CVS is using its 9,800-location store network to play in Amazon’s court, and fend off increasing competition.
Its latest move: A Prime-style membership network hinged on in-store benefits. For a monthly fee of $5, or an annual fee of $48, subscribers can get free one-to-two-day delivery on most prescriptions and other purchases, access to pharmacists around the clock, member-only discounts and a $10 monthly credit on selected items each month. The retailer is testing the program at more than 350 locations in the Boston area right now. It gave no indications about the duration of the pilot or whether it will scale nationally.
It’s a data play and a defensive move against Amazon’s entry into healthcare, which was solidified by its acquisition of online pharmacy PillPack last June.
“It’s a preemptive strike to protect their consumer base from Amazon,” said Jeff Becker, senior analyst at Forrester. “[Amazon] is bringing their supply chain expertise to pharmacy distribution, and with CVS being a leader, it needs to respond to that, and it makes sense to start a prescription delivery solution of their own; rolling it up in a package that looks and smells like Amazon Prime makes sense from a marketing standpoint.”
A CVS Prime-competitor isn’t going to steal Amazon share, but it can help it win where Amazon is less advantaged: in stores. The retailer has been modernizing store locations to improve service efficiency, including moves to put in place Apple-style cashierless checkout. It’s also using stores as delivery hubs. In June, CVS rolled out prescription delivery from all locations along with same-day delivery for a one-time fee of $8.99 in selected urban centers.
Ad position: web_incontent_pos1
With the membership program, new insights will let the retailer better understand the triggers for physical visits.
“They’ll understand what are real trip divers for physical purchases and the drivers for what can be delivered, and what the difference is in basket composition overall,” said Curt Munk, evp and head of strategy at FCB/RED, the retail arm of agency FCB.
Brand trust and a holistic view of the customer from a data perspective are also important advantages over Amazon.
Ad position: web_incontent_pos2
By moving prescriptions to a digital-first, delivery-based format, CVS is simply responding to customer expectations arising from other areas of retail — the “Amazon effect,” where goods are delivered to homes on a regular basis, and services are accessed through mobile devices. But its more cohesive view of overall customer health profiles and the convenience of physical locations can set it apart. Customers can review their prescription records through its mobile app and chat with pharmacists around the clock. CarePass lets members engage in live conversations with pharmacists who have secure access to their prescription history with CVS.
“It’s hard to imagine anything CVS does as not being a data play in some manner; what CVS still has that Amazon doesn’t is a comprehensive, quantified portrait of how Americans manage their health,” said Daniel Black, strategy consultant at Vivaldi. “CVS has an undeniable human advantage over Amazon by offering timely, informed advice, flu shots and other services from credentialed healthcare professionals.”
As CVS’ acquisition of health insurer Aetna moves forward, keeping a close eye on customer health will positively affect the company’s bottom line, said Becker.
“This makes them a payer, and they have a much more vested stake in solidifying their population health efforts, ensuring patients are taking their medications and addressing any barriers to medication access,” he said.
More in Marketing
In the marketing world, anime is following in the footsteps of gaming
As marketers look to take advantage of anime’s entry into the zeitgeist, they might be wise to observe the parallels between the evolution of anime as a marketing channel and the ways brands have learned to better leverage gaming in recent years.
With the introduction of video ads and e-commerce, Roblox looks to attain platform status
Roblox is expanding into more areas than just ads in 2024. Much like platforms such as Amazon and Facebook have transcended their origins to evolve from their origins as online marketplaces and social media channels, Roblox is in the midst of a transformation into a platform for all elements of users’ virtual lives.
PepsiCo wants to remain a ‘driver of culture’ as it turns to influencers and activations amid rebrand
The soda-maker says it can translate cultural relevance into sales volume.
Ad position: web_bfu