Amazon is primarily in the public consciousness as an enormous – and enormously successful – retailer. Yes, it’s probably where you go when you want a book. But it’s also where you go when you forgot your kid needs a pirate costume by the end of the week. Or when you want puppy chow delivered once a month. When you want anything from a Babe Ruth-autographed ball to a three-ton lathe – and, of course, when you want a Kindle, a Fire, an Echo, or any other of their digital devices – Amazon is the answer. Nearly half of all online sales are done on Amazon. But they’re more than that. Amazon owns a digital advertising company, A9. Zappos. IMDB. Goodreads. Whole Foods. Audible. Twitch. It has subsidiaries to manage many of its own logistics, from transatlantic shipping to warehouse robots. Oh, and Amazon Web Services is a $15 billion business that provides a third of the world’s public cloud services.
Why Does Amazon Work?
Okay, Amazon is big. Fourth largest company in the world kind of big. But why? Why aren’t they still just the modest online bookseller they began as in 1994?
That Amazon can work at scale is obvious from the statistics above. The reason it’s grown to that scale is its innovation. And the engine of that innovation is data.
In 1997, founder Jeff Bezos said that Amazon was operating in Day 1 of the Internet economy – but “it’s always Day 1 at Amazon,” said Jeff Wilke, Amazon’s CEO of Worldwide Consumer. Amazon has remained a giant of innovation, perhaps especially in finding ways to remove friction from the shopping process. They know what you want, they have new ways to answer your needs, and they will charge you less to do it. That’s why half of all American households are Amazon Prime subscribers.
The Amazon Go grocery store prototype in Seattle features proprietary Just Walk Out technology, powered by hundreds of cameras and sensors, and an app, all of which monitor shoppers as they move about the store.
“Amazon has fully disrupted the retail space” – CNBC
What IS the “Amazonification” of Health?
Generally, when the term “Amazonification” is used, it’s referring to the increased use of tools and business approaches that make use of big-data-enabled machine learning, which automate processes, work at scale, and increase the popularity of online solutions.
In addition to traditional consumer goods, Amazon is a master at subscription-style services. There’s streaming music and video. There’s Pantry, Subscribe-and-Save auto-delivery and Dash Button for mindless re-ordering of household items.
And increasingly, Amazon is also moving into the healthcare industry, as these examples demonstrate:
- They’ve quietly built a private label of OTC products – for which, of course, they can offer appealing placement and discounts on their website.
- They’re already selling prescription drugs in Japan.
- They’ve gotten wholesale pharmacy licenses in at least 12 states.
- With Berkshire Hathaway and JP Morgan, Amazon has created an independent nonprofit to develop healthcare technology solutions for their employees.
And while Amazon is trying to look more like a healthcare company, the reverse is also true. Healthcare companies are trying to look more like Amazon. From R&D to marketing, data-driven algorithms are being put to work to try to get better results faster. And healthcare brands continue to consolidate and become more focused on the patient journey. This is exemplified by mergers like the recent CVS purchase of Aetna, and now the rumored offer by Wal-Mart for Humana.
But the Amazonification of health is happening not because either Amazon or the healthcare industry is driving it, but because the consumer is demanding it. We are the beneficiaries of “customer-obsessed” (Amazon’s term) innovation in all other facets of our world. We want the same for our health.
What Happens Next?
Iteration is the soul of innovation, and Amazon will continue to iterate. Perhaps Echo assistants in every hospital room will replace rounds, listening to patients, recording vital signs, summoning specialists, and ordering medications. Perhaps all of the data Amazon gathers on what you read, watch, listen to, purchase, wish for and use will be used in a new wearable that more accurately predicts your health situation. Whatever it is, it’ll demonstrate Amazon’s ability to combine their skills in new ways.
“Behind Amazon’s success is an extreme tolerance for failure.” – Seattle Times
But not everything they touch turns to gold. Amazon bought 40% of Drugstore.com in 1999 – remember them? Did you have an Amazon Fire smartphone? Are you on Amazon Spark, their unsuccessful Instagram competitor? You probably said “no” to all three. But those examples don’t make Amazon unsuccessful – rather, they demonstrate how willing the company is to experiment. And perhaps that is the largest lesson for healthcare.
Amazon is yet another force creating greater pressure for healthcare companies to readjust the balance between the value of the product and the amount they sell – between price and volume. When forced to be more competitive on pricing, they will need to be more aggressive in volume. But not every category has large potential volume. In rarer diseases with smaller populations, it will be even more important to get more juice out of their targeting squeeze.
Microtargeting and delivering relevance will become mandatory to help brands succeed. Combining innovative solutions in new ways will be necessary, not optional, to remain competitive in a marketplace where the lines between healthcare marketing and consumer marketing are increasingly blurred.
“It’s only a matter of time until Amazon gets into the prescription drug business in the U.S.” – Justin Chase, EVP/Head, Innovation & Media, Intouch Solutions
As Forbes put it, “Amazon is obsessed with data.” “Amazonification” is, mostly, just a long word for “data.” Amazon succeeds because it minimizes overhead and maximizes data to improve supply chain efficiencies on the back end, and customer interaction on the front end.
The smartest healthcare companies will learn from this. And the smartest healthcare marketers will embrace Amazon’s example to ensure every marketing decision is data-driven and customer-focused.
When pharma someday learns to apply data like Amazon does, the customer experience will not only be vastly improved, but marketing itself will become smarter, more automated, and much more efficient.
The Amazonification of health is happening, slowly but surely, whether pharma is ready or not. To maintain and build relationships with their customers, pharma marketers must reach for the “Amazon bar” – successfully providing customers with convenient products, tools and information, while finding ever better ways to reach and understand them.
Authors: Wendy Blackburn, EVP; Justin Chase, EVP/Head, Innovation & Media; Aaron Uydess, EVP, Customer Experience & Analytics; Sarah Morgan, Content Strategist