Amazon quietly launched Basic Care, an exclusive line of 60 over-the-counter healthcare products, in August — a move that could place more pressure on pharmacy retail chains, reports CNBC.
Here are seven things to know.
1. The products in the Basic Care line, which range from ibuprofen to hair regrowth treatment, are produced by Perrigo, a private-label manufacturer.
2. Although Amazon doesn't own the 60 OTC products included in the exclusive Basic Care line, it does put the e-commerce giant in a position to pressure store-brand profit margins.
"[T]he fact they have a near monopoly in e-commerce gives them a lot of scale that can allow them to undercut price. So that aspect should be concerning for whoever their competitors are in that space," Matthew Oster, head of consumer health research at Euromonitor International, a global market research firm, told CNBC.
3. Amazon already sells OTC medications such as Advil, Mucinex, Nicorette and products from Perrigo's generic brand, GoodSense, which are all subject to price fluctuations from competitors. However, its exclusive Basic Care line would not be subject to the same fluctuations, according to the report.
4. Private-label brands like Basic Care offer higher margins than national brands, and stores can keep them priced similar to the name brand as long as they are cheaper.
5. According to CNBC, a 500-pill bottle of 200 mg Basic Care ibuprofen costs $6.98, where the same bottle costs an average of $12.41 across Walmart, CVS Health, Walgreens and Rite Aid. An Amazon spokesperson declined to disclose the margins for Basic Care products, but said the company "works hard to offer low prices across its entire selection."
6. However, just because Amazon can offer a low price on OTC products doesn't mean other pharmacy retailers are destined for failure. Often, consumers do not have a stock of cold medicines, instead waiting to purchase the medications and running to a nearby store when they need them.
7. An Amazon spokesperson told CNBC that Basic Care will not give the company a pathway to sell prescription drugs. However, the e-commerce giant has expressed interest in entering the prescription drug space throughout the past few months. Late last year, Amazon participated in exploratory talks with generic drugmakers and obtained pharmacy licenses in more than 10 states.