CVS Health Corp (NYSE:CVS) has announced a same-day delivery service in some U.S. cities and next-day delivery all over the country as it prepares for an onslaught from Amazon.com, Inc. (NASDAQ:AMZN). Initially CVS Health will offer same-day delivery services in Manhattan at no cost starting next month. The same-day delivery service will be expanded to other U.S. cities such as San Francisco, Washington, D.C., Philadelphia, Boston and Miami next year.
In Manhattan it will only take a couple of hours for orders to be delivered to customers. Couriers will be hired by CVS Health to deliver the prescriptions as well as other products. The parcels will be delivered in packaging that is secure and tamper-proof.
Amazon eyeing sector
Though Amazon has never publicly admitted that it is entering the pharmacy business Wall Street widely expects it to and for CVS Health and other drugstore chains such as Wal-Mart Stores Inc (NYSE:WMT), Walgreens Boots Alliance Inc (NASDAQ:WBA), the online retail giant poses the biggest threat in the near-term.
“The prospect of Amazon entering has motivated CVS to do something they probably should have done years ago. I think it also is a great signal that Amazon is not going to be able to walk into the pharmacy or pharmacy benefit management industry and immediately take it over,” said Pembroke Consulting’s president, Adam Fein.
According to a spokesperson for CVS Health the delivery service will be faster and offer a wider reach compared to the mail-order business. Currently CVS Health has over 9,700 retail locations and this includes pharmacies situated inside the stores of Target. Some years back a curbside pick-up service was launched by the drugs retailer and about 1,600 locations already offer this service.
Though it beat Wall Street’s estimates in the most recent quarter, slowing sales in established sales as well as company network exclusions led to a decline in profits. Among the networks that CVS Health has been excluded from is the Tricare program which offers coverage for members of the military and their families. Another factor that caused the drop in profits was hurricanes that pounded Puerto Rico and coastal areas of mainland U.S.
On Monday shares of CVS Health Corp fell by 3.54% to close the day at $66.80.