Potential launch of Amazon Pharmacy to have huge impact on UK market, study says

With the potential launch of pharmacy arm in the UK by the e-commerce giant Amazon, the sector is expected to experience a huge impact, a study revealed.

The company already has a very strong distribution channel for OTC products in the UK and can also leverages its already registered trademark with the introduction of ‘Amazon Pharmacy’.

The Amazon Pharmacy trademark was granted registered status in the UK on December 4, 2020 following its initial application, which was submitted on January 9, 2020.

The study conducted by Simon-Kucher & Partners, a global strategy and marketing consulting firm, showed that among UK customers that are already Amazon Prime users 47 per cent would choose the company’s pharmacy platform for drug purchase.

Besides, the 10 per cent of customers who do not buy regularly from Amazon said they would use the new platform once it is available in UK.

Christian Rebholz, partner at Simon-Kucher & Partners said: “Considering these numbers, it can quickly lead to 20 million potential British customers for Amazon Pharmacy in one fell swoop. It would immediately gain a significant market share and be among the top online pharmacies in the UK. Existing platforms and pharmacies must get prepared and find a way to retain their existing customers and take advantage of their omni-channel presence.”

Respondents regarded convenience and price as main reasons for switching to Amazon Pharmacy for buying drugs. A delivery free of charge is crucial, followed by price and an already existing amazon prime account, they said.

Meanwhile, consumers who are not willing to buy at Amazon Pharmacy mentioned the lack of additional services such as nutrition, support to quit smoking, etc. They also highlighted Amazon’s incompetency in the area of pharmaceuticals.

Additionally, the loyalty to an existing pharmacy plays a significant role, the study showed.

Graham Tatham, partner at Simon-Kucher’s London office, said: “Amazon Pharmacy would be a highly influential stakeholder for all other market players. Especially many OTC manufacturers may be pressured by their market power, leading to a strong position for Amazon in negotiations.

“A possible introduction of its private label brands would result in an even higher pressure, especially for manufacturers of easily substituted products and generics. One key aspect for every consumer health company’s strategy should also be to establish and build a direct to consumer relationship.”