Photo: Walgreens
Will Walgreens win the prescription delivery race?
Move over CVS and hold on Amazon.com, Walgreens last week announced a partnership with FedEx on the nationwide launch of a next-day prescription delivery service.
Walgreens will charge $4.99 for the service, called Walgreens Express. Customers must place orders by 4 p.m. on business days for next-day delivery.
Patients sign up to receive text alerts when their prescriptions are ready. They then choose to have the order delivered or pick it up in store through an express line. The Walgreens Express app can also be used to preview the cost of their drugs and prepay.
Separately, Walgreens offers same-day delivery in seven markets, and that program will be expanded in 2019.
Walgreens claims the FedEx partnership makes the chain “the fastest choice for next-day prescription delivery across the nation.”
In June, CVS launched a service whereby the U.S. Postal Service picks up prescriptions at CVS stores and bring them to customers’ homes in one or two days. CVS is also charging $4.99 but Walgreens’ use of FedEx’s air-and-ground delivery network promises to deliver more coverage and speed.
The move by Walgreens also heads off coming competition from Amazon, which bought online pharmacy Pill Pack in June, but the deal has not closed yet. Amazon had attained several state-level permits and made numerous drug industry hires to signal its intention to branch into prescriptions. Kroger and Walmart are also expected to compete in home prescription delivery.
“Next-day prescription home delivery is another convenience-driver, alongside our industry-leading number of extended hours pharmacies and one of the most downloaded digital apps in the category, designed to put care in the hands of our patients,” said Richard Ashworth, Walgreens president of operations, in a statement. “This expansion of our alliance with FedEx illustrates our commitment to making filling prescriptions as fast and easy as possible.”
Walgreens and FedEx have already partnered to let customers pick up and drop off packages at almost 8,000 pharmacies nationwide.
- Walgreens Launches Next-Day, Nationwide Prescription Delivery with FedEx – Walgreens
- CVS Pharmacy Prescription Delivery Now Available from All Locations Nationwide – CVS
- CVS Adds Home Delivery With Help From Post Office – The Wall Street Journal
- Will Amazon’s Pill Pack acquisition disrupt the retail pharmacy business? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Does Walgreens gain much of an advantage in prescription delivery with its partnership with FedEx? How do you see the battle for drug delivery shaking out, and will it reshape the competitive landscape in the retail pharmacy business?
Poll
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
Ben Ball
Senior Vice President, Dechert-Hampe (retired)
Out of all the opportunities for same-day or next-day delivery, I think the most attractive category is prescription drugs, so this is an excellent strategy by Walgreens. I may want an item to arrive quickly, and fast delivery is a nice to have, but when I’m sick and need a prescription the last thing I want to do is go out to the drug store to pick it up. Years ago, all pharmacies delivered and it was a nice luxury. Bringing this back is smart, a great convenience for customers and no doubt will be very profitable. Out of the options with CVS or if Amazon closes their deal, I think the Walgreens program will prove to be the best. $4.99 is a decent price and guaranteed delivery the next day is what customers want, and they will respond favorably.
Walgreens is smart to be proactive in the prescription delivery world. Amazon, CVS and other competitors are fighting for the consumer’s business. Once someone finds the convenient, easy way to get their prescriptions, they are unlikely to change. As Richard Ashworth said in the above article, “Next-day prescription home delivery is another convenience driver…” That word “convenience” keeps coming up. The company that offers the easy and convenient solution will win.
A smart move. According to several studies, USPS is unreliable whereas FedEx has the highest consumer confidence over other shipping companies (Amazon excluded). So using Walgreens/FedEx to make sure your prescription gets to you quickly is a leg up on the competitors.
It will be interesting to watch how this transpires. Don’t count Amazon out yet. They have one thing that none of these other players have: a database of over 250 million U.S. shoppers who they can hit with a great offer the minute they close on the PillPack deal and move into prescriptions. Meanwhile, Walgreens has the advantage over all other drug chains.
Clearly, Walgreens’ partnership with FedEx will help. Why does there have to be a winner in the prescription delivery race? As long as they are reliable and cost effective, all participants can coexist.
It’s all about convenience for the modern consumer so why should prescription drugs be any different? When you’re sick, faster is better and convenience is even more important! Smart move by Walgreens that will definitely give them a leg up on CVS, but I don’t think we can discount Amazon’s entry into this market just yet. It’s hard to predict what innovation Amazon may have up their sleeve for prescription drugs, so Walgreens is smart to do this now and move quickly while they still have time to get a market advantage over Amazon. This will only lead to good news for consumers in a category that surely could use some innovation and convenience!
Walgreens will get to take advantage of the investments and delivery improvements developed by its delivery partner FedEx. As FedEx develops new and better services, Walgreens will be able to take advantage of them.
Drug delivery will become more popular over time, especially as the cost drops as the volume increases. Pharmacies that become involved early will have first-mover advantage in putting pressure on competitors to offer a similar service. Smaller pharmacies may not have the volume to be competitive in offering such a service.
Win the prescription battle, lose the war? If a good percentage of the drug store customers go home delivery — who is left to buy the somewhat eclectic collection of (overpriced and profitable) merchandise in the stores? What will a Walgreens have to do to survive if the traffic from RX doesn’t come into the store? While they have no choice but to offer this service, I can see the next headline soon — “Overstored: drug stores shuttering hundreds of locations.”
The best part of this announcement is “$4.99.” And I hope that Walgreens has the wherewithal to stick with it.
To survive, retailers need to charge for premium services like next-day delivery. This is difficult in the face of Amazon’s investors underwriting “free delivery” promises.
But Walgreens is in a position to stick with it. They ARE the trusted prescription brand and if they continue to be aggressive about being trustworthy and reliable, they will succeed with the $4.99 charge.
The particular caution I’ll offer is that will be hard in the day-to-day chaos of a headquarters when a division (like next-day delivery) sees a bit of growth stagnation. When that happens, today’s bogey-man is always Amazon (whether that’s real or not). Walgreens should keep the courage to stick with it — because any stagnation is unlikely to be the result of Amazon’s illusory “next day” promises. (There’s an incredible thread of discussions on Twitter about how rarely Amazon’s deliver is reliable — a major change over a year ago.)
This is a smart and necessary move to head off increased competition in pharmacy, especially from Amazon. Walgreens has an advantage in that it is a very trusted brand so combining this with convenience is a winning strategy.
My note of caution is that Walgreens must continue to innovate, especially on the health side of the business. CVS is (slowly) innovating and Amazon will almost certainly innovate, so Walgreens must use its strong brand name to become a go-to destination for health and pharmacy needs.
Many of us already use mail-order for our ongoing prescriptions and at no extra cost so this would address those drugs that have been prescribed due to a one time sickness. I just wonder how much of Walgreens’ business is in one time drugs versus ongoing to justify the expense. Of course, if the $4.50 covers it then, enough said. Not knowing the pharmacy business I really don’t know, but the first thing that came to my mind was expense. For my 2 cents.
Walgreens is establishing themselves as a leader in the space by not just offering these services but strategically building out their partnerships. They understand what their shoppers and consumers want and they’ve built their value proposition around convenience. By acting now and going on the offensive they are building market share and loyalty — something that will be very valuable once Amazon gets involved.
If I am sick, the last thing I want to do is wait 24 hours to get my drugs. My “maintenance” med subscriptions are all on pre-scheduled home delivery and the provider is prescribed by an alliance — CVS need not apply if you are on BC/BS! You use WAG or pay retail. When these two categories are excluded, I’m not sure how much prescription volume is left to benefit from next day delivery. This seems more of a perceptual compensation (who wants to wait more than 24 hours for anything these days — so 2015!) than meeting a real consumer need.
This is a great move by Walgreens. FedEx is a great option which will likely deliver more reliable results than the CVS/USPS program. The price point is right and being able to either pick up same day in a shorter line or choose next day delivery give customers the flexibility to get their medications when they need them. Retail pharmacy will need to continue to innovate on solutions that will get medications to customers faster, cheaper and easier. The company that does this best will become the go-to for customers looking for more and more convenience.
Very smart move for Walgreens and I think overlooked is the combination of delivery and pick-up in-store. I imagine a large percentage of Walgreens’ sales and profit margins come from add-ons when someone comes into the store for a prescription but walks out with snacks, toilet paper and beauty/skin care. If only delivery, there will be less of these purchases, but the pick-up in-store option at least allows for some of that potential.