According to the The Wall Street Journal article that I’ve attached, Amazon is desperately trying to find a “fourth pillar,” the company’s next big hit. It’s proving to be a much bigger challenge than Amazon and Wall Street imagined.
Amazon successfully operates three pillars:
- An online retail marketplace.
- The Amazon Prime membership program.
- The cloud-computing unit, Amazon Web Services.
The company’s core online shopping business, Prime and AWS account for almost 90% of the company’s sales.
An area of interest that Amazon is trying to build into a pillar is healthcare; Amazon CEO Andy Jassy is passionate about the subject.
The truth of the matter is that most of what Amazon has done in healthcare hasn’t worked. Amazon acquired PillPack and 1Life Healthcare, which operates a primary-care practice named One Medical. It’s not enough.
In my opinion, Amazon’s healthcare strategy has been weak. Amazon wants to become a leader in an industry with entrenched competitors like CVS, Cardinal Health, McKesson, and Walgreens. Each of these companies have years of experience and millions of customers. Amazon can’t think small. Amazon must Think BIG.
I recently wrote a post and article about Walgreens. Divesting the company to Amazon is the best thing that can happen to Walgreens Boots Alliance, in my opinion.
Amazon wants to make healthcare a pillar. Amazon should acquire Walgreens – a company that generated over $100B in revenue in 2022 but with a market cap of only $19.35B – Amazon can easily make the acquisition. Amazon may choose to divest Boots and only retain the Walgreens brand.
Acquiring Walgreens will make Amazon a major player in healthcare. Amazon will be able to significantly reduce costs at Walgreens by streamlining IT and taking over the company’s supply chain and logistics operations. Walgreens has over 9,000 stores. Amazon can divest the stores that don’t meet their needs, and curate an assortment of products, including groceries, to significantly increase sales at the stores they keep.
An Amazon owned and managed Walgreens has incredible growth potential.
Wall Street and shareholders are praying that Amazon can find a 4th pillar. I believe acquiring Walgreens is the answer to Amazon’s prayers.