YoPharma is a Delhi based online pharmacy offering medical supplies. It was started by Chavvi Gupta and Himanshu Goel in 2012. Goel has a pharma background, having worked with the Guardian chain of pharmacies that has over 300 stores in India, as their retail operations head. He has also worked as a pharmacist with Apollo. In part 1 of our interaction with them, the two co-founders talk about setting up an online pharmacy business, operations, building trust among new users, target segment and other aspects of the business:
- Traditional pharmacy vs online pharmacy
MediaNama: When did you begin your business? Why specifically ecommerce with a focus on pharmaceuticals?
YoPharma: We started 6 months ago but launched the online service only a month back. The service is currently live in Delhi and NCR. The major reason for starting this as an online business was that e-commerce gives us a great alternative distribution platform. We see a lot of inherent problems in the traditional pharmacy system. Very few (pharmacy/medical) brands have 50+ stores in the country. Most of the guys are local and end up setting 2-3 stores in the neighbourhood or city. When you don ‘t have organized service, you lose out on the quality of service.
Secondly, based on negotiation, the traditional pharmacies can offer discounts of around 5% and if the customer is close enough (physically) then the pharmacist might do a home delivery. At Yopharma, these are the basic services that we provide. Our service starts after this point. Once you order the medicine, we can correlate a lot of information like what you might need next, when you might require them. In case of pharmaceuticals we have lot of data. We get information on the customers. Also, till you actually buy the medicines, you don’t have an idea of the price. With us, before going to the shop you have an idea of the cost. We are also building a database for medicines in terms of order and pricing.
So clearly we see two benefits – informed service and customer service. We feel ecommerce distribution has much greater opportunity in distribution compared with the traditional route. We are focusing on two parts – medicines and nutrition. Medication can be the immediate requirement of medication like for cough and fever. We are not focusing on them. We are focusing on diabetic or chronic illnesses with periodic requirements. We are targeting more of those customers.
MediaNama: What is the process of buying medicines from your website?
YoPharma: There are different ways available - If you have a prescription handy, you can submit the prescription online. Once it is submitted, the backend guy checks for all parameters. He then calls you and schedules delivery. If you know your medicine but don’t have the prescription, and order online. The pharmacist will look into it and during delivering it, the delivery guy checks the prescription. If you don’t know the name, you can also enter the name in the website and we will check it and let you know of the availability and then the rest is the same.
If you are a repeat customer, then you give your bill number, we will have your prescription, so you can have it delivered. There are also other products that you can order without prescription like nutrition, ayurvedic medicines etc on the website that we deliver without a prescription.
MediaNama: Why would anyone buy medication online? What are the circumstances under which they buy online?
YoPharma: Two reasons why a person would come to us than walk into a pharmacy: the first set of people are the ones who are buying regular medication either by themselves or for their kids or parents. We provide them a better alternative to buy BP, diabetes medicines that they go and buy every 15 days. Chronic prescriptions typically have 7-8 tablets. You will have big names like Cipla etc as well as regional brands as well. In that case, the customer has to search across multiple stores. Instead of that, they can come to us in one go. It is more about convenience and getting the right brand as prescribed by the doctor. We make it easy for them. If people are suffering from chronic disease, we make life much easier for them. Most of the time, the regular medical guy might not be able to give enough information. We are trying to provide a detailed set of information to them on price, alternative label etc.
Besides the prescription business, there is also the wellness business that is coming up. Multi-vitamins, nutrients, anti-oxidants, traditional supplements or nutritional products are also started. These are not normally prescribed but in demand. We are stocking these products – international and local ones and are making them available to consumers. The consumer always has the option of buying a standard product after price comparison across all makers. It is therefore about more informed buying.
MediaNama: How do you engender trust in online purchases, especially in a sensitive segment like pharmaceuticals?
YoPharma: Any new player in any new market faces this challenge especially given medicines, the problem is more complex. From our initial customer response, we were able to understand what they are trying to do. They are trying one or two medicines from us. The good thing is many of our medicines are branded. They are inhibited a little bit but they are not so closed since the products are branded. Since the market has problems, we are ensuring that the medicines are procured from the company or authorized dealers and maintained under the conditions required for each of those drugs. The backend team is competent. The pharmacists not only talks to the companies but also speaks to the customers on how theses should be taken in case of specific medicines. We are focusing on both business and customer service.
MediaNama: What is the profile of your target audience and how did you pick this segment?
YoPharma: Mostly we are targeting a user-base between 25-30 years of age. These guys are tech savvy – IT or related industry and have access to internet all the time. They are generally people who are taking care of their kids and parents. We are also working with pharma companies that have patients who require long term supply. These are the targeted segments that we are working on currently.
MediaNama: Do you think you will be able to replace the traditional pharmacies?
YoPharma: We don’t obviously provide a replacement for the traditional medicines. It is more complimentary in nature. If you divide every family’s medical needs in parts, you can plan about 20-30% of it ahead of time. In the medical budget, we believe 20-30% goes to medical and nutrition requirements that can be planned. So this 20-30% can be obtained from the store as we strengthen our distribution on delivery timelines. Our delivery system currently works on two modes- One is express delivery, if you order in the first half, we deliver it in the second half as express delivery; if you order in the second half then we deliver it the next day. Apart from that, we deliver the other orders in 1-2 days. We charge extra for express delivery.
MediaNama: Do you charge for your delivery?
YoPharma: Currently, we charge Rs.30 for delivering for bill amount upto Rs 300 and bills above Rs 300 are delivered without a charge. Express delivery is charged at Rs 50 per delivery irrespective of bill amount.
MediaNama: How do you plan to scale, especially with express delivery?
YoPharma: Because of the regulations and the commodity, we can’t do it like other e-commerce companies. It will be like the Dominos kind of model. We will set up warehouses in each city and expand. We are also planning to set up a franchise model, as well. We are planning to come up with a franchise model in cities like Ahmedabad. Because of our internal system, we will also be able to take a look at the inventory in other cities and franchises. A person can order in UP from a franchise store and we could move the products from Delhi to that store internally in case of need. It is a slightly complicated model that’s why people are shying away from working in this space.
MediaNama: How are you funded?
YoPharma: We are self-funded, at the moment.
MediaNama: What is the size of your team? Tell us more about your team
YoPharma: Besides the two of us, we have our IT team. We majorly depend on outsourced services, but have an in-house team of 7 guys along with delivery. We have close to 10 people working with us.
MediaNama: What is the vision for you company?
YoPharma: Looking at short term, we want to have this model working in two or 3 locations. Our long term goal is to establish a brand. The power of data will help us in doing that. When we have the data of thousands of people taking medicines, we will be able to help the customers and the healthcare industry in a larger way.
- Migration of customers to online pharmacy
MediaNama: How many registered users do you have on Yopharma?
YoPharma: We don’t give out those numbers. We have started with limited marketing equity. We have orders coming in from friends and family. So far we are getting very good traction.
MediaNama: How many transactions do you get on YoPharma? What is the propensity for repeat purchase, and how many are scheduled, monthly purchases?
YoPharma: The numbers will be difficult because it is sporadic. We are serving in Delhi and Noida. This is good for us now. When we go expand, probably then we’ll be in a better position to talk about numbers. We are actually getting a very good response in terms of repeat customers, not just repeat purchase. They are also dependent on us. We have a customer who is being treated for cancer. He has to source medicines from Mumbai. His entire family is out of India. More than just business, we have got more blessings because he has only one help and she comes back to us every 15 days for his medicines. His medicines are prescribed based on the doctor’s checkup every 15 days. So we are looking at more customers like that. We are actually very happy that way.
More in Part 2 of the interview