A trip to a drugstore, whether online or off, isn’t what it used to be. And if Amazon.com Inc., Walgreens Co., CVS Health and some well-funded digital pharmacies have their way digital drugstores will soon go from mainly offering prescription fulfillment services into online healthcare shopping malls.
Today many consumers still head for their nearby drugstore after a visit to the doctor or a hospital stay to fill or refill a prescription. But drugstores are increasingly digital—and they’re not just for prescriptions.
Because drugstores—and the pharmacists that work there—often develop close relationships with customers, many consumers give their druggists lots of steady business. For example, 55% and 40%, respectively, of web shoppers on Walgreens.com and CVS.com are repeat buyers, says e-commerce measurement firm Connexity. That’s considerably higher than the 33% median rate of repeat shoppers among the top 1000 web merchants ranked by Internet Retailer on Top500Guide.com, according to Connexity.
Online drugstores want to lock in loyal online healthcare shoppers with a wider variety of easy-to-use services that include prescription drug management, seeing doctors online, buying or renewing health insurance, getting health and wellness advice and digital coaching, and shopping for health, beauty and other over-the-counter products.
Walgreens, one of the biggest retail pharmacy companies and one with an advanced e-commerce programs,, and CVS Health, which in December agreed to acquire health insurer Aetna Inc. for about $67 billion, have aggressive plans to turn their current drugstore-focused e-commerce operations into diversified digital healthcare delivery service systems.
CVS, Walgreens and others, including Amazon.com Inc. are building digital healthcare services that aim to meet a broad range of consumers’ healthcare needs, says KPMG principal Arun Ghosh.
“Pharmacies need to capture the consumer online and offline at the point of sale,” Ghosh says.
Amazon, the biggest online retailer by sales, is also building its healthcare portfolio. plans to get into the drug prescription business. Amazon, which already sells thousands of over-the-counter health and beauty products on Amazon.com, last year filed and was approved for wholesale drug distribution in at least 13 states. However, Amazon has not commented on reports it plans to offer prescription drugs.
Amazon however, publicly announced in February plans in conjunction with Warren Buffett’s Berkshire Hathaway Inc., and JPMorgan Chase & Co., to form a new healthcare services company aimed at using data, digital and e-commerce technology, and the three companies’ combined purchasing power to lower medical costs for their 1 million total employees and, perhaps, eventually to provide the same services to other companies. “Perhaps no company has been as consistently disruptive as Amazon,” says Kate McCarthy, a Forrester Research Inc. healthcare research analyst. “It has set its stakes on healthcare next.”
Digital prescription drug sales presently account for about 1%, or an estimated $3.3 billion of all prescription drug sales, says Eric Kinariwala, CEO of Capsule Inc., a 2-year old digital pharmacy. But he expects strong growth in online purchases of prescription drugs. “We’re just beginning to scratch the surface of this market,” Kinariwala says.
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