Amazon Emerging Businesses
Two of the top emerging businesses by Amazon include pharmacy (via PillPack) and its AmazonCommercial line. More information about each line of business is provided below.
- The first rumor that Amazon will get into the pharmacy business came in late 2017, but it was only confirmed in June 2018 when Amazon acquired PillPack.
- The PillPack deal was closed at $800 million.
- "PillPack is a pharmacy that delivers medications to customers" where they coordinate refills and renewals, then ship them to customers. The acquisition provided Amazon "entry into the pharmacy business" including in the pharmacy benefits management (PBM) and distribution spaces.
- This is just an emerging business and line of products are still limited. Amazon has not added pharmacy products but it offers over-the-counter pills, medical supplies (i.e. gauze and bandages) and at-home pregnancy kits.
- Amazon appointed Nader Kabbani to handle the pharmacy initiative of the company where the PillPack team will directly report to Kabbani. It shows that the pharmacy business is one of the most ambitious projects of Amazon and the company is intending to disrupt this sector.
- Additionally, PillPack is now seeking licenses to different states that will allow them to expand services. Currently, it already received pharmacy licenses from 19 states, while another three have pending applications.
- The company has also already established mail-order facilities in Austin, TX, Miami, FL, Manchester, NH, and New York, NY.
- The acquisition of PillPack is also to save time applying for licenses because PillPack already had a long list of licenses in hand. The Indiana license they have has changed ownership already and named to Amazon.
- Amazon’s immediate plan is focused on the Indiana region. The company plans to apply for a license for its fulfillment center in Indiana. Also, Amazon is "gearing up for a large expansion in this region, with plans to open an $80 million distribution facility."
- In June 2019, Amazon launched its own private label “AmazonCommercial”. This is the company’s first venture in offering commercial and industrial supplies for targeting wholesale and distribution verticals.
- AmazonCommercial is the company’s private-label brand in commercial paper products such as tissues, paper towels and toilet paper for industrial category targeting business-to-business sector.
- Amazon described this label as creating "value for businesses by providing professional-grade, cost-effective products." This move will directly set them up to compete with brands like Office Depot, Staples, and Grainger.
- This business is just in its nascent stage since it launched only two months ago and offers a limited range with only nine SKUs of commercial paper products.
- Revenue estimates show that the 80-roll pack of toilet paper is sold at 1,230 units monthly making this the most popular product under AmazonCommercial label.
- Amazon is using different tactics to promote the brand such as putting up display ads, sponsored product ads and utilizing Amazon Vine Review Program.
- With B2B sales market projected to value at $6.6 trillion by 2020, Amazon has intent in entering the B2B market.
- It is reported that Amazon is continuing its efforts in tapping the B2B sector and has been integrating Amazon Business to displace "traditional wholesale distributors across verticals". Amazon is intending to "invest more in this direction".
Your research team leveraged reports from the Amazon website, press releases, and media/news reports from sources such as Forbes, CNBC, IBJ, Entrepreneur, Tech Crunch and other similar sites to find emerging business or new business that Amazon has launched recently. We found two of the top emerging businesses of Amazon: pharmacy and AmazonCommercial. We selected these two ventures because of the impact they are projected to bring when launched and numerous expert analyses have been published about them. Additionally, these businesses were shown to garner a lot of attention within their respective industries. The news about Amazon’s acquisition of PillPack and getting into the pharmacy industry created such a buzz that PBM stocks plummeted down upon the news release. AmazonCommercial has also been prevalent in the press since this business line is targeting another sector and space which has impacted its would-be competitors and other Amazon merchants.