The Amazon prescription: It’s healthcheck time for Australian pharmacies


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Amazon’s recently announced plans to bring its retail offering to Australia some time in 2017 have been cause for concern among local electronics and consumer goods retailers, Amazon’s bread and butter product. However, pharmaceuticals could also be part of Amazon’s offering – a possibility which pharmacy owners should take very seriously.

In May 2017 Amazon announced the hiring of a “pharmacies market general manager” in the US, which leads one to believe that it fully intends to grab a slice of the estimated USD3bn American’s spend on pharmaceuticals. Any learnings it takes from the US could easily be deployed here once it rolls out.

Currently in Australia, it is illegal to sell certain prescription drugs unless you are a licensed entity, pharmacist operating a pharmacy or medical practitioner. Whilst this may appear to preclude Amazon from being able to operate in this space, Amazon’s sheer size affords it great lobbying power, as demonstrated in Japan where Amazon is now able to sell drugs to patients with approval from a pharmacist.

In our experience, pharmacy sales are often heavily skewed towards front-of-shop categories. Even if prescription and pharmacy only medicines are not on Amazon’s radar, front-of-shop products such as complementary medicine, vitamins and health and beauty products are. Amazon’s consumer convenience factor could see it win market share over bricks-and-mortar pharmacies who simply cannot compete with Amazon’s advanced logistics network that enables it to deliver orders to customers at lightning fast speeds.

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Whilst there is no need to panic, it is critically important for pharmacies to develop an intricate understanding of who their customer is, a question that once answered will drive marketing, pricing promotional activity and discounting. Amazon is famous for employing deep data analytics to generate a detailed profile of its customers, enabling it to predict customer purchases and create tailored product offerings and personalised promotions accordingly.

A strong online presence is also a must for medium and larger chains. Allowing consumers the optionality of shopping physically or digitally and offering extras like click-and-collect will go some way to improving convenience.

There are a lot of ‘ifs’ surrounding Amazon’s arrival in Australia. And as we’ve said, whether or not the pharmaceutical sector is in their current line of sight is as yet unknown. But this comes as a timely reminder for pharmacy owners to reconsider important aspects of their business such as sales mix, digital foot print and ultimately, strategy.

It is important for Pharmacy owners to ask themselves:

  • Am I aware of what Amazon is doing in other markets?
  • Do I have a robust understanding of my customers?
  • What information do I collect about my customers that will help me better service them?
  • Do I need some help?

How can we help?

Our health team has a track record of providing pharmacists and other healthcare providers with pragmatic strategic advice, meaningful performance improvement initiatives and consumer insights based on data analytics.

If you would like to have a further discussion, please contact one of our health specialists listed below.