My first column about the issues related to Amazon coming to the dental market appeared in the October 2014 issue of Dentaltown, and it's time to revisit the topic and address the current rumors, realities and implications of buying dental supplies on the site.
The rumor mill was churning speculation on Amazon well before I wrote that first article, and the volume of conversation has grown at a rapid pace. Baird analyst Jeff Johnson started the most recent round when he incorrectly predicted a date that Amazon would announce a distribution agreement with Patterson Dental.
The speculation around that deal took many forms: Would Amazon buy Patterson? Could Patterson continue to collect orders and have a field sales force facing the dentists, with Amazon fulfilling the orders on the back end? This would give Amazon instant access to major dental brands that have been elusive thus far and it would boost Patterson's business. Selling dental products in all 50 states is more complicated than it appears, and a partnership with Patterson would eliminate that hurdle. This could be good timing for Patterson, which recently announced its decision to discontinue its exclusivity agreement with Dentsply Sirona, effective September 2017. (At the time of writing this article, neither Amazon nor Patterson has publically denied the rumor.)
The realities in this story certainly outnumber the rumors. Amazon recently exhibited for the first time at a major dental trade show: It had a sizeable booth at the 2016 Greater New York Dental Meeting to promote Amazon Business, the work version of an Amazon account. Virtually every dentist in the U.S. has purchased something on Amazon, but an Amazon Business account is necessary to purchase dental supplies that are not available to the general public. This leads to reality No. 2: Amazon is very committed to becoming a significant player in this market. Its presence at the trade show pales in comparison to the resources dedicated to the development of Amazon Business. This is certainly not its first foray into a new market, and its reputation suggests its will continue to push for progress until it's successful. The third reality is the pressure that large group practices and DSOs are able to exert on suppliers to negotiate big discounts to win their high-volume business. While solo dentists can seek out a buying group or simply accept this as a fact of life, I suspect that many others will start to seek their own avenue for savings. Once again, signs point to Amazon.
The implications of a dental world where Amazon could offer the same depth in dental supplies as it's known for with books could be a mixed bag. First, dentists are in the relationship business, and for many dentists their relationship with their supply representative is an important one. Second, the dental distributors provide much more than access to necessary supplies; they're sources for new equipment, software, repair services and much more. If the changing climate around the cost for dental supplies has a profound impact on suppliers' bottom line, what will that do to the cost of other services that they provide? If Amazon and Patterson strike a deal that gives Amazon access to the big brands in dentistry, what would they do next? A small poll on Dentaltown.com message boards suggests that most responders believe the manufacturers would then start selling directly to Amazon.
Dental supplies represent 6–7 percent of the overhead in a typical dental practice. If Amazon is able to save a dentist 10 percent on the cost of supplies, that would represent $3,000–$3,500 annual savings for a practice that produces $500,000. This is a conservative illustration, to gauge your interest in making a change. What savings would you require? Are you excited about these developments? Would you switch to Amazon for other reasons? Please share your feedback in the comments section of this article online.
Talk to Tom via email or Twitter
Get in touch with Dentaltown editorial director Thomas Giacobbi, DDS, through email at email@example.com or via his Twitter account: @ddstom.