Why Amazon Is Giving the Healthcare Distribution and Manufacturing Worlds the Jitters.

28 Jun Why Amazon Is Giving the Healthcare Distribution and Manufacturing Worlds the Jitters.

Imagine the following scenario: a dental, medical or veterinary office manager saying “Alexa, add gloves to my last order.” That’s a real possibility and may come sooner than many people would like. And just imagine how Amazon’s predictive sales engine will transform these practices or any B2B enterprise.

It’s not exactly an open secret, Amazon, the online behemoth is at all the trade shows and its presence is sending shivers throughout the industry. What is Amazon doing in the healthcare distribution space? How will Amazon affect healthcare manufacturers? About a month ago I started pondering ideas for this post, furiously scribbling point and counterpoint my trusty blue and gold notepad. Apparently, I wasn’t thinking and writing fast enough…and in a flash, Amazon bought Whole Foods in a blockbuster deal.

Abe Kasbo is CEO of Verasoni Worldwide a marketing and public relations firm

Abe Kasbo
Verasoni Worldwide

If and when the deal gets through regulators, Amazon will have a physical presence with 450 locations, giving its logistical operations more firepower, and its technology new fertile testing ground. With this acquisition, Amazon has taken a loud shot across the bow to enterprises across the bow signaling its willingness to enter almost any market it wishes. In Darrell K. Rigby’s Harvard Business Review’s he sheds light on the implications of Amazon’s latest move for the retail space, and I believe there are similar lessons in the B2B space, especially for Healthcare distributors and manufacturers.

What’s not news is that Amazon is already in this space. Amazon Medical and Amazon Dental are simply Amazon Business Prime with a market focus. And why not? “Easy” is the new luxury brand, and Amazon makes things easy for small and medium businesses (SMBs). Medical, dental and veterinary offices are SMBs. The thing is, Amazon is not about the books or bikes it sells, nor the businesses it acquires; it’s about an unmatched business mindset that’s manifested in the digital worlds. When you drive innovation, combining speed, precision, and an unapologetic willingness to fail and try again, you get Amazon. That is something healthcare distributors and manufacturers find challenging in their own organizations, let alone keeping pace with the online giant that can turn on a dime. Amazon is not playing for today, it’s playing for incremental market share today but the certain domination of tomorrow’s markets.

One thing is quite certain, healthcare distributor and manufacturers must move smarter and with urgency to better serve their customers on two fronts at the same time; digitally and physically. Yes, Warren Buffet recently exited Walmart after 12 years naming Amazon as a chief factor, but Walmart seems to be rising to the challenge with its own innovation team, as well as recent acquisition of Jet.com, Bonobos and other notable online retailers with unique technologies. Make no mistake, these acquisitions aren’t necessarily about market share, they are about leading technology and processes. Note: Walmart is not acquiring SEO companies to figure out how to drive more visits to its website (that is the past), it’s acquiring forward thinking technology that will be the engine of future business and growth. At the same time with its acquisition of Whole Foods, Amazon just made the offline, physical world more relevant.

So where do healthcare distributors begin eating this elephant? Here are 4 meaningful strategies to start right now:

  1. Remake Innovation Teams Immediately: Many healthcare distributors and manufacturers already have innovation teams. These teams are made of well-intended managers, who may be versed in innovation by internal or industry reputation because they’re well read or attend conferences; but they are not, in themselves true innovators. Innovation is not a part time job or done by once a month committee meetings. Innovation teams are super-focused, full time positions designed to move the business forward, and in many ways present an uncomfortable yet productive counterculture experience for the business. Innovation teams must have the power of budget and more importantly the CEO’s full support giving them ultimate power to fail and succeed with impunity. Lack of digital experience is no longer an excuse and know holding on to old business habits is costing your business both money and opportunity.
  2. Customer Database Is A Huge Advantage (right now) – The one clear and irrefutable advantage healthcare distributors and manufacturers have on Amazon right now is their customer database. They know what and when customers buy, what they have in their offices, and what’s next for the customer’s business life cycle. Amazon doesn’t have those crucial insights…right now. What Amazon does have is accounts… doctors, dentists, and vets and their office managers have Amazon accounts. If indeed “easy is the new luxury brand,” then distributors and manufacturers must look at their customer database and associated data as indispensable; the pot of gold at the end of the rainbow, and go get it. No, not just building a new website, or the running down the rabbit hole of marketing automation; but examining what your customers need, and delivering it to them digitally easier than you are already delivering it, learn and do it again but better next time. Don’t talk about it, do it.
  3. Fearlessly Commit to Digital Integration – History is littered with companies who did not move fast and smart enough, consider Blockbuster vs. Netflix. Blockbuster was out of business in a flash because its culture viscerally did not understand and rejected what Netflix meant to Blockbuster’s own customers. The same could happen here. Virtually every doctor or office manager has an Amazon account. That’s the key for Amazon, though as I mentioned in point 2, healthcare distributors and manufacturers hold THE most valuable asset right now, the customer database. The race here will be between the learning curve of having Amazon understand the business of those account holders and healthcare distributors and manufacturers who already know these customers and can move to deliver products seamlessly online. The entity that gets there faster will win.
  4. Consolidation is Not Protection: Gaining market share through acquisition may be perceived a safer play some shareholders, but it’s by far more risky in this climate. Sure, you can buy a competitor or a merge with a partner, and indeed that may provide some downside protection for the moment, but if they are not bringing technology or innovation that works from the “customer back” and not from “you to the customer” to the eventual deal, then you’ve already behind. Like Walmart and Jet.com, Walmart didn’t need Jet’s retail experience; it needed its technology and strategic approach to online retailing. Also, there are hundreds of companies in the retail technology space, and Walmart’s focus on Jet.com is a result of its ability to separate fact from fiction. Make sure your future technology partners aren’t selling you a bill of goods, and you understand the difference between technology, yesterday’s technology and what the market is demanding to drive your business.

What’s next? Start now, not tomorrow, not later today. Now. Focus on a complete and fearless digital game plan that runs parallel to your existing business. Provide room for unapologetic failure, because you will fail, but you’ll learn quickly. Get out of the inter and intra-industry echo chamber because talking to each other may not be as helpful as you think. And you’ll know on the right path because you’ll be able to track results through analytics, namely, online sales and market share gains. And with that, you’ll lead your industry while protecting and growing your market position.