Re:This Is How Amazon Could Invade the Pharmacy Business
by phasecode on Wednesday November 08, 2017 @01:00AM
(#15650194)
I would love to see Walmarts online growth split apart from the acquisition of Jet. Chance's are they are riding the coattail of that acquisition and once that drys up the only thing left is to spend a ton of money on customer acquisition to fuel "growth". Having both used Amazon and Jet, I find that Amazons customer support and checkout experience is significantly better then Jets.
Re:This Is How Amazon Could Invade the Pharmacy Business
by snowpanda on Wednesday November 08, 2017 @05:19AM
(#15651081)
Totally agree with what you said. I'd like to add that another part of the break-even game is that often all it takes is for your competitor to take one step in the wrong direction, for you to become profitable.
When Blockbuster (for example) took on streaming to compete with Netflix, not only were they far too late, but they also charged a fee for movies. People didn't bother because Netflix had unlimited streaming. They also had a poor catalog if I recall correctly. Too many mistakes.
- Increased shipping volume. This adds to their market leverage and it can bolster their own logistics business over time. Anything Amazon can do at scale, while at least breaking even, is a very big benefit to their flywheel.
- Another entry into the home, into a person's life. And in this case, a far more important one than most purchases. If Amazon can sell a 67 year old a prescription and get into her home, they're no doubt betting they can also sell her an artificial intelligence tool in the coming years (maybe it takes three years of advertising the Echo on the side of the prescription delivery box to convince the customer).
- It becomes a very sticky repeat business. People will stay with those so long as you don't treat them horrendously. That buys Amazon time to figure out new ways to make money in the segment. It may also be a long-term play on the fact that the US is guaranteed to increasingly shift to government healthcare, as the ACA or equivalent walks its way up the income ladder by necessity; Amazon may see an angle in that.
- Walmart is finally becoming a serious online competitor. They're growing at 2x the rate of Amazon, with about 1/3 the online retail sales. Walmart's online business appears to be kicking into another gear. They've got a $20 billion per year pharmacy sales business. Then there are obviously the other far larger pharmacy-centric giants (the big three have ~72% of the pharmacy business). Anything Amazon can do to press them all in that segment, is a win competitively. To grow at this point, Amazon has to take from everyone else, as US consumer spending is expanding relatively slowly.