Amazon is on the healthcare industry’s doorstep. The e-commerce giant continues to transform virtually every segment of the economy as it leverages its massive distribution network to deliver logistical harmony. With a stronghold on the consumer market, Amazon is eyeing the business-to-business segment as it builds its seller base. Soon, that familiar smiling brown box will make its way from porches to providers’ front doors and that may make for some disgruntled medical supply distributors.
Since launching two years ago, more than 45,000 sellers have signed on to the Amazon Business platform, which essentially serves as the middleman for third-party vendors. The platform offers business pricing and quantity discounts on more than 5 million products, potential sales tax exemptions, same-day shipping and free two-day shipping for purchases over $49. Large organizations can integrate Amazon Business into their purchasing systems and directly transfer data to streamline processing.
Amazon Business, which generated $1 billion in sales in its first year, is one of its important areas for growth, executives said in earnings calls.
“Amazon Business combines the selection, convenience and value customers have come to know and love from Amazon, with new features and unique benefits tailored to the needs of businesses,” Chris Holt, leader of global healthcare at Amazon, said in a statement.
Of note in its business platform, Amazon’s growing presence in the medical supply segment is poised to disrupt distributors. Similar to the “Amazon effect” felt in other industries, a downward pricing pressure will eat away at profit margins and cause distributors to adjust accordingly.
“Look, if customers find it acceptable, Amazon would be a gigantic challenge to the business model to most medical suppliers because they have a track record of reliable service and cost structure that kills businesses,” said attorney Jim Shehan, head of Food and Drug Administration regulatory practice at Lowenstein Sandler.
Amazon Business features an array of medical supplies including infusion pumps, catheters, IV bags, sutures, forceps, hospital beds, scalpels and other lab items. One of its “most wished for” items is a 10-pack of syringes with blunt tip needles and caps for $8.39. Some of its best sellers include an AmScope biological microscope for $84.98, a Famili nonslip digital bathroom scale for $14.99 and a Jellas pocket-size PH meter for $11.99. Experts from across industrial categories claim that Amazon will typically undercut margins by 10% to 20%.
Image Credit: Modern Healthcare