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Amazon in the Healthcare Supply Chain

 Amazon in the Healthcare Supply Chain


While some people still remember Amazon’s beginnings as a purveyor of books, it has long been clear that Amazon’s ultimate goal is to dominate the sales of practically everything to practically everyone. The June, 2017 issue of Modern Healthcare accurately describes Amazon’s new status , “The e-commerce giant continues to transform virtually every segment of the economy as it leverages its massive distribution network to deliver logistical harmony”.

In the healthcare supply space, many assumed that barriers to entry, such as the uniquely specialized nature of the market as well as the expertise and knowledge necessary to support medical products, would protect them from companies like Amazon entering the space. It is now clear that the purveyor of books knows no boundaries and will access the healthcare market.

Amazon has been planning its entry into the healthcare supply chain for more than two years. In fact, an MDDI Online article from February, 2015, pointed out that Amazon is poised to disrupt the med-tech industry. The prediction came from Frost and Sullivan, a global research and consulting organization, and while Amazon’s campaign into the medical world has not gone exactly as predicted, Amazon currently holds a solid foothold in the hospital market. The article went on to suggest that Amazon would ultimately compete with Group Purchasing Organizations for market dominance. Interestingly, GPOs have long been associated with pricing discounts related to volume aggregation; however, their presence in the logistics and ecommerce world has never materialized creating a significant advantage for Amazon who can bring both volume pricing influence while excelling at market place and logistics efficiency.

Amazon’s launch into the healthcare marketplace was purposely delayed as it built out its rapid deployment-same day delivery model in fifty cities. Local distributors with same day delivery capability no longer enjoy a logistical edge over Amazon in the health care market. Initially it is believed Amazon will have the greatest impact on the large medical supply distributors that service the hospital market, as Amazon targets the large volume business.  However, Home care providers can expect Amazon to invade their space as well. MMDI online said it best, “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.”


Modern Healthcare Magazine: Amazon poised to deliver disruption in medical supply industry