As CVS and Walgreens face challenges, Walmart announces prescription delivery service to customers.

• Walmart said Tuesday that it will start delivering prescriptions to customers' doorsteps.
• By the end of January, the discounter plans to expand its prescription delivery service to 49 states, starting with six states.
• Walmart is expanding while Walgreens and CVS are closing stores and attempting to revive their struggling businesses.

To improve profits and investor sentiment, Walgreens announced on Tuesday that it is introducing a new service for customers: home delivery of prescriptions.

Walmart, the largest retailer in the nation, announced that prescription deliveries are now available in six states: Arkansas, Missouri, New York, Nevada, South Carolina, and Wisconsin. The company expects to deliver prescriptions in 49 states by the end of January, except for North Dakota due to state laws.

Walmart's prescription delivery service is another way the company is competing on convenience and low prices. Customers can now get a variety of items delivered at the same time, including items like tissues, blankets, and chicken noodle soup.

The new delivery service offered by Walmart could potentially harm drugstore chains, which have been losing favor with consumers and experiencing declining profits and stock prices. However, it is uncertain how much market share Walmart can capture from CVS and Walgreens, both of which provide same-day, one-day, and two-day prescription delivery options.

Walmart U.S.'s chief e-commerce officer, Tom Ward, stated that the company introduced pharmacy deliveries in response to customer demand.

He stated that this is the most requested service by our customers.

Walmart tested deliveries in several states and found that customers benefited from receiving a variety of items, including prescriptions, in one delivery.

New prescriptions and refills can be delivered through Walmart's delivery service, which costs $9.95 for standard doorstep delivery. However, Walmart+ members can enjoy free delivery.

The company announced that health insurance plans will be applied to transactions, similar to how they are used in stores.

Walmart's pharmacy deliveries will include additional safety measures, such as tamper-evident packaging, real-time order tracking, and a photo of the prescription being delivered via the app or email. Customers will also be required to do a consultation with the pharmacy by phone before ordering a new prescription for delivery.

Nearly 60% of Walmart's annual revenue in the U.S. comes from groceries, but health and wellness is a growing category for the company, with pharmacy, over-the-counter drugs and other medical products, optical services and other clinical services accounting for about 12% of its annual revenue in the U.S.

A new challenge for drugstores

On Monday, Walmart's shares had increased by approximately 54% for the year, while CVS's shares had decreased by roughly 26% and Walgreens' shares had fallen nearly 60%.

In 2023, CVS is the leading U.S. pharmacy in terms of prescription drug revenue, with over 25% of the market share, according to Statista data released in March. Walgreens came in second with approximately 15% of the market share, while Walmart held just 5% of the market share.

The falling reimbursement rates for prescription drugs are posing a challenge for CVS and Walgreens, as inflation, weaker consumer spending, and competition from various retailers such as Amazon, big-box retailers, and grocery stores are making it difficult for them to maintain profitability in their front-store operations, which include cleaning supplies, beauty products, and pantry staples.

Last week, CVS CEO Karen Lynch departed the company and was succeeded by David Joyner, as the pharmacy chain faces pressure from Wall Street and an activist investor to improve its business performance. In addition to the leadership change, CVS plans to reduce expenses by $2 billion over several years, which includes cutting approximately 2,900 jobs on the corporate side of its operations.

The company is closing 851 of its 900 stores as part of a three-year plan.

The pharmacy chain Walgreens is also reducing expenses by shutting down approximately 1,200 stores in the next three years, with 500 closures happening in fiscal 2025 alone. Walgreens has about 8,700 stores in the US, and 25% of them are unprofitable.

Health care has presented financial challenges for Walmart, prompting the company to plan low-cost clinics that provide doctor, dentist, and therapy appointments.

In the spring, Walmart closed all of its clinics due to the unprofitable business environment caused by the difficult reimbursement environment and rising operating costs.