How Amazon plans to connect all the dots of health
The news about Amazon intending to acquire Whole Foods is no surprise as media rumors have been spreading around in recent weeks. So while most attention is focused on the deal per se, there are some retail strategy fundamentals to consider for the future of Amazon as the new wellness destination.
1) All started by capturing the online platform for health and wellness
There is no doubt that Amazon has increased its business of health and wellness business via online sales of vitamins, supplements, and other wellness products. Although still a relatively small share of all Amazon sales, it is growing fast. Check out this infographic from OneClick Retail. I did a search on probiotics supplements and it turned over 10,000 results! Amazon follows a two prong strategy. On one side, Amazon is allowing hundreds, if not thousands, of small and medium size companies to sell to consumers in a very convenient and direct manner, and most importantly, cost effective. And this is precisely one of the reasons why many smaller players have seen their sales boom against the lower growth rates of bigger established brands from large multinational companies.
2) Launching their own brand in wellness
Amazon is not shy and knowing that health and wellness is now a super hot area to invest in consumer goods, they decided to launch their own line of supplements Elements aiming to capture this fast rising category in fast moving consumer goods. Although the current line consists of a few options, I would not be surprised if this is expanded.
3) The power of the cloud
Amazon is one of the largest providers of cloud services. As such, they have expanded their cloud services to medical practices allowing physicians to set up store fronts to be able to sell their “doctor” brands of vitamins and supplements directly to their patients. As consumers become more concerned about the quality and safety of supplements, many physicians who practice in the wellness space are seeing a good opportunity to boost their income as reimbursement from payers decrease. Moreover, the power of the cloud will allow Amazon one day to be able to store electronic health records (EHRs) and personal health records (PHRs) from wearables and medical monitoring and tracking devices in one convenient place to achieve and effective and less costly healthcare link between practitioners and consumers.
4) The retailing of health and wellness clinics
Watch out Walgreens and CVS! The move of Amazon to acquire Whole Foods confirms a trend of grocery retailers to establish their own health and wellness clinics. One example is Hy-Vee, a humble yet growing employee-owned grocery chain in the Midwest US that expanded its Retail Health Clinics this year in partnership with some of the leading health systems in the US such as Mayo Clinic. Back in 2015 Whole Foods had announced the possibility of opening up a retail medical clinic within Whole Foods, but it has not fully materialized. Amazon may potentially reinvigorate the wellness spirit within Whole Foods.
5) Amazon as the new pharmacy
Last month Amazon hinted the intention to possibly play in the online pharmacy business in a news report that has raised eyebrows as it can disrupt the traditional model of pharmacy benefit managers (PBMs). Amazon can easily do this quicker if it focuses first on over-the-counter drugs (OTCs), vitamins and supplements while meeting regulatory requirements for prescription (Rx) drugs dispensing.
6) The future vision: Amazon seeks to close the loop of health and wellness
Imagine this: Amazon is a comprehensive and holistic health and wellness destination where consumers will be able to drive and purchase their health. The connected dots of consumer health consist of:
- Convenient online sales, including mobile
- Own brand with certified quality, safety and efficacy
- Artificial intelligence – Echo (Alexa) to provide guidance on health issues supported by their partnership with WebMD
- Brick-and-mortar presence as health and wellness destination capitalizing on Whole Foods name
- Virtual pharmacist and healthcare practitioner for consultation and guidance (telemedicine)
- Integration of health in the cloud – consumers will be able to access all their health records in one convenient place with no hassle
In one word, a beautiful integration of consumer health!
Ali Health via Alibaba is already doing this in China so it will be interesting to see how the two e-commerce titans compete in the world of health and wellness.
Monica Feldman is a Consumer Health Strategist, Group Director of Client Services at Nicholas Hall & Co and a leading voice on global trends related to over-the-counter (OTC) products for preventive health, self-care and the extension of health span.