Amazon Backing Off Hospital Sales

Amazon is a juggernaut that seems to enter one market after the next.  Most of these ventures are successful for the firm but not all work out well.  A recent example relates to Amazon’s plans to sell pharmaceuticals to hospitals as detailed in this USA Today article.  Amazon’s goal was to apply their logistics expertise and bulk savings benefits to pharmaceuticals and start supplying hospitals directly.  According to the article, this is looking harder than they originally intended for a a couple of reasons.  The biggest issue seems to be challenges disrupting the existing purchasing process.  Hospitals have existing processes and suppliers and they appear to be unwilling to change those processes.  Another possible issue could be logistical – transporting materials that need to be refrigerated.

There are several marketing concepts that could be tied to this article.  There’s a logistics management issue Amazon would have to address, there’s a direct link to personal selling and the potential advantages that is providing incumbents, a general opportunity to discuss the buying behavior of business and organizational customers, and there’s the specific issue with the existing buying centers being unwilling to change their purchasing processes – presumably even when that change could result in lower cost.  That last issue could potentially represent an ethical discussion as well.  If insurance companies pay the bill, should hospitals be worried about cost management?