As Amazon looms, CVS rolls out next-day Rx deliveries nationwide

Discussion
Photo: CVS Health
Nov 08, 2017
George Anderson

CVS Pharmacy plans to begin offering free, next-day delivery of prescription drugs nationwide beginning early next year as well as same-day service in select cities beginning next month. The move is seen by many as a way for CVS to head off a rumored entry by Amazon.com into the prescription drug business.

“Our goal is to meet the needs of all of our customers wherever, however and whenever they want,” said Helena Foulkes, president, CVS Pharmacy, in a statement. “Providing same and next-day options for delivery of medications is just another way we can help our patients get and stay healthy.”

CVS will launch its same-day service in Manhattan on Dec. 4 with plans to roll out in Boston, Miami, Philadelphia, San Francisco and Washington, DC early in 2018. The drugstore chain will deliver prescription medications as well as a curated selection of over-the-counter remedies to customers in “secure tamper-proof packaging” to assure customer privacy.

“People living and working in Manhattan have busy lives and there are days when they don’t even have time to run down the street to their pharmacy to pick up a prescription,” said Ms. Foulkes. “Same-day prescription delivery gives customers the easy option of having the pharmacy they trust deliver right to their front door at no cost.”

The chain also announced that it continues to expand its relationship with Instacart, which offers personal shopping of non-prescription products from 2,600 of its 9,700 stores. Plans call for the service to be in place to reach half of all U.S. households by the end of 2017.

Shoppers also have the option to purchase products online and pick them up at participating locations across the country within an hour of delivery using the CVS Curbside app.

The St. Louis Post-Dispatch recently reported that Amazon has received approval for wholesale pharmacy licenses in nearly a dozen states. Amazon moving into that business either through acquisition or from the ground up would put the e-tailer in direct competition with CVS’s Caremark pharmacy benefit manager business.

DISCUSSION QUESTIONS: What impact will free next-day and same-day delivery of prescription drugs have on CVS’s pharmacy and front end business? What will it mean for rival pharmacies and as a defense against Amazon?

Braintrust
"This is the right move by CVS. However, there will be many aspects to closely monitor."
"What’s old is new again. At 17, I was a driver for the local drugstore and we did FREE same-day deliveries typically within an hour."
"I think CVS is smart to recognize Amazon as an upcoming competitor and they are doing many things right..."

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14 Comments on "As Amazon looms, CVS rolls out next-day Rx deliveries nationwide"

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Ken Lonyai
BrainTrust

What’s old is new again. At 17, I was a driver for the local drugstore and we did FREE same-day deliveries typically within an hour. It’s how business was conducted even decades before. Corporatization of the industry created the arrogance that scale and cost-cutting would trump old-fashioned quality customer service and true customer concern. So if Amazon did awaken the C-suite, ha-ha(!) what a nice comeuppance.

For those independents still out there — all I know of have offered free one-hour or less delivery, I imagine they are unsure of what the big deal is about.

Zel Bianco
BrainTrust
CVS is a trusted name in most of the country and this is a natural extension of the service you get when going to the pharmacy in-store. Is it needed when the store is literally a block or two away? Yes, it’s one less thing you need to do. They already remind you when it’s time to re-order medications, and now they deliver them to you. As a defense against Amazon, who knows? I am glad to see that CVS is jumping in with both feet as I think it would be very bad for our industry if Amazon takes… Read more »
Shep Hyken
BrainTrust

We are in a “Convenience Revolution.” Companies are competing against each other using customer service, and specifically convenience, as a way to differentiate or at least level the playing field. CVS will have to act fast to earn some loyalty from customers. When the customer experiences a hassle-free, easy and convenient experience from CVS they will most likely return for more of the same.

Art Suriano
BrainTrust
I think this is an excellent move for CVS. Today it’s all about instant gratification; we want it and we want it now. So why not include something important like prescription drugs? Years ago, when we all did business with the local pharmacy, we had our prescription drugs delivered and it was a tremendous convenience. Today most of those local pharmacies are gone, but it will be nice to have that service again. I think CVS is smart to recognize Amazon as an upcoming competitor and they are doing many things right, most recently attempting to purchase Aetna, which if… Read more »
Lee Peterson
BrainTrust

This could be huge. In this case, you’d really have to watch out for porch pirates but, otherwise, if they can execute, it’s a massive benefit for those who probably need the scripts the most. I don’t think anyone would say that going to the store to pick up scripts is convenient, especially if someone’s really sick. Good move.

Seth Nagle
BrainTrust
CVS is taking the same approach to Amazon as H-E-B takes with Walmart regarding expansion and innovation and it looks to be paying off. As someone who gets hurt a lot it’s never fun waiting in a line at a pharmacy trying to balance on crutches. Ordering these items online and having them delivered would be a big win. The one catch to this whole home delivery process will be the user experience. From setting up the shipment to signing for the package. If this can be done seamlessly then CVS should be in a good position if Amazon enters… Read more »
Shawn Harris
BrainTrust

This is the right move by CVS. However, there will be many aspects to closely monitor, such as impacts to in-store rub-off revenue and margin drain from increased labor usage to deliver this service, balancing productivity, safety and customer service. I can see delivery drivers being held up by customers who appreciate the visit, in addition to their delivery, and just want to talk. My sister is a pharmacist, I hear about it all of the time. Again, it’s the right move by CVS.

Roy White
BrainTrust
Free delivery is really nothing new; it just became disused due to cost. Now, however, with Amazon looming on the horizon of the retail prescription drug market, this move makes tremendous sense. CVS, like all drug stores, already has proactive programs that reach out to patients relative to prescriptions. Overall, it’s as if CVS has come alive in recent weeks. The negotiations with Aetna are continuing and may be finalized and announced in December. The expansion of the Instacart relationship is also a plus, even though the front-end of CVS’s stores is a really minor portion of the overall corporate… Read more »
W. Frank Dell II
BrainTrust
Some years ago every pharmacy offered home delivery — at that time the pharmacy accounting for the majority of retail space. Medicine can be broken down as either acute or maintenance. Acute is something you need right now, be it a pain killer or to start the curing process. Maintenance is what a person takes every day. Acute requires immediate delivery while maintenance can be next-day. Just like grocery home delivery, unless you have minimum logistic costs, delivery can exceed gross margin. The negative for home delivery is the lost sales on impulse purchases or regular purchases (toothpaste, razor blades)… Read more »
Richard Layman
Guest
1 month 3 days ago

Not having any prescriptions myself, I am not always up on the latest in drug store marketing and systems. When this announcement was made, I thought to check in on grocery store delivery and whether or not the chains that have drug stores include prescriptions in their delivery schemes. I only checked Safeway’s website, but they do include prescriptions in their delivery program. Obviously that’s something that supermarkets need to better market.

Phil Rubin
BrainTrust
1 month 3 days ago

Time is the new loyalty currency and this move by CVS, clearly a nod to Amazon, demonstrates that CVS is smart enough to know, at least in part, how to compete in the future. Most retailers would be well served to fully understand what makes Amazon’s customers so loyal, whether they compete directly against Amazon or not. Hint: it’s not about price, it’s about how Amazon leverages data to be relevant and deliver a superior customer experience, which includes recognizing that time is increasingly more valuable than money, for an increasing majority of customers.

Craig Sundstrom
Guest

I’m a little curious about the logistics of this. Cal now requires signatures, I believe, for all prescriptions, and I wonder how that will be handled (without the obvious requirement of having someone at home all the time). And with “opioid epidemic” the buzzword-du-jour, I wonder at what point convenience will collide with greater safety. Other than that, though, I think CVS has, if not raised the stakes, anted up.

Ricardo Belmar
BrainTrust
CVS is wisely thinking about how to improve their customer experience and loyalty by evaluating their service from the customer’s perspective — and for many customers it’s all about convenience. Taking a page from the Amazon playbook, CVS is hoping to build loyalty from delivery services in the hopes that drives future foot traffic into the store. It will be interesting to see if this has an impact on basket size for online orders and if CVS makes it easier to add extra items to be delivered with prescriptions. That would truly mimic an Amazon model and possibly help stave… Read more »
Javier Cazares
Guest

If CVS executes this plan correctly and delivers a seamless experience then it can compete with what Amazon can do. If on top of this CVS adds value by personalizing the experience based on the customer health information they can gather and complement the in-pharmacy experience then they will be ahead of Amazon.

wpDiscuz
Braintrust
"This is the right move by CVS. However, there will be many aspects to closely monitor."
"What’s old is new again. At 17, I was a driver for the local drugstore and we did FREE same-day deliveries typically within an hour."
"I think CVS is smart to recognize Amazon as an upcoming competitor and they are doing many things right..."

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