A Bengaluru-based startup, Myra Medicines, has been exploring the online business model to supply medicines. The company which relies heavily on technology, offers discounted medicines online with the convenience of home delivery. While the potential of the activity cannot be disputed, it is also full of challenges. The company founder Faizan Aziz discusses the sector contours and how the company is leveraging technology for aggressive growth, with Pankaj Joshi.
How much does your model differ from the normal regional distributor or a pharma/ FMCG company?
There are similarities and dissimilarities in the way Myra operates with pharma/FMCG companies. Here sales happen from a remote store and not a physical store, but there are similarities in terms of the supply chain management and marketing is the responsibility of the manufacturer. If you look at the FMCG comparison the closest would be BigBasket. We choose strategic locations to optimise delivery, offer competitive price and convenience.
Compared to other players who we compete against, we have end to end control of the supply and demand, enabling us to provide a uniform consumer experience. We operate a full stack model with own warehouses and delivery mechanism to ensure the customer gets their medicines within an hour. As an aggregator, the difference is that Myra takes the ownership of the entire chain than just solving a supply discovery issue.
It is reported that the pharma retail distribution market is worth USD 15 billion, and that the entire online segment is worth only USD 10 million, whereas scale up in other markets is substantial. Can you confirm or update this?
It’s a rough estimate. The penetration of online segment is definitely less than 1 per cent. The medical delivery systems enable stronger control over supply, making consolidation easier. The Indian ecosystem has space for a lot of players. We are also somewhat behind because of our strict legal framework.
Can you give a break-up of your current 300 staff across functions? Which are the functions which will need additional manpower in your target of 900?
Myra has about 40 in the central team comprising of tech, engineering, marketing and other support functions. The rest is in delivery. The growth will also be primarily based on delivery. Other teams will double in size over the year.
Your current daily order velocity is 1,000. What is your specific target for FY2020?
As of now, we are aiming for 10,000 daily order over the next one year. Ideally, we will be operational in three cities with seven warehouses each. While expanding we look at two major factors – adoption of technology and density of population. Our margins are achieved on scale. For us, tier-II and tier-III cities don’t make sense currently.
What are the challenges for this business compared to other online delivery businesses?
Firstly, the core difference is of need against want – we cannot make a person buy medicines three times a day for 30 days. Legal frameworks are much more stringent, since the business directly affects health and wellness of citizens. Getting customers on-board from local chemists is a challenge, because they tend to be skeptical and therefore the drop-off is high.
What are the ancillary services you offer which can enable or catalyse a transaction?
Beyond the discounted pricing and timely home delivery, we also offer free doctor consultation and prescription storage for re-order purpose, as also bill storage for tax purposes. We offer multiple payment options and an easy 30-day return policy.
What is your view on addition of nutraceuticals, herbal or cosmetic products to your product offering?
These products do make good addition to the product basket, but the primary space we want to occupy is in healthcare and medicines, and the margins on some of these are not enough to sustain our value proposition of 20 per cent discount.
What are the specific areas of application of technology?
We use technology in all areas – ordering and stocking medicines, processing orders, delivery, payouts and much more. Our technical system makes order processing easier, analysing the market better and data science helping stock the optimal quantity according to the market requirement.
How critical is technology in determination of dispatch and stock unloading points?
It is very relevant. It is essential that the demand is catered by not just the closest warehouse but the fastest warehouse. The warehouse might be closer to the delivery location but traffic conditions may hamper delivery. An additional complexity is the stock availability. All factors are calculated before ascertaining the dispatch point.
The stock unloading itself is tricky. You need transaction data to understand what to stock and you can’t have transaction data without stocking. The initial stock unloading is guesswork but when data kicks in,
technology helps in minimising the errors.
Economic order quantity (EOQ) is important in both stock ordering as well as making deliveries. However, we are currently focusing on enhancing the customer experience so that we can take advantage of EOQ at scale.
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