CVS Adds Home Delivery With Help From Post Office
June 19 2018 - 08:29AM
Dow Jones News
By Sharon Terlep
CVS Health Corp. has enlisted the U.S. Postal Service for a new
home delivery service, as the drugstore giant strives to stave off
Amazon.com Inc. and other rivals.
CVS struck a deal with the Postal Service to pick up
prescriptions at CVS stores and bring them to customers' homes in
one or two days. Customers will be charged $4.99 per delivery,
which could include over-the-counter products such as aspirin or
face wash.
CVS is rolling out the nationwide service as it fights falling
sales in its roughly 9,800 pharmacies and braces for potential
competition from Amazon, which has considered launching a
prescription offering and has made a bigger push into medical
supplies. CVS is also facing competition from venture-backed
startups like PillPack Inc. and Capsule Corp., which provide home
delivery of medicines.
CVS executives last year said they would launch the service, but
didn't say how they would handle the last-mile delivery, an
expensive service that has vexed many businesses. It has chosen the
Postal Service to carry out a mission that other major retailers
have tasked to parcel giants like United Parcel Service Inc. or
FedEx Corp. -- or turned over to startups.
Target Corp. last year paid $550 million to acquire grocery
delivery startup Shipt Inc., in an effort to quickly expand
shipping services. Walmart Inc. plans to offer grocery delivery in
100 cities by the end of the year. It is using several services
that use contract workers similar to Uber, and a handful of stores
is testing a program in which store workers deliver some orders
placed on Walmart.com.
For years, filling prescriptions was a reliable way for CVS to
draw shoppers to its stores, where it could also sell other items.
Last year, retail accounted for about 40% of the company's total
revenue. As the pharmacy industry shifts, CVS has focused on the
insurance and pharmacy benefits businesses, including a $66 billion
bid for insurer Aetna Inc. CVS offers mail-order prescriptions
through its pharmacy-benefits manager.
Amazon relies on the Postal Service to deliver about half of its
U.S. packages every day, according to analysts' estimates. The
service Amazon primarily uses requires the shipper to sort its
packages by ZIP Code and postal route, and drop off the parcels at
the closest post office for delivery. Letter carriers bring the
boxes to recipients' doors.
CVS, by having the Postal Service pick up packages at stores,
will avoid the logistical challenge of getting packages to the post
office. Still, the Postal Service's network was built for letters,
not parcels. The deal also comes at a time that President Donald
Trump has criticized the quasigovernmental agency's dealings with
Amazon and launched a task force to examine its finances.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
June 19, 2018 08:14 ET (12:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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