Amazon Wants to Be a Pharmacy. Here’s Why Small Drugstores Should be Concerned.

Amazon has announced the creation of Amazon Pharmacy, a new service that allows customers to order doctor-prescribed prescriptions and have them delivered. The news will have major ramifications for small drugstores that may already be struggling during the COVID-19 pandemic. 

Amazon’s announcement emphasized convenience. Jamil Ghani, vice president of Amazon Prime, said, “Our goal is for Prime to make members’ lives easier and more convenient every day, and we’re excited to extend the incredible savings, seamless shopping experience, and fast, free delivery members know and love with Prime to Amazon Pharmacy.”

The service will have a benefit plan for customers who do not have health insurance. Prime members get discounts on generic and brand name drugs. They’ll also be able to get prescriptions delivered in two days, just like other items they might order from Amazon.

The news doesn’t come completely out of the blue. In 2018, Amazon paid $750 million to purchase pharmacy startup PillPack. This new announcement represents a step even further into the healthcare industry.

Several of the nation’s largest pharmacies have already been impacted: Shares of Walgreens dropped 8%, CVS 6%, and RiteAid almost 12% in the hours after Amazon’s announcement. 

But what about pharmacies that aren’t publicly traded?

Amazon Pharmacy Will Probably Have a Negative Impact on Small Drugstores

Analyst John Boylan told the Associated Press that he believes small drug stores will feel the brunt of the effects of Amazon’s move into the healthcare industry. That’s because the major drugstore chains have deals in place with insurers that funnel patients to their stores for prescriptions.

But it’s not totally hopeless for small drug stores. Over the last year, people have been buying more from small businesses. During the COVID-19 pandemic, many people have made a special effort to shop from locally-owned companies that are a part of the community.

We Can Look at Independent Bookstores for an Example of How to Survive

In 2000, five years after the creation of Amazon, the number of independent booksellers dropped by 43%. By 2009, there were only around 1,600 independent bookstores in the country. 

That trend reversed, though, as people came to realize that they valued the customer service and sense of community that was not available at Amazon. The in-store experience has proven to be valuable enough that by 2019, there were more than 2,500 independent bookstores. Small-scale brick and mortar stores have shown that they can succeed if they focus on aspects in which Amazon can’t hope to compete, even without the retail giant’s level of convenience.

Small Drugstores Can Offer An Experience Amazon Can’t

Obviously, COVID-19 has added a layer of unpredictability here. The comparison between pharmacies and bookstores is also not perfect — people may feel they’re getting quality customer service and that sense of community from their doctors or other healthcare professionals.

But small drugstores don’t only deal in prescription drugs. They sell all kinds of over-the-counter health and wellness products. 

By focusing on a curated shopping experience in that area, and having knowledgeable sales staff who can speak to those products (in addition to on-site pharmacists), small drugstores can go a long way toward keeping or growing business.