Update: Former Amazon Executive John Rossman Discusses Industry Disruption and Innovation
Thursday, Sep 27, 2018
It’s a sunny Saturday morning in Southern California. I stopped at my local pharmacy, a large national chain, to pick up a prescription following a doctor’s appointment earlier in the week. It’s 10 AM, and the store is quiet. There is one customer talking to the clerk at the pharmacy pickup window, and one lady in front of me waiting to be served. In addition to the clerk serving the customer, there were two pharmacists working and a fourth person walking between the 10 foot high aisles behind the pharmacist’s counter. Should be a quick in-and-out experience, but who’s in a rush?
The first sign of what was to come was the clerk calling out “I’ll be right with you” in the general direction of the lady in front of me and myself. Another person lines up behind me so there are now three people waiting. We are of course a respectful 10 feet behind the customer at the counter, but you can’t help but hear the conversation the customer is having with the clerk, who then calls a pharmacist over for a new prescription consult.
5 minutes have passed. Finally, the customer at the counter is done, and the lady in front of me steps up. The customer says her name and the clerk searches the alphabetically ordered temporary plastic hanging bags looking for her prescription order. She asks for the customer name three times to make sure she has the right name and scans all the hanging bags because sometimes orders get hung in the wrong place. The customer says they got a text on their phone an hour ago saying her order was ready (hey, that’s a good technology accomplishment!). The clerk then grabs a big red basket containing a number of filled prescription orders that have not yet been hung up on the hangers. She looks at them one-by-one, going through about 10 until she finds the customer’s order. Eureka! Then it’s time to pay. The clerk asks the customer if they have the rewards program card. The customer responds “I do but I don’t want to go through the hassle”. So she then pays for the order not connecting it to her history or loyalty number.
Now it’s my turn. “Name?” asked by the clerk. “John Rossman” I respond. “Grossman?” responds the clerk. “No, Rossman” and then I spell it out “R, O, S, S, M, A, N” to avoid any further needed clarifications. She finds the order and brings it over. She asks for my insurance, which I recently switched. So I hand her the card and she realizes it’s new. She instructs me to take a sit over to the side. Why??” is the thought in my head, but I smile and obediently sit over on the side. And I sit.
I start looking at the aisles of retail items at the large pharmacy store. From mouthwash, hair care products, to books and coolers. It seemed like every other item had both a normal price and a handwritten “price reduced” tag taped to the shelf. There were six check-out counters, three or four store clerks, and I could only spot two other customers, other than the now four customers standing in the pharmacy pickup line. “I’ll be right with you,” says the clerk again to the pharmacy customer line which is now curled to avoid the shelves behind it. She continues to be the only employee directly serving customers, while the 2 pharmacists and other clerk continue to fill prescriptions to be placed in the red basket, to be placed in a bag, to be hung on the hangers, to be manually picked when the customer shows up.
After waiting for 5 minutes, I stand up and approach the counter. The pharmacist had forgotten to come over. They complete the transaction, and I’m on my way. I still don’t understand why I had to go sit on the side seats.
And for the first time, the thought comes to me — “Amazon, dear Amazon, PLEASE open a retail pharmacy!” Part plea, part prayer, part “no duh” it’s coming observation — the industry is just a sitting duck for Amazon.
How might Amazon improve the customer experience and business operations of the traditional retail pharmacy?
First, use Amazon’s “just walk out” AmazonGo technology throughout the store. Watch the video on YouTube. It’s stunning. Better customer experience, reduced labor, reduced shrinkage, better information to improve store operations, and its cool! But using AmazonGo is the obvious idea.
Automate the prescription filling and inventory management system. Between the Kiva robot and sortation expertise of Amazon, there is no doubt Amazon would dramatically improve the speed, accuracy, labor efficiency and costs of this activity – and likely improve the pharmacist’s job satisfaction as they could spend their time on customers and more impactful activities.
Deliver prescriptions to home, likely within an hour. I should actually never be forced to go to a pharmacy for a prescription again unless of course, I want to. The recent PillPack acquisition clearly puts this scenario in play. The key challenge is in shortening the delivery time for an Amazon prescription to within a one or two-hour window. My guess is that this would somehow involve grocery delivery capabilities via Whole Foods and this is the type of supply chain and multi-channel integration Amazon is adept at.
But what if I actually need to talk to a pharmacist when having my prescription delivered to my house? Two ideas come to mind. First, is via the Echo and leveraging voice-to-pharmacist. The second is to use the Amazon Mayday application, which is on all Amazon Kindles to give you face-to-face video with a pharmacist.
Reorder your prescription? How about either a reminder for reorder from Amazon, or using a custom Amazon dash button?
And don’t forget the most historic parts of Amazon’s business model. The one that put it on the map and continues to make “let’s compete with Amazon” really difficult for any business. Compete on price. Amazon would dramatically lower the price charged to consumers for prescriptions because their business model is used to lower margins and Amazon would be creating a more efficient and lower cost structure. A typical pharmacy generates most of its revenue and margin from prescriptions. The typical prescription drugs offer a high margin, and Amazon would use that margin to either lower prices on the drugs or drive prices even lower on ancillary items.
Yet, another opportunity would be for Amazon private label drugs and products. The company has Amazon-owned private label products in almost every retail category, from the Amazon Basics brand for electronic accessories to Pike Street bath and home products and Strathwood outdoor furniture. Over time, Amazon would surely find opportunities in private label generic drugs.
Finally, consider how Amazon’s data and information prowess could improve the customer experience around insurance coverage transparency when it comes to what is covered and options for generics. The best that happens today is the pharmacist might recommend a generic or equivalent to a customer, but typically this only happens for new prescriptions, and the customer is at the mercy of the pharmacist to share that information. Amazon would improve this customer experience.
With Amazon’s acquisition of Whole Foods and more than four hundred Whole Foods stores and the many ways Amazon is leveraging these stores and brand, Amazon now has the footprint to add pharmacy in these stores to for a pharmacy.
And why not? No existing retail pharmacy enterprise will reinvent and disrupt itself. “Retail first” organizations can’t win over a “technology first” enterprise. No company is truly eager or capable of disrupting their own business, and even if they were, they lack the ability or will to manage through the process. And they don’t have the supply chain or automation expertise to fulfill this vision. Amazon had seventy-six supply chain patents last year alone.
So dear Amazon, PLEASE re-invent the retail pharmacy experience…and make it happen soon!
By the way, did I tell you about my experience at the doctor’s office…I think Amazon is thinking about this too.
ABOUT JOHN ROSSMAN John Rossman is an advisor, thought leader and keynote speaker on Digital Strategy and Amazon Leadership Principles. He travels the country speaking on Digital Disruption, IoT, Innovation, and Leadership — “The Amazon Way”. For more information, visit https://tinyurl.com/JohnRossman
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