
Amazon has worked to secure more state licenses over the past two years. They were for shipping prescriptions across the U.S. That had been Amazon’s obstacle to its expansion into the drug supply chain according to notes from Jefferies Equity Research.
The company was founded as an online bookseller. But it has eventually disrupted industries including retail, computing and now potentially pharmaceuticals. Amazon has drawn criticism of its size and power from labor groups and lawmakers along the way.
The retailer aimed to bring “customer obsession to an industry that can be inconvenient and confusing.” This was a statement from TJ Parker, PillPack’s CEO and vice president of Amazon Pharmacy,
The company faces entrenched competition from Walgreens Boots Alliance (NASDAQ:WBA) Inc, CVS Health Corp (NYSE:CVS), and Walmart Inc. Moreover, Rite Aid (NYSE:RAD) Corp, Kroger (NYSE:KR) Co and others.
According to market research from J.D. Power, take-up of online ordering of drugs has been low.
Amazon’s discounts on non-insurance purchases apply at more than 50,000 brick-and-mortar pharmacies, should Prime members prefer buying in person . Those run by rivals are also included. The group that administers that benefit is Inside Rx, a subsidiary of Cigna Corp (NYSE:CI)’s Evernorth, Amazon said.
However, still, the pandemic may help bring drug orders online. With people made to stay home to stave off infections of COVID-19, e-commerce has surged this year. Prime members, who are over 150 million globally, may be open to buying medication online now that it’s from Amazon.
Amazon Prime subscribers get up to 80% discount on generic drugs and 40% off brand drugs for payments without insurance. They also get a two-day delivery, the company said.
Currently, Amazon’s online pharmacy is not yet available in Illinois, Minnesota, Louisiana, Kentucky, and Hawaii, a spokeswoman said.