Amazon Expands Same-Day Medication Delivery Service

Amazon Stock

Amazon (NASDAQ:AMZN) has extended its same-day medication delivery service to New York City and Los Angeles as part of its efforts to strengthen its online pharmacy retail business, Amazon Pharmacy. Residents in these areas suffering from common conditions such as flu, high blood pressure, and diabetes can now receive their prescribed medicines within hours.

To enhance delivery speed, Amazon Pharmacy has established new small-format facilities stocked with commonly prescribed medications. The company has also announced plans to deploy a pharmacist and fulfillment team in Brooklyn to expedite deliveries. Additionally, Amazon plans to utilize generative AI and machine learning technologies to streamline the fulfillment process.

Amazon aims to expand its same-day prescription medication delivery service to over a dozen cities across the United States by the end of the year. Currently, the service is available in Austin, TX; Indianapolis, IN; Miami; Phoenix, AZ; and Seattle, WA.

The expansion of this service underscores Amazon’s commitment to reaching more patients, thereby benefiting its online retail business, which is a primary growth driver for the company. Year-to-date, AMZN shares have gained 17.3%, outperforming the industry’s rally of 9.7%.

Growing Pharmaceutical Retail Efforts

According to Statista, the online pharmacy market is projected to generate revenues of $52.51 billion in 2024, with an expected increase to $81.37 billion by 2028, representing a CAGR of 11.6% between 2024 and 2028.

Amazon is well-positioned to capitalize on this market growth through Amazon Pharmacy, which allows customers to order medications with a prescription from a licensed healthcare provider. In addition to expanding its delivery service, Amazon has partnered with Eli Lilly (NYSE:LLY) to provide home delivery of drug prescriptions through LillyDirect, covering medications for diabetes, obesity, and migraine.

Moreover, Amazon’s introduction of RxPass, a Prime membership benefit offering eligible medications for a flat monthly fee of $5 with free delivery, has been well-received. The company has also launched drone delivery of medicines from Amazon Pharmacy, promising delivery within 60 minutes of order placement.

These initiatives are expected to drive growth in Amazon’s online store sales and subscription revenues, particularly through pharmacy-related Prime perks, ultimately contributing to the company’s overall top-line growth.

For the first quarter of 2024, Amazon anticipates net sales between $138 billion and $143.5 billion, representing an 8-13% increase from the year-ago quarter. The Zacks Consensus Estimate for the same period stands at $142.42 billion.

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