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Amazon (AMZN) Ups Pharmacy Retail Game With New Online Store

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Amazon (AMZN - Free Report) continues to make advances in the multi-trillion healthcare space on the back of its robust technologies and e-commerce capabilities.

The latest move of unveiling Amazon Pharmacy in the United States is a testament to the above-mentioned fact.

Further, the company has now integrated previously acquired PillPack into Amazon Pharmacy, which is its new online store for prescription medicines.

Notably, Amazon Pharmacy is accessible via the Amazon app. Customers can place their medicine orders with the help of a prescription from a licensed healthcare provider.

Further, Amazon is offering home delivery of the ordered medicines along with free two-day delivery to the Prime members.

Additionally, customers are allowed to upload their insurance information securely on their pharmacy profile on the Amazon app and opt for the payment mode before checking out.

We believe that Amazon is likely to gain strong customer momentum on the back of its online pharmacy retail move during the ongoing pandemic scenario, which has turned out to be a boon for the e-commerce industry, owing to the aggravating fear of stepping out of the house among the people due to the rapidly spreading COVID-19 infection.

Moreover, the company itself has been witnessing a flurry of online orders, thanks to the social distancing and stay-at-home restrictions. This, in turn,has helped the stock in instilling investor optimism.

Coming to the price performance, Amazon has returned 68% on a year-to-date basis, outperforming the industry’s rally of 56.4%.

 

 

Focus on Prime Members

The company’s latest move is also highly focused on Prime benefits, which are expected to drive its Prime momentum further.

Apart from the two-day delivery of prescription medicines for Prime members, the company is offering savings on medications at Amazon Pharmacy to themembers opting to pay without insurance.

Notably, this new Amazon Prime prescription savings benefit will help Prime customers to save upto 80% on generic medicines and 40% on branded medicines.

Additionally, these savings benefits can be availed at above 50,000 other participating pharmacies as well as on PillPack by Amazon Pharmacy service.

These huge savings are likely to entice Prime members to shop for medicines on the company’s e-commerce app. Moreover, it is likely to encourage Prime subscriptions further, which, in turn, will contribute well to top-line growth of the company.

Efforts in Pharmacy Space, Competitive Scenario

The latest move bodes well for Amazon’s growing efforts toward bolstering presence in the pharmaceutical industry.

Notably, the company ventured into the high-potential pharmaceutical industry with the remarkable PillPack acquisition.

We believe that the PillPack buyout and Amazon Pharmacy are likely to pose a threat to the brick-and-mortar pharmacies as well as big retailers such as Walgreens Boots Alliance (WBA - Free Report) , Rite Aid Corporation (RAD - Free Report) and CVS Health Corporation (CVS - Free Report) .

We note that shares of these three pharmacy companies tumbled on the launch of Amazon Pharmacy.

Further, Amazon is likely to give tough competition to retailers like Walmart and Kroger, who have also ventured into the pharmacy retail space, on the back of its robust fulfillment network and distribution strength.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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