Amazon.com, Inc. (NASDAQ:AMZN) announced Tuesday its long-anticipated push into retail pharmacy ordering, fulfillment and delivery with a service allowing its Prime members to order prescription drugs without insurance and have the drugs delivered to their homes in two days as part of their annual or monthly memberships.
The service, called Amazon Pharmacy, can save Prime members up to 80% off the retail price of generic drugs and up to 40% off branded pharmaceuticals even for members who pay without using their insurance or who don’t have coverage, the Seattle-based e-tailer said. As with other products ordered on Prime, there is no limit to the number of deliveries that can be made.
Under the service, Prime customers can browse the pharmacy site, compare their insurance co-pays, the price without insurance or the savings through the new Prime program, Amazon said. Discounts also can be used at more than 50,000 pharmacies participating in the program, as well as at Amazon Pharmacy, the company said.
There is no shortage of delivery services for online pharmacy orders. However, what makes the Amazon program unique is that it allows Prime members to buy medications at sizable discounts, even without insurance, said Brittain Ladd, who runs an e-commerce consultancy and was a top Amazon executive a number of years ago.
The integrated ordering and delivery strategy will be difficult for traditional pharmacies to match, especially when competing against Amazon’s speed and precision of delivery, Ladd said. Amazon can also scale the model by opening pharmacies inside the grocery stores it is building, building additional savings and convenience for Prime users, Ladd said.
Wall Street may also be thinking along those lines. Shares of Amazon were up nearly $18 a share about two hours into the Tuesday trading day. By contrast, shares of pharmacy giants CVS Corp. (NYSE: CVS) and Walgreen Boots Alliance (WBA) were trading down sharply.