Will Amazon, CVS or Walgreens win the speedy Rx delivery race?

Discussion
Source: CVS Pharmacy
Apr 05, 2019
George Anderson

Who will win the race for door-delivered consumer purchases of prescription drugs?

Last June, CVS declared itself as the first national drugstore chain to offer next- and two-day delivery of prescription drugs from all its stores. At the time, the pharmacy chain said that 80 percent of orders were delivered next-day with the balance delivered within a two-day window.

That same month, Amazon.com announced the acquisition of the online pharmacy service, PillPack, which delivers pre-sorted doses of prescribed medicines in envelopes to customers.

Walgreens launched its Express next-day delivery service with FedEx on a nationwide basis in December. The drugstore chain is also expanding a same-day delivery program it began with the parcel service last year.

Moving to the present, CVS yesterday has announced that it can make deliveries to customers within hours of prescriptions being filled. The drugstore chain is working with Target-owned Shipt to make deliveries from 6,000 CVS locations across the U.S.

CVS customers can opt to pick up prescription meds or having then delivered when orders are filled. To receive deliveries, they have a choice of using the chain’s mobile app and selecting on-demand delivery, making the request through a SMS text or by calling their local pharmacy.

Same-day deliveries come with a $7.99 service charge. CVS is making a wide selection of front-end items available as well via its same-day service. Next-day or two-day deliveries have a $4.99 charge attached.

DISCUSSION QUESTIONS: Do you expect the demand for home delivery of prescription medicines to grow significantly over the next decade? How important will speed of delivery be to customers, and do you see a likely retail winner — Amazon, CVS, Walgreens, etc. — when all is said and done?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Keeping thing simple and exerting more control are the hallmarks of all future success. "
"A $7.99 delivery charge might not sound like a lot but with Medicare the prescription cost may be that or less which means with delivery the cost of the meds just doubled."
"CVS and Walgreens have no choice but to keep improving RX delivery capabilities (and reducing delivery fees)."

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19 Comments on "Will Amazon, CVS or Walgreens win the speedy Rx delivery race?"


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Dr. Stephen Needel
BrainTrust

This is so sad – another sign I’ve aged. As a teenager, delivering prescriptions within a few hours was my job (and a job for many others around the country). I don’t see it growing a.) because of the cost and b.) because we’ve already shown we don’t need it or want it that badly. P.S. — delivery was free.

Tom Dougherty
BrainTrust

Amazon wins. The reason is SIMPLICITY. They are fast, reliable and part of our current fabric.

Keeping thing simple and exerting more control are the hallmarks of all future success. Amazon is already being used for just about everything else. Adding prescription drugs is only additional work for Amazon. Not for the consumer.

Dave Wendland
BrainTrust

If speed were the only factor, it’s a coin toss among the many options (Amazon Prime, CVS same- or next-day delivery, Walgreens/FedEx, and even independent pharmacies that have offered same-day neighborhood delivery for decades).

However, we’re talking about prescription drugs here and there are other factors to be considered: 1.) Safety (we recently launched a track-and-trace pedigree compliance service to ensure the reliability of the supply chain across retail pharmacy); 2.) Counseling – patients may require assistance in their care; 3.) Trust – knowing that the right product has been received from a reliable source matters to consumers.

Bethany Allee
BrainTrust

America is aging – fast. According to the Population Reporting Bureau, “The number of Americans ages 65 and older is projected to more than double from 46 million today to over 98 million by 2060, and the 65-and-older age group’s share of the total population will rise to nearly 24 percent from 15 percent.” Yes, the demand will significantly grow over the next decade and into the foreseeable future. The audience that’s growing the fastest are folks who will be living on a fixed income. Prescription delivery will see massive adoption and the winner will make it easy, affordable, and fast.

Dr. Stephen Needel
BrainTrust

I’d say the opposite, Bethany – living on a fixed income means you go out and get your prescriptions rather than spend $5-$8 for delivery

Art Suriano
BrainTrust

Those of us old enough to remember the days when the pharmacy would always deliver the prescription medicines can see the benefit of this service. However, the issue won’t be the convenience; it will be the cost. Forking over an additional $7.99 for delivery might be a bit steep for many, and because we’ve become accustomed to picking up our prescriptions, many consumers may opt to do so. I see the more significant opportunity being with an annual delivery fee of something like $50 for all deliveries and other perks for the consumer if they sign up. This way the retailers will establish customer loyalty and receive a more significant win.

Ben Ball
BrainTrust

The real volume here is in “regimen” scripts and those are typically controlled by a PBM. That puts a strong competitive moat around CVS and Walgreens unless Amazon can gain access to that part of the business. The same increasingly applies to one-time scripts. My BC/BS plan only covers scripts filled at Walgreens — CVS and Amazon need not apply.

Phil Masiello
BrainTrust
I think there are two main points to consider in this question. The first point is credibility in the space. Although Amazon certainly has a relationship with a majority of households in the U.S., they still have not fully developed the pharmacy business. PillPack was a start, but that business is still relatively small compared to Walgreens and CVS. Additionally, consumers generally have their prescriptions sent to the closest pharmacy. Short term I think CVS has the advantage. Long term I would never count Amazon out of anything. They have enough capital to buy either of these companies. The second point is who has the best distribution network already in place. Having to rely on a third party that is actually owned by one of your competitors is a difficult position to be in for a channel you want to own. For CVS to win long term, they would need a more controllable distribution mechanism. Walgreens’ reliance on FedEx is costly and does not address same-day delivery, which consumers would want. Amazon has the warehousing… Read more »
Richard J. George, Ph.D.
BrainTrust

Given the aging of America the demand for prescription delivery will grow. The challenge will be to do so profitably. Delivery minimizes store visits and related potential purchases, particularly impulse purchases.

My bet – Amazon. It has the best logistics in place and its customer-centric focus gives it the best opportunity for add-on purchases.

Steve Montgomery
BrainTrust

The concept of offering a prescription delivery service has rapidly gone from a needed-to-win to a needed-to-play service for chain drug. With an aging population the demand for prescriptions will continue to grow. The only question is who the customer trusts to do it right and do it cheaply.

Today’s older population may not yet trust Amazon in the same way they trust their drug store. However those who grew up ordering from Amazon may be far more willing trust Amazon. A $7.99 delivery charge might not sound like a lot but with Medicare the prescription cost may be that or less which means with delivery the cost of the medication just doubled.

Lee Peterson
BrainTrust

As the boomers roll into their 70s, naturally needing more health care, while simultaneously getting more and more accustomed to “speed to my door” tactics, scripts to home will be a huge business differentiator, no doubt.

Amazon has the clear edge in doing this best and fastest as they’ve got the logistics already in place as well as the brand love from consumers who would have to make the switch. There should be another Bezos Boom and some scary moments ahead for the thousands and thousands of physical pharma stores out there.

Aside from the battle for home scripts, anyone that’s over-stored (which to me includes the drug category in spades) is not in a position to win anything as they’re going to be spending an inordinate amount of their time and energy receding going forward.

Ed Rosenbaum
BrainTrust

With the aging of the population, we will see an increase in the potential need for faster home delivery. What I don’t see is the public agreeing to the fee for the delivery. Like so many other new trends, there are initial fees. But as time evolves someone will say no and that will be the end of it. The question is, who will be the first to blink? Delivery will continue to evolve; but without a fee for the service.

Brent Biddulph
BrainTrust

CVS and Walgreens have no choice but to keep improving RX delivery capabilities (and reducing delivery fees). They have established trust with patients over decades on perhaps the most personal of consumer products.

However, it is a delicate balance when competing against free delivery of Rx at the risk of having no front of store attachment items to help subsidize the order.

Leveraging partner delivery networks (and expanded assortment) is smart, as CVS+Target+Shipt could prove to be very beneficial to both partners.

Harley Feldman
BrainTrust

The demand for home delivery of prescriptions will grow. The rate of growth will depend on the price of the delivery charge. As the prescription delivery costs drop due to overlapping with other products being delivered like CVS is likely to see by using Shipt, the growth will accelerate. I believe CVS will be the big winner followed by Walgreens. Consumers can choose to go to the stores or have their prescriptions delivered, and they are comfortable with the company’s pharmacists as a trusted advisory source. Amazon will struggle to grow at the same rate due to having neither stores or local pharmacists.

Patricia Vekich Waldron
BrainTrust

I live one block away from my CVS and I’d happily pay to have them deliver prescription(s) especially if I’m ill!

Joan Treistman
BrainTrust

Speed of delivery is important in at least two scenarios, maybe more; the onset of an illness requiring medication that day, re-stocking medication that someone forgot to refill and has to be taken that day. While that seems limited from one perspective, I have no idea how often that scenario plays out each day at every pharmacy.

Same-day free Rx delivery is still happening in New York City. As others have indicated an aging population ensures the demand for home delivery will grow. It’s likely that mail order prescriptions will continue to include the cost of shipping.

I’m trying to figure out who will be willing to pay more for home delivery. This seems to be an opportunity for another service to step in and save the day for those who can’t afford that additional charge. It seems unlikely that with the high price of prescription drugs consumers will be willing to take on an additional cost. Workarounds are bound to occur.

David Naumann
BrainTrust

It is amazing what the Amazon has done to consumers’ expectations. Consumers now expect to shop, buy and receive products without leaving the comfort of their home or phone.

Personally, because I am frugal, I don’t want to spend an extra $5 to $8 for same day delivery, unless I am in a physical crisis that prevents me from leaving my home. For replenishing current prescriptions, there are many free shipping options for filling orders.

I don’t think there will be one “winner” in the prescription fulfillment category and all the major players will get a piece of the pie.

Ananda Chakravarty
BrainTrust

Rx delivery will grow. However, most PBMs already push 3 month script delivery with mail order prescription companies like ExpressScripts and others that have been engaged in this market for years. The race is not so much tied to delivery time as it is to convenience and in some cases, trusted branding. It’s not all about the aging population needing scripts. There are ongoing challenges for the pure play in customers who are switching providers (almost every job change), advice at the counter, store presence (almost every shopping center has a drug store), and medical provider-insurance provider relationships that will drive presence and customer preferential change. Why else would CVS and Aetna be merging? No, this market will not be lost by CVS and Walgreens — but it will become more efficient in delivery, where customers who want it can have it.

Oliver Guy
BrainTrust

This is going to be huge … the convenience factor of being able to “click” when drugs are running out for them to be replenished provides an opportunity for removal of friction – offer it to the consumer and they will engage.

A vast proportion of the population take prescribed medication — the process of renewal could be call the doctor request repeat, after so many days visit the pharmacy. Changing this to one click and they are delivered is a huge bonus for consumers.

wpDiscuz
Braintrust
"Keeping thing simple and exerting more control are the hallmarks of all future success. "
"A $7.99 delivery charge might not sound like a lot but with Medicare the prescription cost may be that or less which means with delivery the cost of the meds just doubled."
"CVS and Walgreens have no choice but to keep improving RX delivery capabilities (and reducing delivery fees)."

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