CVS targets millennials with Amazon-like membership

CVS has a plan to win over millennials and it looks a lot like Amazon Prime: free home delivery of products from shampoo to cold medicine, all for an annual membership fee of $48.

CVS announced its CarePass program will expand nationwide. The company tested the membership in Boston, Philadelphia and Tampa. Consumers pay $5 a month or $48 annually for free delivery on drugstore products and prescription drugs, discounts on CVS-branded items, a monthly $10 coupon and access to a pharmacy hotline.

Results from the pilot showed 20% of people who enrolled were born between 1981 and 1996.

“That’s something we wanted,” told CVS Pharmacy President Kevin Hourican. “Millennials are time-starved, and we want it to be easier to do business with you.”

Pharmacy chains like CVS and Walgreens are fighting to stay relevant as consumers, especially younger ones, shop online more and in physical stores less. Their business models rely on people buying toothpaste, vitamins and other convenience items in addition to filling their prescriptions.

Amazon has already eaten into sales of these items, called front-store products. The e-commerce giant also threatens their pharmacy businesses with PillPack, an online pharmacy it acquired last year.

Hourican declined to specify what percent of customers shop in CVS’ stores compared to its website, saying the “vast majority” of purchases are made in stores. CVS knows its customers are shopping online and wants to them there — even if that means they don’t stop in their local CVS.

“We think this program extends the convenience advantage,” Hourican said. “We are a very convenient shopping location because of our footprint, and this expands our convenience one step further.”

While the membership includes free shipping, it takes one to two days. That could dissuade consumers who need an antibiotic or a gallon of milk right away.

Still, the pilot program showed that CarePass members spent 15% to 20% more at CVS. Hourican said the higher sales outweighed what CVS spends on shipping and promotions.

Source: cnbc.com