CVS AS BORDERS: Amazon Could Probably Conquer Drugstores, Too.

Can Amazon do to the pharmacy business what it’s done to … well, everything else?

Rumor has it they’re thinking about doing just that. They’ve reportedly created a new general manager position to look into such an expansion. In May, when those rumors started floating, Bloomberg’s own Max Nisen explained why they might find the business attractive. . . .

The chief executive officer of CVS appears to be unworried, however. In a recent earnings call, he told analysts, “There are many barriers to entry when you’re looking at pharmacy.”

And true that is. Health care is one of the more heavily regulated sectors of our economy, and regulation is always one of the most reliable barriers keeping new competitors out. As with the grocery business, proximity is another major barrier: If your kid’s got strep, you don’t want to wait two days for their antibiotics to arrive.

And yet.

Over the years, I’ve listened to a lot of earnings calls with CEOs whose businesses were being threatened by Amazon. Those CEOs all had one thing in common: They were quite sure that the Amazon juggernaut was never going to roll into their business. Their business was special, you see.

If you’re relying on barriers to entry, you’re already in trouble. The question is, how loyal are your customers, and how easy are you to undercut? Do you offer service that people are willing to pay a bit more for? Or would people be willing to pay a bit more to avoid dealing with you? . . . .