A deep dive into the e-commerce opportunities and pain points within the healthcare industry

It’s the age of rapid delivery, and it doesn’t stop at retail. The rise of e-commerce is affecting all industries including the healthcare business. In fact, the healthcare industry is prepared to spend an estimated $32 billion on e-commerce and web services technology annually, says Goldman Sachs. That’s five times more than the $6 billion online retailers spend annually on all forms of e-commerce and services.

Consumer retail spending for durable medical equipment, a category that includes items such as eyeglasses and hearing aids, has reached $48.5 billion – up 4% from the previous year. In 2016 consumers spent an estimated $322.7 billion on prescription drugs at chain or independent pharmacies, and the growth for prescription delivery doesn’t seem to be slowing down.

Because of the industry growth and the growing desire for convenience, there is a huge opportunity for healthcare companies breaking into the e-commerce business.

The State of Healthcare

The US healthcare system is a $3.2 trillion market that breaks down into many different segments including hospitals and health systems, insurance companies, physician groups, drug and medical equipment manufacturers, and pharmacies. Today, healthcare products, services, and prescription spending are opening all sorts of new opportunities for large pharmacy retail chains like Walgreens, CVS and even Amazon.com.

Currently 68% of today’s businesses consider getting into the healthcare market a very important priority. Businesses such as Walgreens and CVS are taking their e-commerce operations and transforming them into digital delivery platforms that offer consumers a variety of services.

Amy Madonia, founder and principal of Madonia Consulting, a New York B2C e-commerce and digital marketing consulting firm says, “The healthcare industry is digitizing rapidly, and the customer is getting comfortable with going online for their healthcare needs by doing research on symptoms or specific doctors, paying bills, buying products and generally getting more educated about their options. There is an opportunity for niche web merchants in healthcare to succeed.”

Healthcare Companies Making a Big Play in E-Commerce

It is predicted that more niche merchants will be launching to provide more ways for consumers to buy and fill their prescriptions online.

For example, since co-founder, CEO and pharmacist T.J. Parker launched his company PillPack in 2013, the company has raised $93 million in funding to build their digital pharmacy base. PillPack handles several prescription medications for their clients by sorting, packaging and delivering their doses – all while providing 24/7 pharmacy staff accessible over the phone or online. Every two weeks consumers are mailed their personalized roll of pre-sorted medications, along with a recyclable container.

Other pharmaceutical companies, like CapsuleCares.com, are utilizing same-day carriers in order to promise free two-hour delivery to those that live in the surrounding area. Additionally, medical device manufacturers and distributors are launching e-commerce websites where consumers or physicians along with their support personnel can order medical supplies and equipment direct, stating that online competition are forcing them to operate differently.

And then we have Amazon. Rumors are flying that Amazon isn’t targeting the healthcare market, but they are in fact already in the midst of it and growing. Right now, Amazon currently sells a broad array of general medical supplies and equipment and has already obtained licenses to distribute medical supplies to providers in 43 states. In fact, CNBC reported that Amazon.com was developing plans to get into the online pharmacy business, which doesn’t seem so out of reach with their purchase of Whole Foods. This would put the leading online retailer in direct competition with Walgreens, CVS, or some of the earlier listed startups like PillPack or CapsuleCares.

The Pains of Making a Play in E-Commerce

With great opportunity comes great difficulty. While customers are more than willing to purchase medical devices online and choose to have their prescriptions to be sent to them, delivering isn’t so simple. There are specific rules and compliancy hurdles that the healthcare industry must consider.

  • Security: Healthcare companies are tied to HIPAA compliance and must adhere to HIPAA regulations when it comes to patients. That means that companies need to make sure all of their patients’ medical information remains private, secure and encrypted at all times – even during delivery.
  • Time Sensitivity: In retail, if a delivery is missed it usually won’t be a life or death scenario. In healthcare, however, it very well could be. If a patient is depending on a vendor system that will deliver them time-sensitive medication or a much needed medical device, the system must always get these packages to him/her on time. For healthcare companies creating an e-commerce strategy, it is important to understand that consistency and reliability are among the top goals in regards to shipping and receiving medications and other healthcare supplies on time.
  • Compliance: It’s just as important for healthcare companies to ensure that they are compliant with the carriers they are utilizing for deliveries. Often times, medical devices and medications require a signature upon delivery, so navigating the carriers’ frequently changing requirements and associated protocols is a must. Maintaining compliance with FDA regulations related to shipping records is also a concern.
  • Hazmat/Dangerous Goods Compliance: Automating the complicated paperwork of hazardous and radioactive materials, and shipping them, is a headache for some companies in the healthcare industry. Improving productivity, lowering costs and keeping regulations up-to-date, all while avoiding fines and returned shipments is imperative for hazmat compliance.
  • Visibility and Reporting: In order to be successful in e-commerce, you need a good customer service strategy. Today’s customers, especially those ordering time-sensitive items, need updates on when their orders will be delivered. Not only that, but your own team is going to need visibility into the service quality of your carriers and notifications of delivery incidents/exceptions.
  • Heavy Business Rules: When it comes to shipping, many healthcare companies need to have custom business rules in place in order for their products to be shipped the right way. For instance, some products can only travel specific expedited services, or some are temperature-controlled shipments that need dry ice. Building, managing and updating these complex business rules can be an exhausting task.

Finding the Right Parcel Solution

There are a lot of e-commerce vendors that would consider healthcare as the holy grail of industry markets and also a lot of healthcare companies who are looking into e-commerce strategies to keep up with competition. The size and diversity of the market for digital healthcare, including e-commerce, mobile, database and customer service/customer relationship management, is estimated to be about five times bigger than the market for B2C e-commerce services.

E-commerce is changing everything, and in order to keep up with the growing e-commerce industry, healthcare companies need solutions they can trust. Each company has different requirements, so finding a flexible and scalable shipping solution that relieves your unique pain points, such as security, time sensitivity, compliance, hazmat, tracking and business rules is imperative.