But many online retailers and e-commerce technology vendors fail when attempting to expand their presence into healthcare by trying to go it alone.

The potential annual market for e-commerce and web services technology in healthcare is about $32 billion, per an estimate from Goldman Sachs. That’s five times more than the $6 billion online retailers spend annually on all forms of e-commerce technology and services, says Forrester Research.

Consumers as patients also are spending more on medical supplies and drugs. For 2015—the latest year for which full statistics are available from the U.S. Department of Health and Human Services—consumer retail spending for durable medical equipment—a category that includes such items as eyeglasses and hearing aids—reached $48.5 billion, up about 4% from the prior year. Consumer spending for other nondurable medical products including over-the-counter medicines, medical instruments, and surgical dressings, also grew 3.7% to $59.0 billion in 2015, and prescription drug spending grew year over year 9% to $324.6 billion, says the federal government.

That healthcare product, services and prescription spending is opening new opportunities for big pharmacy retail chains such as Walgreens and CVS Health. Even Amazon.com Inc., whose healthcare revenue comes mainly from its Amazon Web Services cloud computing unit, reportedly is looking at expanding into prescription selling and delivery, electronic health records and telehealth. Healthcare also is opening new niche markets for web retailers such as PillPack.com, FSAStore.com, Orthoticshop.com, CapsuleCares.com and others.

This digital evolution in healthcare presents multiple risk and reward opportunities for healthcare providers, says BRP healthcare consulting vice president Don Gleason. Creating and sustaining a viable business in digital healthcare, requires organizations to create and execute a detailed strategy that includes proper market research and due diligence. “Healthcare is a very regulated market where any company expanding e-commerce and online capabilities needs to have a complete understanding of their customers and online information regulations,” Gleason says. “From the beginning, your strategy and focus need to be right.”

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Many online retailers and e-commerce technology vendors fail when attempting to expand their presence into healthcare by trying to go it alone. The need to understand unique data requirements, privacy and security regulations, and customer segmentation strategies makes healthcare different from other e-commerce and web services markets, Gleason says.

The U.S. healthcare system is a $3.2 trillion market that breaks down into many segments, including hospitals and health systems, insurance companies, physician groups, drug makers and pharmacies.

To succeed a retailer or vendor needs to know the healthcare customer it is targeting and to deliver products and services that will be unique.

expanding in healthcare.

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  • Walgreens and CVS are taking their substantial e-commerce operations and transforming them into digital healthcare delivery platforms that offer consumers a variety of services, including seeing a doctor online.
  • com is on track to grow online sales 30% this year and FSAStore.com has achieved a compound annual growth rate of 80% over five years by becoming leading niche merchants in their respective specific segments.
  • com and Akamai Technologies are leveraging the customer relationship management and content development technologies and services they developed for retailers and other consumer facing markets successfully into healthcare.

A recent survey of e-commerce vendors by Internet Retailer found 68% of respondents consider getting into the healthcare market a “very important” or “important” priority. The survey, which garnered a detailed response from 29 e-commerce technology product and services companies, also found that 54% of those vendors not in the market plan within the next six months to begin selling their products and services to healthcare organizations, such as hospitals, doctor groups and insurers.

The new Internet Health Management report—Healthcare E-Commerce Opportunities—exxplores the market opportunities, challenges and rewards in healthcare e-commerce and seeks to inform online retailers and vendors how they can succeed with their own initiatives and strategies.

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