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Amazon's potential move into the pharmaceutical industry could create a dangerous new competitor.

Is Amazon Australia a threat to the pharmaceutical industry?

After months of speculation, Amazon Australia finally launched overnight on December 4, 2017. As the online giant gets the ball rolling Down Under, reports indicate that it’s not only dealers that should be preparing for new competition. Since the August acquisition of Whole Foods, speculation as to Amazon’s buy-in to the pharmaceutical industry has been rife. Indeed, Morgan Stanley has since released several reports detailing the potential avenues Amazon could take into the selling and shipping of medication.

While this industry leap has been in no way confirmed, the hiring of U.S. talent and the acquisition of American state licenses will soon enable the website to sell drugs. This makes it highly likely that Amazon intends to target the uninsured market, providing easy and affordable access to medication.

It’s clear that to compete with Amazon’s offering, shipping improvements are vital.

The risk to the Australian pharmaceutical

Since the recent launch of Amazon Japan, the Japanese website has begun selling drugs which are then delivered to customers after approval from a pharmacist. The success of this venture has raised fears that Amazon will aim for a similar industry adoption in Australia. Certainly, there are market offerings that would make Amazon a significant market competitor:

  • Amazon dominates the sphere of domestic and international shipping. As a digital native, Amazon’s mastery over the supply chain is its most valuable asset. With the onset of the Prime service, Amazon has proved it can ship items to customers within an impressive 24 hours. This is in stark contrast to current Australian pharmacies which, if they provide a delivery service at all, usually take at least three days to ship drugs and at a substantial cost to the customer.  Amazon’s potential offering is likely to be of particular benefit to elderly customers who have more difficulty regularly visiting a brick-and-mortar pharmacy.
  • In an increasingly digital buyer market, more customers are showing a preference for online retailers. Indeed Australia’s predilection for online access to goods resulted in a 10.2 per cent growth in e-commerce spending in 2017, compared to only 3.3 per cent in traditional retail spending according to the 2017 e-Commerce Industry Paper, from the Australian Post and StarTrack. There is no reason to see why this pattern would not also apply to the medication people use, particularly for regular medication and repeat prescriptions. Amazon’s superior shipping offering would make it a suitable replacement for a trip to the pharmacy.

It’s clear that to compete with Amazon’s offering and to advance the pharmaceutical service to better cater to customer needs, shipping improvements are a must.

Improvements to shipping and supply chain efficiency allow traditional pharmaceutical industries to compete in the digital age. Shipping improvements in the pharmaceutical industry are an important way to compete with online retailers.

Improving your shipping

At Eco Pallets, we can provide supply chain and shipping expertise tailored to the pharmaceutical industry. Our range of sustainable, durable and clean plastic pallets and bulk containers enables efficient shipping throughout Australia.

For more information on how Eco Pallets can improve your shipping contact the team today.

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