Some radical changes are afoot in the U.S. retail pharmacy market. In announcements released just days apart, both Amazon and Walgreens outlined their promises to consumers and plans for ensuring their dominance and competitiveness. Their strategies differ in notable ways, but these different pathways that also feature some pertinent similarities in terms of their attempts to achieve customer loyalty.
When Amazon released its new offerings, it signaled its expansion into a relatively new market for it. Amazon Pharmacy is free to Prime members, and it promises two-day delivery of prescription medications, often at discounted prices. Members can check whether their insurance covers the costs, but Amazon also offers access to prescription drugs for those without insurance and claims its pricing is about 40 percent off conventional prices, with up to 80 percent discounts for generic drugs. To achieve this price positioning, it is working with an estimated 50,000 pharmacy providers.
Nearly simultaneously, Walgreens launched its myWalgreens loyalty program for shoppers. The free membership in the program gives consumers curbside pickup options, home delivery through third-party services, and discounts of up to 80 percent. Through a dedicated app, they can access pharmaceutical advice and virtual chats with health care professionals. Similar to its existing loyalty program, it also lets members accrue points for their purchases, which they can redeem for additional items.
Despite their differences, both the efforts signal the desire to get customers to choose and remain loyal to a single channel for their prescription needs. Walgreens hopes to leverage its stores and existing reputation and substantial market share as a pharmacy provider. It also provides specialized, health-related services that Amazon has not developed. Amazon instead aims to appeal to consumers’ needs for convenience. When they order their prescription medications, they can buy nearly everything else they need for their households, likely using one-click convenience and a shopping channel they know well.
Of course, this discussion also needs to account for the efforts by CVS, which has its own subscription program, called CarePass. Members who pay a $5 monthly fee receive free deliveries of nearly everything the drugstore retailer sells, with no minimum orders.
Discussion Question:
- Which of these offerings in the retail pharmacy market seems most likely to appeal to consumers? Why?
- What are the strengths and weaknesses of each competitor’s novel attempts to appeal to and ensure the loyalty of pharmacy consumers?
Source: George Anderson, “Will Amazon’s New Online Pharmacy Disrupt the U.S. Drugstore Business?” Retail Wire , November 17, 2020; George Anderson, “Walgreens Reinvents its Loyalty Program, Launches 30-Minute Delivery Program,” Retail Wire, November 20, 2020