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Though more quietly than in other categories, omnichannel has taken hold of pharmacy. All the bells and whistles are now available to pharmacy customers, from automatic refill subscription services to refill via text to home delivery. CVS and Walgreens — the two U.S. retailers most associated with pharmacy prescription fulfillment — have injected their pharmacy businesses with a heavy dose of digital in the past few years, keeping pace with the behaviors of their pharmacy customers
Ryne Misso
Pharmacy’s transition to omnichannel seemed to enter what we’ll call the “watering hole” phase back in 2015 and 2016. The moment commerce for a category shifts online, the floodgates open for more and new competitors to come take a sip from the watering hole. Startups like NowRx, Nimble Pharmacy (formerly NimbleRx) and Alto Pharmacy (formerly ScriptDash) emerged onto the scene with app-based ordering and home delivery, hoping to take their share of a nearly $400 billion industry. Their differentiation was and is to this day based on convenience through technology.
Major health care providers also rode the omnichannel wave and established direct-to-consumer home delivery for prescriptions. Cigna Home Delivery Pharmacy, Blue Cross/Blue Shield Exclusive Home Delivery and UnitedHealth’s OptumRx are all prescription delivery services sourced directly from the health care providers, among others. All three of their websites promote their delivery services as cheaper than fulfilling at retail — yet another pressure applied to in-store pharmacy by way of omnichannel evolution.
Despite all of this activity, it wasn’t until 2017 that the proverbial king of the commerce jungle decided to come rock the omnichannel pharmacy conversation. Amazon’s pharmacy task force was established last year, and since then all it has done is receive approval for wholesale pharmacy licenses in several states, launch the Basic Care private label line of medicines, build out its pharmacy team with more than 20 high-level employees from health care and drug retail companies, partner with Berkshire Hathaway and JPMorgan Chase to solve U.S. health care problems, and send health care stocks into a tailspin. Though some still have their long-term doubts about Amazon’s ability to enter the pharmacy business successfully, it has a track record of breaking into its target market by any means necessary (e.g., the Whole Foods Market acquisition). And with its unrivaled online delivery infrastructure, Amazon may very well usher pharmacy into its next phase of omnichannel.
If it’s not obvious by now, omnichannel has had a significant impact on the pharmacy business. That impact has come in the form of new competition, which has ushered in a wave of innovation to bring a frictionless, convenient experience to pharmacy customers. Omnichannel has transformed how companies win and retain pharmacy customers. Those who have traditionally relied on store locations as a primary differentiator will need to look for new ways to set themselves apart.
Count Walgreens among the traditional power pharmacy players that have altered their course as recently as this year in response to changing market conditions. We touched earlier on how Walgreens has kept pace with the market with respect to incorporating digital into the customer experience, but the changes it has made in 2018 touch on some deeper themes about its relationships with its customers.
Starting with its new tagline, “Trusted since 1901,” Walgreens’ new direction puts caring about the customers center stage.
The company has developed a Web resource that shares examples of how it cares for customers, aggregating stories and anecdotes from real Walgreens employees and customers. These stories — from Walgreens locations staying open during Hurricane Harvey to help those in need, to simple conversations Walgreens pharmacists have had with customers that help them improve their care — are all featured content the retailer’s customers can refer to in order to see and feel the Walgreens difference.
Walgreens isn’t relying on customers to visit the company website to get the word out either. Its “We Care” national TV advertising campaign launched in January of this year, spreading awareness of its new mission. According to Market Track’s advertising data and ad spend estimates, the ad has run over 4,000 times in national cable, national syndication and over 65 local U.S. markets at an estimated cost of over $7 million. The ad campaign has been supported with full omnichannel execution, including radio spots, digital display and video content, as well as social engagement. Walgreens is investing the time and the money to ensure it is both communicating and demonstrating its commitment to caring for its customers.
Walgreens’ brand reset is just one example of how pharmacy retailers, health care companies and direct-to-consumer pharmacy brands need to change the way they engage with and market to pharmacy customers in order to win and retain their business. Home delivery is no longer enough. App-based prescription reorder is no longer enough. Being on the corner is no longer enough.
It’s hard to predict what pharmacy in the U.S. may look like five years, three years or even one year from now. It’s not as hard to predict that those who fail to deliver value and memorable experiences to their customers will not be part of the picture.
Ryne Misso is director of marketing at Market Track.
