Capsule is attempting to rebuild the pharmacy industry leveraging an emotionally resonate brand and technology that enables customized outcomes for doctors, hospitals, insurers and manufacturers.

I’ve researched Capsule since the company was founded by CEO Eric Kinariwala in 2015 with the goal of “rebuilding the pharmacy from the inside out.” The company uses couriers for same-day delivery of medications to customers’ doors within a two-hour window of their choosing. Capsule builds its own pharmacies in each of the markets it operates in and staffs them with pharmacists and technicians it directly employs. Kinariwala has long emphasized that Capsule’s approach to customer service and marketing is what sets the company apart. I believe the business model is sound.

What I don’t believe is sound, however, was the decision to close a manually run pharmacy for dispensing orders, prior to an automated pharmacy that leverages robotic arms to fill prescriptions, could be proven. Capsule has encountered multiple problems since launching the automated facility resulting in late shipments and shipments of the wrong prescriptions being sent to customers.

I’m also concerned about the fact that all orders are shipped for free. Capsule’s operating costs per prescription is $15 according to the article I attached. Capsule is a startup that raised $140 million of new funding in deals in 2023 that value the company at $500M. Capsule was valued at $1.2B in 2021.

Capsule should consider several options to reduce costs and increase revenue:

1. Launch ‘Concierge by Capsule,’ a subscription program whereby Capsule customers receive a discount off the cost of their prescription or a discount off the cost of shipping, whichever is greater. Another option is providing one free shipment monthly. Free shipping isn’t free; Amazon has learned this the hard way. Amazon’s shipping costs totaled $85.3B in 2022.

2. Motogo Systems provides a very unique model for shipping and receiving pharmaceuticals which includes the option of couriers or robots. Capsule should pilot the system as I believe it has potential for reducing their costs as they scale.

3. An interesting option, not perfect, but interesting, is introducing a mobile pharmacy that stocks the top 15 or so prescription medications. Capsule customers can use an app to hail the mobile pharmacy to come to their location. The app can also verify the prescription and validate identify. An onboard system can dispense the medication.

4. Capsule should approach 7-Eleven and other convenience store chains about leveraging Capsule to create a pharmacy option for convenience store customers. Prescriptions can be shipped to the home or picked up at a store. Systems from ViaTouch Media and Magex offer safe and secure options for Capsule.