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How Capsule’s Online Pharmacy Is Riding The Third Wave Of E-Commerce

The startup pharmacy blends humanity and technology to produce better experiences for customers.

How Capsule’s Online Pharmacy Is Riding The Third Wave Of E-Commerce
[Photo: Freestock.org/Unsplash]

What was your last great healthcare experience? Maybe it was at a walk-in clinic, a local doctor, or even an online resource or telemedicine service. But it almost surely was not at a pharmacy.

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Pharmacy generates $275 billion in annual revenue—and 1% of it is online

This is the opportunity that Capsule, an e-commerce startup, is chasing. The company, which started in 2015 and whose service currently operates in New York City, offers free same-day delivery of prescription medicine and access to its team of pharmacists via text, email, or phone.

“We believe that we can use e-commerce and personalization to create better health outcomes,” says Capsule CEO Eric Kinariwala, who spoke this week at the Fast Company Innovation Festival. “We can unlock service for consumers.”

There are 70,000 pharmacies in the United States

Capsule doesn’t charge customers on top of what the medicine costs—prescription prices are set by insurance companies—but it can take advantage of not having physical real estate and all of the expenses that come with it to offer what pharmacies cannot.

“The difference is in the value you can build around it,” says Kinariwala. Namely, a higher level of care and attention. Even with most drugstore pharmacies tucked in the back of the store, there’s often not a place to hold a private conversation if you have sensitive questions. (Capsule’s chief pharmacist is Sonia Patel, who formerly ran the Sam’s Club pharmacies before joining Kinariwala.) The company says that its users are six times more likely to consult with a pharmacist, because a text message is an intimate space where people feel comfortable sharing.

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Eric Kinariwala [Photo: Noam Galai/Getty Images for TechCrunch]
40% of medicines are out of stock at a traditional pharmacy

“There are two keys to making sure that someone takes their medicine,” says Kinariwala. “Make it simple and do it with a partner.” Capsule follows up proactively with its patient customers, and it manages its supply to make sure that it has refills in stock. Similarly, Capsule works to keep patients, doctors, and pharmaceutical companies in sync. “The pharmacy is the front line of health,” says Kinariwala. “We build trust through our interactions, and we share data with all the partners in the ecosystem.”

“The third wave of ecommerce”

Kinariwala, whose background was in finance and investing—before a horrific experience getting a prescription for a sinus infection inspired him to start Capsule—believes that his company represents an early entrant in what he’s dubbed “the third wave of e-commerce.” The first wave was all about “price, transparency, selection, and search” of commodity items. In short, Amazon is the paradigmatic example of a first-wave e-commerce company. Second-wave e-commerce companies are direct-to-consumer brands that reinvent individual categories with a vertically integrated business model. Think: Casper or Warby Parker.

But Kinariwala feels that both of these earlier waves of e-commerce rely too heavily on creating services that remove humans from the equation. The third wave, Kinariwala believes, is “blending the human with technology.” As he says, “Everyone needs some looking after sometimes.”