As Amazon’s tremendous growth has continued, it’s ventured into markets few e-commerce platforms have the size and scale to enter. From book publishing to consumer electronics to groceries to clothing, there is seemingly no marketplace out of reach for the company. Amazon’s latest foray is in pharmaceuticals, where it’s recently launched its own proprietary label to compete with major players in a gigantic industry.

Another Proprietary, Low-Cost Brand for Amazon

After first launching in August of last year, Amazon’s new “Basic Care” label is now rolling out broadly in the U.S., which will include a range of generic, over-the-counter medications including everything from pain relievers to allergy medication to smoking cessation products. CNBC reports the brand currently has about 60 products. As with Amazon’s “Amazon Basics” line, Basic Care promises low-cost products with the same free shipping and convenience Amazon’s customer base has come to expect.
Whenever Amazon enters a new industry, the entrenched players always take notice and work to shift their strategies accordingly. It’s been long rumored that Amazon would be getting into the pharmaceutical industry, and now that they’ve opened that door, speculation is rampant that they may eventually look to get into the prescription game as well, although they would face enormous regulatory hurdles to do so. 

Big Pharma is Bracing for the Storm

According to CNBC, companies like CVS and Walgreens have already been losing traffic as shoppers flock to buy their over-the-counter medications online, and with the price point Amazon is able to offer as well as free shipping and easy returns, it’s likely Amazon will continue to eat into those stores’ bottom lines. CNBC reports that CVS, Walgreens Boots Alliance and Rite Aid are all now pursuing possible M&A deals to protect themselves against the threat posed by competing with Amazon.
Of course, Amazon’s entry into the pharmaceutical market doesn’t necessarily spell the end of brick-and-mortar pharmacies. Shoppers value the ability to run out to a store and buy cold medicine at the onset of a cold, which can be obtained instantly, as opposed to stockpiling the products in advance and waiting several days for the products to arrive. Additionally, most brick-and-mortar drugstore brands offer services like flu shots and in-store clinics, which is something Amazon cannot provide.
Amazon entering your market is something on the radar of every consumer goods industry, and in making a play at pharmaceuticals, the e-commerce giant is wading into waters with some pretty big fish. It will be interesting to see whether the pharmaceutical industry as a whole decides to join Amazon, as many brands in other industries have done, or fight back by transforming their own business model.

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