Amazon recently announced the launch its line of generic OTC medications named the Basic Care range. The line competes with large and established US generic brands including Giant Eagle’s TopCare, Target’s Up & Up and Walmart’s Equate.
The Basic Care line is comprised of 60 items and includes cough, cold & allergy, gastrointestinal, analgesic, hair growth and smoking control products. Technically, Amazon does not own these products, which are produced by private label manufacturer Perrigo, but it does put Amazon in a position to put the squeeze on other marketers. Amazon has taken a very simplistic approach to the branding of Basic Care but claims the products are of the same standard as established OTCs.
Should OTC marketers worry?
The answer is yes and no. Amazon’s biggest competitive advantage will be on price. Basic Care offers much lower prices compared to established brands especially when buying in bulk. This will work well for consumers who like to stock up on OTC items so they have them to hand when needed. Also the convenience of being able to couple this with a dash button and Amazon Prime will be a winning combination for some.
In an interview with CNBC, retail analyst Scot Ciccarelli suggested some OTC marketers may need to become more willing to lower prices. A number of retailers such as Walgreen’ and Walmart have already had to sacrifice margins to become more of a threat to Amazon after the acquisition of Whole Foods Market.
However, Amazon will still struggle in terms of accessibility. For example when the first symptoms of a headache come on, most consumers will go to their local pharmacy or supermarket to get instant relief. Amazon will not be able to offer convenience by just selling products online.
Is this part of a bigger picture?
Amazon is yet to make its plans for the prescription drug market completely clear. However, reports suggest launching an OTC range could be a step closer to a broader healthcare business play.
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