Amazon lowballs CVS and Walgreens on OTC med prices
A comparison of private label over-the-counter (OTC) remedies sold by CVS and Walgreens with those from Amazon.com finds that the brick and mortar pharmacy giants are charging substantially more than the e-tailer on like items.
A new report by Jefferies Group found that CVS’s prices were 20 percent higher than Amazon’s and that Walgreens sold its private labels at a 22 percent premium to the e-tail giant, which recently announced that it was acquiring the online pharmacy PillPack. The acquisition promises to put Amazon in direct competition with CVS and Walgreens for share of the prescription medicine market. PillPack, which delivers pre-sorted doses of prescribed medicines in envelopes, is licensed to fill prescriptions in all 50 states.
It’s part of the Amazon playbook to target a category and undercut the competition on prices to gain share. By offering lower prices on OTC medications, Amazon appears to be conditioning consumers, particularly Prime members, to look its way for health needs. The e-tailer, which launched its Basic Care line last August with 35 items, has since expanded the selection to 65, according to a Bloomberg report of the Jefferies Group’s research. Perrigo, the largest manufacturer of private label OTC meds, is behind the Amazon line.
Eight-four percent of Walgreens’ private label items were more expensive than the same drugs sold by Amazon, and the same was true for 72 percent of CVS’s own-brands, according to multiple reports.
CNBC found that a Well at Walgreens bottle containing 500 tablets of 200-milligram ibuprofen cost $17.99 on the pharmacy chain’s site. The same item and size bottle of the CVS private label cost $15.99, while the cost of the Amazon Basic Care SKU was $8.05.
- Amazon already undercutting prices on over-the-counter pills – Bloomberg/The Star
- Amazon undercuts drugstores on prices for most over-the-counter drugs – CNBC
- Will Amazon’s PillPack acquisition disrupt the retail pharmacy business? – RetailWire
DISCUSSION QUESTIONS: Do you think offering lower prices on over-the-counter medicines will set Amazon up for its push into the prescription drug market? Do you expect CVS and Walgreens to counter Amazon by cutting their own prices, or will they respond in some other way?