Amazon’s One Medical acquisition – why Australian healthcare businesses should be on notice


One Medical is an app that allows its US members to make same- or next-day GP appointments, gives access to 24/7 virtual care, and has a range of other health services.
Having firmly established itself as a global retail superpower, Amazon is now turning its attention to healthcare. | Image source: Alejandra Villa Loarca/Newsday RM via Getty Images

It was only five years ago that retail behemoth, Amazon, graced Australia’s shores. And despite a sluggish start, Amazon’s Australian sales have increasingly gained momentum, reaching an impressive $1 billion by 2020. With continued growth expected, Amazon is predicted to completely dominate the local eCommerce market by 2030, making it increasingly more difficult for local retailers to compete with Amazon’s low prices, frictionless shopping experience, and speedy delivery options.

Having firmly established itself as a global retail superpower, Amazon is now turning its attention to healthcare. It recently announced plans to purchase One Medical – an app which allows its US members to make same- or next-day GP appointments, access to 24/7 virtual care, and a range of other health services. And while many will agree that America’s health system is in drastic need of an overhaul (two thirds of Americans who file for bankruptcy do so due to their exorbitant medical bills), the potential ripple effects of this acquisition should have the close attention of the Australian healthcare sector.

eCommerce meets health

If Amazon’s sweeping retail dominance is anything to go by, it’s unlikely One Medical will be its only healthcare play. With an entire chessboard of healthcare products and services ripe for disruption, the One Medical acquisition could simply be its opening move. Amazon has both the infrastructure and digital commerce capabilities to perfectly bridge healthcare’s digital and physical worlds, transforming a healthcare app like One Medical into a one-stop-shop for prescription drugs, vitamins and supplements, health food, eyeglasses and contact lenses, orthodontics, and even health insurance policies. In the same way Amazon offers a completely frictionless shopping experience, it has the capacity to bring the same effortless, digital commerce experience to healthcare.

“Alexa, schedule my next dentist appointment.”

“Alexa, fill my Cefalexin prescription.”

“Alexa, what are the best deals on vitamins?”

According to Adobe’s The Consumerisation of Healthcare report, consumers expect a healthcare experience that is responsive, convenient and digitally enabled. Further, nearly 60% of all respondents said they would “absolutely” or “very likely” switch providers if offered an experience that includes faster appointments, online booking and video appointments. This insatiable consumer demand for convenience, combined with Amazon’s unparalleled ability to deliver, has the potential to disrupt the healthcare industry as we know it within the next five to ten years.

Light years ahead

The biggest threat from Amazon is that its infrastructure is already in place. Despite an uptick in telehealth appointments as a result of the pandemic, the pace of digital adoption in Australia’s healthcare system has been lagging – to the point where some health and medical brands still rely on print catalogues and fax.

The other key difference is that Amazon already owns their customer, giving them access to invaluable first party data. Although some companies are dipping their toes in the Direct to Consumer (DTC) space, many health and medical brands sell via pharmacies and retailers, so they don’t have access to the rich consumer insights needed to perfect a digital commerce strategy. From this perspective, Amazon has an immediate competitive advantage.

Even niche B2B medical and pharmaceutical companies selling specialised devices, surgical appliances, medical imaging and biotechnology should all be aware – they are all at risk of market disruption should Amazon decide to compete in this sector. B2B eCommerce is already on the rise – just like consumers, buyers now want to be able to order stock with the same ease they make online purchases in their personal lives. And Amazon could easily ramp up its ability to sell medical equipment to hospitals and specialised health facilities, in the same way it can deliver goods to consumers. The capabilities of a digital commerce Goliath like Amazon simply cannot be underestimated.

Start small, but start now

For now, Australia isn’t in the crosshairs. But the chances are, it’s only a matter of time. And unlike its entrance to the local retail market five years ago, Amazon has already won the hearts and minds of many Australians. Once it perfects its healthcare offering in the US, there is no doubt it will turn its attention Down Under.

Health, medical and wellness businesses who aren’t already thinking about digitisation, need to start making this a priority. But transformation doesn’t have to happen at once – the smartest strategy for businesses looking to digitalise, whether that’s moving into DTC or exploring B2B eCommerce options – is to start small. They need to develop a prototype, to test it with a select group of customers, analyse customer journeys, and keep testing and tweaking until it’s ready to scale. It might take years to get right – which is why businesses cannot afford to wait to get started. That way, in five to ten years’ from now when we hear confirmation that Amazon Health is coming to Australia, the businesses who went digital today will be confident, ready and waiting.

James Horne is CEO of Balance Internet and a digital commerce innovator and thought leader with a passion for driving business success from digital commerce ecosystems. Find out more at Balance Internet