Costco-Instacart JV tests free one-hour medicine delivery service; competition with Walmart, Amazon intensifies

Many retailers like Amazon and Walmart times have been exploring the prescription-delivery market of late

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Costco, the second largest retailer in the world, is the latest to join the delivery war. The company is teaming up with Instacart to allow one-hour free prescription-delivery service to its members. A large number of retailers are exploring the prescription delivery area of late that also includes retail giants like Amazon and Walmart.

Costco has been trying this pilot for the last few days to customers in Washington and California and plans to expand it in the days to come. The move puts Costco directly in competition with rivals like Amazon and Walmart that have been increasing depending on its strong delivery arm to lure more customers. At the same time, the service can bring relief to thousands of elderly and ailing Americans.

During the pilot, Costco will be offering a free one-hour delivery to orders costing $35 and above. Otherwise, prices will vary depending on how fast a member needs the medicines delivered. The company has already started updating its customers about the new services and banking heavily on the project as delivery war among retailers in the US heats up.

A number of retailers in recent times have been exploring the prescription-delivery market. The pharmacy market in the US is touted to be a whopping $300 billion and delivery time plays a major role for pharmacy chains. The market is fast growing providing a big opportunity for retailers who are trying to penetrate this space.

Costco is already a major player in the pharmacy space, with retail pharmacy in many of its stores. This move is likely to strengthen its presence in the prescription drug space. Amazon, on the other hand, entered the pharmacy space in 2018, following the purchase of Internet pharmacy start-up PillPack.

Walmart was the first major retailer to explore the pharmacy space by offering mail-order medicine delivery service. Costco's tie-up with Instacart to deliver prescription medicines free of cost not only will pose a threat to the likes of Walmart and Amazon but also to large pharmacy chains like Walgreens and CVS.

On-time delivery key to success

An increasing number of retailers in the US are trying to lure customers by offering faster and free delivery. Amazon was the first to start the delivery war post its acquisition of grocery chain Whole Foods in 2018. The likes of Walmart, Kroger and Target Corporation were soon to join the race. Grocery is one of the spaces most companies are focusing on by offering free delivery service.

Last month, Amazon announced that it will be offering free one-day delivery grocery to all its Prime members. This was in a move to attract more customers ahead of the all-important holiday season. Costco's new offering will certainly intensify the competition, more so because an increasing number of retailers are trying to capture the fast-growing pharmacy market.

This article was first published on November 7, 2019