Amazon Business: Healthcare Product Distribution

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What were some of these inefficiencies, and how was Amazon trying to change that?

There were many inefficiencies, like how products are priced. For example, a box of gloves has a price generally not controlled by the manufacturer but by the distributor. The distributor has price control, which is unique.

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You mentioned that Amazon, in your view, was very patient and perhaps not buying its share into different verticals. The pace of expansion was very measured and methodical. In your experience in healthcare, did you experience this, and in what regard?

Anything a hospital buys is generally covered by a multi-year agreement. Getting products into this highly contracted environment is tricky and requires a unique strategy and engagement approach. Some of the most successful and admired companies in the US are involved in medical. Amazon has expressed a desire to be a major player in this field, willing to learn gradually and initially focus on non-contracted spend. Our big pitch was to take 20% of non-contracted spend and build our business on that as we learn the space. Even 5% of healthcare's acute care spend is significant business.

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Because of the economics as well. Like you mentioned, how it changes from selling perhaps gloves to very complex medical devices. What was the markup you would charge?

Here's the other thing about those categories; the reason vendors love them is because of the preference. If you get a surgeon who prefers your brand, you're golden. Procurement can't touch it. Procurement can come in and say, that product's too expensive. We don't Have a contract with them. We need you to change. And your best surgeons, they're going to be like, are you crazy? I've used this brand since medical school. There's no way I'm switching. And so the best products understand the value of preference and they are driving towards preference with every fiber in their being to claim these surgeons for the long haul.

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