CVS looks to one-up Walgreens, other rivals with nationwide Rx deliveries

Discussion
Photo: Getty Images
Jun 20, 2018
George Anderson

CVS Pharmacy, the retail division of CVS Health, announced yesterday that it is now offering same- and next-day deliveries of prescription drugs nationwide. Customers can request deliveries by ordering them through the drugstore chain’s mobile app or by picking up the phone and calling their local pharmacy.

The fee for next- or two-day deliveries from CVS is $4.99. The service is available across the U.S.

Same-day deliveries, which are limited to more densely populated markets such Boston, Miami, New York, Philadelphia, San Francisco and Washington, D.C., include a fee of $8.99. For same-day deliveries, orders placed by 4:00 pm local time are delivered by 8:00 pm Monday through Friday. Orders received by 11:00 am Saturday and Sunday will be delivered by 4:00 pm.  

Some prescriptions including controlled substances, Medicare Part B items and medicines that require refrigeration are not included in the CVS delivery options.

Kevin Hourican, president, CVS Pharmacy, said the expanded delivery service is part of the drugstore chain’s “promise to make staying healthy simpler for every patient, regardless of where they live …. The rollout of delivery from nearly all of our 9,800 retail pharmacy locations nationwide represents another step forward for us in delivering innovative omnichannel solutions that help people on their path to better health.”

USA Today reports that CVS is playing catch-up in many respects when it comes to delivering meds. Seventy-two percent of independent community pharmacies offer deliveries and 76 percent of those offer the service for free. Larger rivals including Kroger and Walgreens also offer deliveries. Kroger offers same- and next-day deliveries, but not nationwide. Walgreens charges $19.95 for one-day deliveries.

A CNBC report suggests that CVS is introducing deliveries of prescription drugs in a preemptive move intended to blunt an entry by Amazon.com into the market.

Reports surfaced about a year ago that Amazon was seeking to hire an executive to lead its entry into the pharmacy business. The $400 billion category was seen as another that Amazon could potentially disrupt as it has done elsewhere. The top 15 pharmacies in the U.S., which include CVS and Walgreens, represent about 75 percent of total prescription drug sales.

DISCUSSION QUESTIONS: What will the CVS same- and next-day delivery mean for competitive balance within the retail pharmacy business? Do you expect Walgreens and other large sellers of prescription medicines to match or beat the CVS offer? How likely is Amazon to enter the retail pharmacy business?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"They are setting a bar that all will follow but, nonetheless, being first to market will not hurt!"
"This will undoubtedly strengthen CVS’s competitive position and reinforces the chain’s persona as a healthcare provider..."
"CVS is playing catch up, so I doubt this will have much impact on the competitive balance within the retail pharmacy business."

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12 Comments on "CVS looks to one-up Walgreens, other rivals with nationwide Rx deliveries"


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Max Goldberg
Guest

CVS is playing catch up, so I doubt this will have much impact on the competitive balance within the retail pharmacy business. And with Amazon poised to enter the drug business, delivery is a must have for any pharmacy that wants to stay competitive. The $4.99 price point is also a deterrent, since Amazon will probably offer free two-day delivery for Prime members.

Neil Saunders
BrainTrust

This is positive for consumers, but it has the potential to erode footfall to CVS stores thereby affecting sales of other products. Given that CVS’s retail business is already under pressure, this is not necessarily a good thing. However, given the likely future disruption in pharmacy, CVS has little choice but to grasp the nettle of home delivery.

I expect Walgreens to eventually match CVS on delivery options and price. It does offer prescription delivery at present, but its $19.95 next-day service is far more expensive!

Dr. Stephen Needel
BrainTrust

My first real job was working at a pharmacy — everyone made deliveries and they were free. When CVS came to our town, this was the big point of differentiation — CVS was low price, we were all high service. Now CVS is giving away the price advantage to Walgreens. Might it work against Amazon? You’d have to be quite a gambler to believe Amazon can create the infrastructure for drugs — are there that many pharmacists out there who can work in each city? Remember, the pharmacist (or her assistants) have to have the written prescription and personally identify the recipient in many states.

Lee Peterson
BrainTrust

This is great, especially for the customers that really need their prescriptions but have a hard time getting out there, or even for daily needs like moms with sick kids. For sure they are setting a bar that all will follow but, nonetheless, being first to market will not hurt!

My only complaint is the old, “what took you so long?” But I could say that about over 100 retailers today. Good move, keep going.

Ray Riley
BrainTrust

This seems like a feeble attempt to catch up. Are they really planning to build their own fulfillment and infrastructure network? Why not partner with a four-letter company in need of good press with hundreds of thousands of cars on the road? Amazon already has this infrastructure so they are already a step ahead.

Adrian Weidmann
BrainTrust

Amazon is preparing to attack this market with their typical fervor. This announcement by CVS is strategically preemptive. The online sale and delivery of prescription drugs is simply far too lucrative. I’m certain Amazon is lobbying at all levels to offer global market pricing for drugs while the pharmaceutical and insurance companies are blocking every attempt. In the end, Amazon will win but it’ll be a fierce battle. Simply delivering prescriptions is just the tip of the iceberg and CVS’s announcement is the starting gun for this race.

Roy White
BrainTrust

This will undoubtedly strengthen CVS’s competitive position and reinforces the chain’s persona as a healthcare provider offering a very broad menu of services. Like supermarket checkouts, prescription lines at the in-store pharmacy counter are a pain and, I’m guessing, even with the fee it will be a popular benefit. It also appears CVS can afford it: In the first fiscal quarter, the corporation’s retail segment generated a 13 percent increment in operating profits on a 6 percent gain in sales. Moreover, this segment operates with pretty healthy gross margins of 29 percent. As for the issue of not getting that valuable prescription customer into the store, the front end now only accounts for less than a quarter of store sales and about 12 percent of total corporate sales. If a drug store retailer wants to set itself up to counter Amazon, this is one way to do it.

Harley Feldman
BrainTrust

Same-day or next-day delivery by CVS will make it easier for current and potential CVS customers to purchase their pharmaceuticals from CVS. Since people tend to buy their medication from the same pharmacy since they can keep their prescriptions there, this move could have a major impact on the pharmacy market. I expect Walgreens and other pharmaceutical suppliers will respond quickly as they need to offer a similar service in order to not lose their customers who fill the prescriptions at Walgreens, etc. Amazon will try the retail pharmacy market, but they will be challenged with the fact that there are so many Walgreens and CVS stores close to the consumer that can provide products and services instantly rather than delayed shipments, and the retail store has their prescriptions already recorded. Amazon might be slowly successful, but they will be facing strong head winds from the local retail pharmacies.

Richard J. George, Ph.D.
BrainTrust

No doubt this move was prompted by the anticipated move of Amazon into the space. While CVS’s delivery fees are less than Walgreens, the no-fee delivery at independent pharmacies and the expected Amazon Prime option for prescription medicine delivery does not provide for a long term advantage. Having said this, the trend will be toward universal home delivery, with few or no fees attached.

This move will be welcomed by the heaviest users of prescription medications, namely senior citizens. However, it may have a deleterious impact on CVS store visits and store basket sizes. CVS and others will need to figure out how to replace or replicate the store visits with the customary add-on non-scripts purchases that typically take place in-store. A whole new ballgame (and playing field) is emerging.

Sterling Hawkins
BrainTrust

Retail is becoming a brand new game and I agree that CVS didn’t have much of a choice to remain competitive. Having a delivery solution will be necessary and ultimately will increase customer loyalty and sales (even though it may sacrifice footfalls). It’s a move to catch up, but a good move nonetheless.

Shep Hyken
BrainTrust

This is simple. If companies like CVS don’t offer delivery and similar services that focus on the convenience of the customer, they will lose to those that do. This is expected. Great customer service is expected. It’s no longer an option.

And, anyone that isn’t thinking Amazon (or any other forward-thinking competitor) won’t enter into the retail pharmacy — or any other type of business — will be very surprised. Nobody is safe from competition.

Lucretia Garcia
Guest
4 months 24 days ago

Everything old is new again…almost!

wpDiscuz
Braintrust
"They are setting a bar that all will follow but, nonetheless, being first to market will not hurt!"
"This will undoubtedly strengthen CVS’s competitive position and reinforces the chain’s persona as a healthcare provider..."
"CVS is playing catch up, so I doubt this will have much impact on the competitive balance within the retail pharmacy business."

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