Heres Why Trump Went Postal on Amazon

Here’s Why Trump Went Postal on Amazon

The Amazon blame game took another turn on Thursday, when President Donald Trump spun the wheel back around to the U.S. Postal Service. Amazon.com Inc. is a convenient scapegoat for just about any issue. The mail is no different.

Amazon isn’t killing the post office. Since signing a landmark contract in 2013 to expand their business relationship and deliver packages on Sunday, revenue has ticked up; losses are down; and shipping is just about the only growth segment in the mailbag. The Postal Service is saddled by larger issues. Sure, there’s the internet, and nobody is sending postcards anymore, but the big financial dilemma is the agency’s yearly obligation to set aside cash to cover health care costs for future retirees. This accounts for billions in losses.

Give Up?

U.S. Postal Service makes small improvements but is nowhere close to sustainable

Source: U.S. Postal Service

U.S. mail is also required to cover every American, employing carriers who roam neighborhoods six days a week (or seven, if Amazon has a package ready). The Postal Service has said it actually makes money on the Amazon deal. E-commerce revenue provides “essential support to pay for the network and infrastructure that enables us to fulfill our universal service obligation,” David Partenheimer, a spokesman for the Postal Service, wrote in a January op-ed. “All users of the mail benefit.”

The Amazonification of U.S. Mail

Shipping revenue overtook junk mail for the first time last year

Source: U.S. Postal Service

Amazon rebuilt its delivery network around the post several years ago. The company operates “sortation centers” that complement warehouses and organize packages by zip code before sending them to post offices for the final leg of delivery. In Kenosha, Wisconsin, Amazon has a million-square-foot warehouse, connected to a 500,000-square-foot sort center with a covered conveyor belt that resembles an airport skybridge.

Ending the U.S. mail relationship would probably be a bigger setback for Amazon than for the Postal Service. On a dark day in late 2011 when the postmaster general proposed cutting 100,000 staff and shutting thousands of post offices, EBay Inc. shares dropped more than 6 percent. Amazon’s deal came soon after, and radical cuts were avoided—probably not a coincidence.

So the e-commerce giant got the Postal Service off life support, but any benefit beyond that is minimal. Nothing short of a complete overhaul of the mail system, some kind of bankruptcy-style financial restructuring or reneging on those health-care promises would turn the Postal Service into a sustainable business.

Maybe that’s Trump’s goal. Building an antitrust case against Amazon—an idea the President has floated—is a tall order. Amazon’s five-year contract with the Postal Service could be up for renewal this year. Breaking up that relationship would be an easier way for Trump to inflict pain on the #AmazonWashingtonPost, as he calls it.

Fully Charged

And here’s what you need to know in global technology news

A Facebook executive advocated for a grow-at-all-costs mentality in a controversial 2016 memo. BuzzFeed obtained a copy of the staff email from longtime executive Andrew Bosworth, which said deaths or terrorist attacks shouldn’t get in the way of the company’s mission to connect people.

Google is helping shape the future of U.S. wireless networks. The company’s plan to overhaul how valuable airwaves are used for calls and texts is gaining momentum.

Tesla is recalling about 123,000 cars. The voluntary recall affects all Model S sedans built before April 2016, capping the automaker’s worst month-long performance on the stock market since 2010.

Microsoft unveiled its biggest reorganization in years. Devices and software will live together, and Windows is now part of the cloud division. Windows chief Terry Myerson will depart as part of sweeping changes by CEO Satya Nadella.

The man who steadied Twitter wants to sell you a mortgage. As CEO of student-loan refinancer SoFi, Anthony Noto has to upsell the company’s high-earning clientele and fend off Goldman Sachs.

Read more: http://www.bloomberg.com/news/articles/2018-03-30/here-s-why-trump-went-postal-on-amazon

JPMorgan Brings Amazons Alexa to Wall Street Trading Floors

  • Voice-activated assistant can now send reports from analysts
  • Other firms such as New York Life using it to help employees

“Alexa, ask JPMorgan what the price target for Apple is.”

It’s a request that JPMorgan Chase & Co. institutional clients can now get quickly answered through Amazon.com Inc.’s ubiquitous voice-activated assistant. The bank and the e-commerce giant have partnered to provide JPMorgan’s Wall Street users with another way to access its research. Alexa is able to send analysts’ reports and related queries, and the bank is testing other features, like providing prices on bonds or swaps, according to David Hudson, global head of markets execution for the New York-based bank.

Voice assistants are “clearly becoming something people are habituated to in their lives,” Hudson said. “It’s about taking information that’s somewhere in the bank, that someone has to generally go and look for, or which is time-consuming or requires authentication to get, and putting that to you in another channel.”

As clients’ habits evolve, firms have been finding ways to adapt popular retail technologies for the business world. While JPMorgan is one of the first to push the Alexa virtual assistant to institutional shops, other banks have been using the service in their consumer operations. And New York Life Insurance Co. is among financial companies building programs that use Alexa as a tool for employees.

12,000 Agents

Customers are becoming increasingly willing to use voice assistants to monitor accounts, according to a survey conducted last year by Bain & Co. While 6 percent of U.S. respondents now use the technology, 27 percent are open to it, according to the consultant.

Capital One Financial Corp. was the first bank to allow customers to manage credit card and bank accounts through the voice assistant, and the lender has slowly expanded its Alexa service, allowing people to ask questions like how much they spent on Amazon last week.

New York Life will start rolling out Alexa features to its 12,000 agents later this year to help them get quick details on policies and prepare for meetings, said Mark Madgett, who leads the insurer’s field force of agents. That means the agents can ask Alexa to figure out how much life insurance a customer has or the value of those policies, or to catch them up on the latest products the firm is offering, he said.

“This is a very complicated business,” Madgett said. “When I started 32 years ago, I had five products that I could help solve problems with. Today there are thousands of permutations around financial solutions.”

New ’Skill’

JPMorgan’s automated service, known in Amazon verbiage as a “skill,” is the latest shared project for the biggest U.S. bank and the world’s largest online retailer. Amazon already leases cloud-computing power to JPMorgan and has asked the bank to compete in creating new products including a small-business credit card for its customers. The companies are also collaborating on a health-care venture.

Read more: JPMorgan-Amazon health venture goes beyond squeezing middlemen

JPMorgan’s Alexa project started last year as part of an internal competition to foster innovation. The bank first opened up data in its research group and added feeds from other departments, including banking and custody and fund services — capabilities now being tested internally. If the automated service takes off, it should free the firm’s salespeople from having to answer routine queries.

JPMorgan has seen that clients are open to new ways of interacting with technology. Not long after the bank created mobile apps for its trading business, it was recording large trades, including a $400 million currency bet last year. So allowing Alexa users to access JPMorgan data from wherever they choose to work — home, office or on the go — makes sense.

The next step is enabling institutional clients to act on the information they’re getting. In the not-so-distant future, Wall Street traders could routinely use Alexa to execute trades, according to Hudson. But the bank needs to do more work on client authentication and other security measures to prevent errant trades before that happens, he said.

“In the open-office environment, if you leave an Alexa on your desk plugged into an Amazon account, you might find a TV delivered tomorrow as a practical joke,” Hudson said.

Read more: http://www.bloomberg.com/news/articles/2018-03-26/jpmorgan-brings-amazon-s-alexa-to-wall-street-trading-floors

Amazon, Berkshire, JPMorgan Link Up to Form New Health-Care Company

It’s no secret Jeff Bezos has been looking to crack health care. But no one expected him to pull in Warren Buffett and Jamie Dimon, too.

News Tuesday that Bezos’s Amazon.com Inc., Buffett’s Berkshire Hathaway Inc. and JPMorgan Chase & Co., led by Dimon, plan to join forces to change how health care is provided to their combined 1 million U.S. employees sent shock waves through the health-care industry.

The plan, while in early stages and focused solely on the three giants’ staff for now, seems almost certain to set its sights on disrupting the broader industry. It’s the first big move by Amazon in the sector after months of speculation that the internet behemoth might make an entry. The Amazon-Berkshire-JPMorgan collaboration will likely pressure profits for middlemen in the health-care supply chain.

Details were scant in a short joint statement on Tuesday. The three companies said they plan to set up a new independent company “that is free from profit-making incentives and constraints.”

It was enough to sink health-care stocks. Express Scripts Holding Co. and CVS Health Corp., which manage pharmacy benefits, slumped 6.9 percent and 4.9 percent, respectively. Health insurers such as Cigna Corp. and Anthem Inc. and biotechnology companies also dropped.

The group announced the news in the very early stages because it plans to hire a CEO and start partnering with other organizations, according to a person familiar with the matter. The effort would be focused internally first, and the companies would bring their data and bargaining power to bear on lowering health-care costs, the person said. Potential ways to bring down costs include providing more transparency over the prices for doctor visits and lab tests, as well as by enabling direct purchasing of some medical items, the person said.

“I’m in favor of anything that helps move the markets a bit, incentivizes competition and puts pressure on the big insurance carriers,” said Ashraf Shehata, a partner in KPMG LLP’s health care and life sciences advisory practice in the U.S. “An employer coalition can do a lot of things. You can encourage reimbursement models and provide incentives for the use of technology.”

“Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort,” Bezos said in the statement. “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable costs. In the statement, JPMorgan CEO Dimon said the initiative could ultimately expand beyond the three companies.

“Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he said.

HTA Alliance

Amazon, Berkshire and JPMorgan are among the largest private employers in the U.S. And they’re among the most valuable, with a combined market capitalization of $1.6 trillion, according to data compiled by Bloomberg.

This isn’t the first time big companies have teamed up in an effort to tackle health-care costs. International Business Machines Corp., Berkshire’s BNSF Railway and American Express Co. were among the founding members of the Health Transformation Alliance, which now includes about 40 big companies that want to transform health care. The group ultimately partnered with existing industry players including CVS and UnitedHealth Group Inc.’s OptumRx.

Top Team

The latest effort is being spearheaded by Todd Combs, who helps oversee investments at Berkshire; Marvelle Sullivan Berchtold, a managing director of JPMorgan; and Beth Galetti, a senior vice president for human resources at Amazon.

Buffett handpicked Combs in 2010 as one of his two key stockpickers. Combs, 47, has been taking on a larger role at Berkshire in recent years, and Buffett has said that Combs and Ted Weschler, who also helps oversee investments, will eventually manage the company’s whole portfolio. Combs also joined JPMorgan’s board in 2016.

Sullivan Berchtold joined JPMorgan in August after eight years at the Swiss pharmaceutical company Novartis AG, where she was most recently the global head of mergers and acquisitions, according to her LinkedIn profile.

One of the highest ranking women at Amazon, Galetti has worked in human resources at the e-commerce giant since mid-2013, becoming senior vice president almost two years ago, according to her LinkedIn profile. As of late 2017 she was the only woman on Amazon’s elite S-team, a group of just over a dozen senior executives who meet regularly with Bezos, according to published reports. Previously Galetti worked in planning, engineering and operations at FedEx Express, the cargo airline of FedEx Corp. She has a degree in electrical engineering from Lehigh University and an MBA from Colorado Technical University.

The management team, location of the headquarters and other operational details will be announced later, the companies said.

Health-care spending was estimated to account for about 18 percent of the U.S. economy last year, far more than in other developed nations. Buffett has long bemoaned the cost of U.S. health care. Last year, he came out in favor of drastic changes in the U.S. health system, telling PBS NewsHour that government-run health care is probably the best approach and would bring down costs.

“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in Tuesday’s statement. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

    Read more: http://www.bloomberg.com/news/articles/2018-01-30/amazon-berkshire-jpmorgan-to-set-up-a-health-company-for-staff

    Trump Takes On Amazon Again, Urging Much More in Postage Fees

    President Donald Trump said the U.S. Postal Service should charge Amazon.com Inc. more to deliver packages, the latest in a series of public criticisms of the online retailer and its billionaire founder.

    The post office “should be charging MUCH MORE” for package delivery, the president tweeted Friday from his Mar-a-Lago estate in Florida, where he’s spending the holidays.

    “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump told his 45 million followers.

    Trump regularly criticizes Amazon and its chief executive officer, Jeff Bezos, who also owns the Washington Post newspaper and is currently the world’s richest man. In August, Trump accused the company of causing “great damage to tax paying retailers,” even though the internet giant began collecting sales tax on products it sells directly in April.

    As with prior missives targeting the company, Trump’s message appeared to concern investors. Amazon’s stock had gained the past three days, but dropped 0.6 percent to $1,178.68 at 12:41 p.m. in New York.

    A sudden increase in postal service rates would cost Amazon about $2.6 billion a year, according to an April report by Citigroup. That report predicted United Parcel Service Inc. and FedEx Corp. would also raise rates in response to a postal service hike.

    Amazon didn’t respond to requests for comment.

    ‘Last Mile’

    Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and businesses daily. It has a network of more than 20 “sort centers” where customer packages are sorted by zip code, stacked on pallets and delivered to post offices for the final leg of delivery.

    While full details of the agreement between Amazon and the Postal Service are unknown — the mail service is independently operated and strikes confidential deals with retailers — David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40 percent of Amazon’s volume the previous year. He estimated at the time that Amazon pays the Postal Service $2 per package, which is about half what it would pay UPS or FedEx.

    Both shippers were up less than 1 percent Friday. Higher postal service rates would benefit private carriers by making their rates more competitive.

    But the postal service’s losses have little to do with Amazon and more to do with its large health-care obligations and the dwindling use of first-class mail. USPS charges some of the world’s lowest stamp prices.

    The president’s tweet also assumes that Amazon would be forced to pay if the Postal Service increased its rates for packages. But Amazon has been setting up its own shipping operations in the U.S. and elsewhere in the world to minimize costs.

    For more on Trump’s Twitter storms, check out this podcast:

     

    $62 Billion Loss

    The Postal Service reported a net loss of $2.1 billion in the third quarter of 2017 and has $15 billion in outstanding debt. The service has lost $62 billion over the last decade.

    USPS’s chief financial officer, Joseph Corbett, wrote in a post for PostalReporter.com in August that the service is required by law to charge retailers at least enough to cover its delivery costs.

    “The reason we continue to attract e-commerce customers and business partners is because our customers see the value of our predictable service, enhanced visibility, and competitive pricing,” he wrote.

    He said Congress should pass provisions of legislation introduced last year by former Representative Jason Chaffetz, a Utah Republican, that would allow the postal service to raise some rates and discontinue direct delivery to business customers’ doors.

    Amazon is experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the program, Amazon would oversee the pickup of packages from warehouses of third-party merchants and delivery to home addresses.

    Despite the occasional anti-Amazon tweet, Trump is unlikely to target Amazon with any action because the company is creating jobs by building new warehouses around the country. It’s also expected to generate 50,000 new positions with its second headquarters, said James Cakmak, analyst at Monness Crespi Hardt & Co.

    “The interests of Amazon and the administration are largely aligned – even factoring the dislocation to retail – given the positive headline potential around new job creation with fulfillment centers and HQ2,” he said.

      Read more: http://www.bloomberg.com/news/articles/2017-12-29/trump-says-u-s-post-office-should-charge-amazon-much-more

      A Manager of $42 Billion Fears Bubble in World’s Biggest Stocks

      The world’s biggest companies could be hiding the biggest risks.

      That’s because companies such as Amazon.com Inc. and Alibaba Group Holding Ltd are overvalued, according to Robert Naess, who manages about $42 billion in stocks at Nordea Bank AB, Scandinavia’s largest bank.

      “I’m a bit worried about the valuation of these very popular companies,” Naess, portfolio manager, said in an interview in Oslo on Friday. “The big stocks have become more expensive. There’s danger of a bubble in them.”

      Naess and his partner, Claus Vorm, quantitatively analyze thousands of companies, investing in those with the most stable earnings and avoiding expensive stocks, a strategy which has delivered a 10 percent return for the Global Stable Equity Fund this year. It has returned 12 percent on average in the past five years, beating 75 percent of its peers.

      They prefer “boring” stocks, unlike the global behemoth technology companies that have led the global stock rally. Tech stocks sold off at the end of November, with the single worst day on record for the so-called FANG stocks. One of those stocks, Amazon, which has risen 55 percent this year, has a price-to-earnings ratio of 275 for 2017, compared with 18.2 on average for MSCI World Index.

      “Long-term, 5-10 years, stocks that are expensively priced, such as Amazon, Tencent and Alibaba, will give a low return,” Naess, who also shuns Facebook, Inc., said. “I’m pretty certain that in the next 10 years the return on those will be lower than the market.”

      The fund holds Apple Inc. and Alphabet Inc., which are “reasonably priced”. It has also bought a stake in Merck & Co., Inc. and increased in Amgen Inc., CVS Health Corporation and Walgreens Boots Alliance, Inc.

      Naess sees about 12 percent upside for the global developed stock market in the next 12 months provided companies continue to deliver expected earnings growth.

      “2018 looks OK,” he said. “Normally, I think the earnings estimates are too high. But I believe earnings estimate could be too low next year given earnings are so good this year.”

        Read more: http://www.bloomberg.com/news/articles/2017-12-11/a-manager-of-42-billion-fears-bubble-in-world-s-biggest-stocks

        Target to Buy Shipt for $550 Million in Challenge to Amazon

        Target Corp. agreed to purchase grocery-delivery startup Shipt Inc. for $550 million, stepping up its challenge to Amazon.com Inc. by speeding the rollout of same-day shipping.

        The all-cash deal will let Target customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores.

        Buying Shipt further beefs up Target’s logistics operations after the retailer earlier this year acquired software company Grand Junction, which also manages local and same-day deliveries. Target now offers same-day delivery in New York City and can send orders from 1,400 of its stores. Competition in this space is growing fiercer, though, as rivals Wal-Mart Stores Inc. and Best Buy Co. also offer same-day service, keeping pace with Amazon.

        Target’s decision to buy Shipt, rather than partner with it, “shows how serious they are,” Kantar Retail analyst Robin Sherk said. “One-stop shopping was convenient in the 1990s but for today’s families you have to be able to do instant food delivery as well. It’s also a realization that Amazon, this big technology disruptor, has entered the consumer landscape.”

        Four out of five shoppers want same-day shipping, according to a survey by fulfillment software maker Temando, but only half of retailers offer it.

        “With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” John Mulligan, Target’s chief operating officer, said in a statement.

        The deal will give Target same-day delivery at about half of its 1,834 stores by next summer, with the number growing to a majority of stores in time for next year’s holiday season. The service — costing $99 a year for unlimited deliveries — will initially encompass categories like groceries, household essentials and electronics before expanding to all major product groups by the end of 2019.

        Improved Position

        “While it will not affect Target’s capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position,” Charlie O’Shea, an analyst at Moody’s Corp., said in a note.

        Target rose 2.7 percent to close at $62.67 Wednesday, while the news caused a momentary dip for the shares of Shipt’s existing retail partners, Kroger Co. and Costco Wholesale Corp. Kroger ended the day up 1.4 percent, while Costco was little changed.

        Kroger said it’s still optimistic about the company’s prospects for home delivery after expanding its logistics operations in recent years via partnerships with Instacart Inc. and others.

        “We feel really good about the variety of partnerships Kroger has going,” corporate communications head Keith Dailey said. Costco Chief Financial Officer Richard Galanti declined to comment.

        Online Preference

        Consumers’ increasing preference for shopping online, along with Amazon’s purchase of upscale grocer Whole Foods and its encroachment into new arenas like apparel, have sent retailers scrambling to improve their online offerings. E-commerce sales are up about 17 percent this holiday season, according to Adobe Systems Inc., and online merchants racked up a record $6.59 billion on Cyber Monday alone, the company found.

        The question for traditional retailers is how to handle all those internet orders. They could build their own delivery network, but it’s an arduous and expensive process. That’s why many of them are seeking help from e-commerce startups like Shipt and Instacart.

        Founded in 2014, Shipt serves about 20,000 customers through partnerships with retailers including Publix Super Markets Inc., HEB Grocery Co., Kroger and Costco. It will continue to operate independently and plans to expand its business with other retailers, Chief Executive Officer Bill Smith said in an interview.

        ‘Scale Matters’

        “We’ve spoken to a number of our existing partners about this deal and all the conversations have been very positive,” Smith said. “Having multiple retailers allows us to grow our membership base and make it more attractive. In same-day delivery, scale matters.”

        For now, Target shoppers will need to pay Shipt’s $99 annual membership fee to gain access to the service. Once a customer orders, they send a “shopper” into the store to grab the groceries, and then deliver the items. Target is working on how to integrate Shipt into its website and mobile shopping app, Mulligan said.

        The deal is expected to close before the end of the year and will be “modestly accretive” to Target’s profit in 2018, while boosting online sales, the company said. The retailer’s e-commerce sales already grew 24 percent in the third quarter.

        ‘Big Loser’

        Target has worked with Shipt’s rival Instacart for same-day service in cities like Minneapolis and Chicago since 2015, and Mulligan said he “will have conversations with them on where we go next.”

        “The big loser in this deal is Instacart,” said Cooper Smith, an analyst at business-intelligence firm L2.

        Following Target’s announcement, Instacart said it works with more than 165 retailers, including seven of the eight biggest grocers in North America.

        “As an independent company, Instacart doesn’t compete with any of our partners,” the company said. San Francisco-based Instacart has recently expanded its partnerships with retailers including Costco, Kroger, Albertsons Cos. and drugstore giant CVS Health Corp.

        Target and Shipt began discussing the deal in the middle of the summer, Mulligan said. They decided to pursue an acquisition rather than just a partnership in order to plow Target’s resources into expanding Shipt’s business, and to maintain its current level of customer experience.

        Smith will stay in his role, reporting to Mulligan, and its 270 employees will remain in Shipt’s offices in San Francisco and Birmingham, Alabama.

          Read more: http://www.bloomberg.com/news/articles/2017-12-13/target-to-buy-shipt-for-550-million-in-bet-on-same-day-delivery

          Amazon Threat Causes Shakeout in the Health-Care Industry

          Amazon.com Inc. is casting a long shadow over the health-care industry.

          The prospect of the giant Internet retailer entering the business is beginning to cause far-reaching reverberations for a range of companies, roiling the shares of drugstore chains, drug distributors and pharmacy-benefit managers, and potentially precipitating one of the biggest corporate merger deals this year.

          On Thursday, the pressure was plain to see. A report that Amazon had received pharmacy-wholesaler licenses in a dozen states triggered a fast and steep selloff that wounded the likes of McKesson Corp., AmerisourceBergen Corp. and Cardinal Health Inc. And late in the day, shares of Aetna Inc. surged after a report that it was in talks to be taken over by CVS Health Corp.

          Executives in the drug industry say that Amazon could use its expansive online reach and its logistical muscle to threaten companies that ship and sell medicines to consumers and cut pricing deals with drug makers.

          “Size and scale-wise, they can disrupt anywhere they want to disrupt,” said Chip Davis, president of the Association for Accessible Medicines, a trade group for generic medication, in an interview Thursday.

          Competitive Squeeze

          A deal for Aetna could conceivably move CVS further away from the business of brick-and-mortar retail drugstores and deeper in health services such as pharmacy benefits, where it already has a sizable presence.

          Combining Aetna and CVS would create a health-services giant and a bigger competitor for UnitedHealth Group Inc., which is the largest U.S. health insurer and has its own own clinics and a pharmacy-benefits unit.

          The presence of Amazon is already being felt by retailers and companies that sell drugs over the counter. The head of of Bayer AG’s consumer-health business said on a conference call with analysts Thursday that the wider shift to online shopping by U.S. consumers was hurting its business. Erica Mann, the division’s chief, dubbed it the “Amazon effect,” saying buyers are looking for value.

          At the same time, the pecking order in the health-supply chain is beginning to shift.

          Earlier this month, insurance giant Anthem Inc. said it was cutting ties with Express Scripts Holding Co. after a long dispute over pricing and starting its own pharmacy-benefits manager in 2020. A bulked-up CVS and Anthem’s new venture could raise the pressure on Express Scripts, which has touted its independence.

          Any tie-up of Aetna and CVS would follow a pair of failed mergers among health insurers. The deals would have reduced the ranks of big U.S. health insurers from five to three, a prospect that led the Justice Department to oppose both prospective tie-ups.

          If the Aetna deal happened, “CVS would have a dominant position” in the drug-benefits business, said Michael Rea, founder of Rx Savings Solutions, which has an app that helps patients find low cost drugs.

          Pharmacy Threat

          Analysts have speculated that Amazon could soon enter the business of selling prescription drugs, threatening to disrupt retail drugstores, drug wholesalers, and the pharmacy-benefits management business. While Amazon has never publicly commented on what its plans may be, CNBC reported this month that the Internet giant could make a decision about selling drugs online by Thanksgiving. The network didn’t name its sources.

          McKesson slid 5.2 percent at 4 p.m. in New York, while AmerisourceBergen shares fell 4.2 percent and Express Scripts sank 3.7 percent following the report on Amazon’s state licenses by the St. Louis Post-Dispatch.

          Bloomberg News confirmed that Amazon had obtained wholesale-pharmacy licenses in at least 13 states, including Nevada, Idaho, Arizona, North Dakota, Oregon, Alabama, Louisiana, New Jersey, Michigan, Connecticut, New Hampshire, Utah and Iowa. An application is pending in Maine. Some of the licenses were obtained late last year and some this year.

          Amazon declined to comment.

          The licenses could be part of Amazon’s business-to-business sales effort, which would include sales to hospitals, doctor’s offices and dentists. Amazon on Tuesday announced “Business Prime Shipping,” which brings the quick delivery associated with Amazon household orders to workplaces. 

          The Seattle company launched Amazon Business in 2015, offering tractor parts, latex gloves, file folders and millions of other products needed in factories, hospitals, schools and offices. Businesses are shifting their supply shopping online from less-efficient methods such as browsing print catalogs, faxing orders and telephoning sales representatives.

          Online business-to-business sales – a broad category that includes pens and paper for the office as well as lab equipment and parts used in factories — will grow to $1.2 trillion in 2021 from $889 billion this year, according to Forrester Research Inc.

          On a conference call Thursday with analysts, McKesson CEO John H. Hammergren said the wholesaler doesn’t “take the entry of any competitor lightly,” but said the company already has a large online order operation and similar to what Amazon does logistically. “To some extent, we were Amazon before it was cool to be Amazon.”

            Read more: https://www.bloomberg.com/news/articles/2017-10-26/drug-wholesalers-slump-after-amazon-com-obtains-state-licenses