FACTS

    Internet retail giant Amazon is adding even more to its range of offerings. Amazon Prime users in the U.S. can now order prescription drugs through “Amazon Pharmacy,” with free two-day shipping and up to an 80% discount if uninsured.

    “As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store…Now we’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives and feel healthier.”

    Doug Herrington, Senior Vice President of North American Consumer at Amazon

    The move has triggered questions as to what this will mean for the likes of Walgreens, CVS Health, Rite Aid, and other drugstore pharmacies. The pharmacy industry “represents a more than $350 billion market.”

    RESPONSE

    D.A. Davidson Analyst Tom Forte called Amazon’s move a “trillion-dollar global opportunity.” Many “investors fear the drugstore chains might suffer the same fate that befell traditional bookstores or toy shops after Amazon encroached on their turf.” However, Barron’s senior writer Bill Alpert argued, “Investors are overreacting…Tuesday’s announcement of free shipping and discount cards adds nothing that is not available from CVS and Walgreens.” An article from the Associated Press noted, “But Amazon.com has mastered these things, and its online store is infinitely larger, with millions of loyal shoppers already buying books, TVs and just about anything else.” While many have pondered the effects on competing pharmacies, Eric Sheridan, an analyst at UBS bank, said the company most greatly affected will likely be drug discount-card company GoodRX, considering Amazon’s own “prescription savings card.”

    “For Amazon, the announcement is well-timed. Americans are increasingly relying on getting their medicines via mail to avoid possible exposure to the coronavirus. That shift could be permanent, as more people than ever before are learning about new ways of receiving medication.”

    Christina Farr and Annie Palmer, reporting for CNBC News
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