PharmEasy delays IPO, targets Ebitda breakeven by next year
PharmEasy, the leading online pharmacy with a network of 11,000 pharmacies and more than 15 million customers, has delayed its initial public offering (IPO) from October to December and is now targeting an ebitda breakeven by March 2020. In Q2 the company reported revenues of Rs 136 crore with losses at Rs 24 crore. The market for e-pharmacy remains fragmented with niche players like PharmEasy, Amazon, and BigBasket trying to win over customers by selling groceries along with medicine. While Amazon’s grocery stores are also focussed on meeting the growing demand from its Prime members in urban areas, BigBasket already operates a successful chain of retail stores across India that meet this need. PharmEasy’s pivot towards an e-commerce model will be challenging with increasing competition.
Key capabilities to achieving an e-commerce model
PharmEasy has built a strong foundation to scale up for its e-commerce model. Strong brand name & customer engagement – PharmEasy has been serving the healthcare needs of customers for over five years and has earned the trust of millions of customers across India. Strong seller network – The PharmEasy network of 11,000 retailers has helped the company build strong supply chain capabilities, which will be instrumental in scaling up for e-commerce. Strong technology platform – PharmEasy has a proprietary software-as-a-service (SaaS) platform that is robust and scalable, having been built with the scalability of the e-commerce business in mind.
Focus on improving customer experience & engagement
PharmEasy is trying to improve its customer experience by reducing delivery times and expanding the product portfolio. To reduce delivery times, PharmEasy has partnered with third-party logistics providers like Delhivery and GoJavas. To expand the product portfolio, the company is investing in adding product categories like healthcare, beauty, and home care products. The company is also focused on increasing customer engagement by investing in building strong digital channels. One such initiative is the launch of PharmEasy’s digital wallet, which will allow customers to make cashless payments for their purchases.
Strengthening supply chain and logistics
PharmEasy has built a strong supply chain and logistics network to facilitate its e-commerce business model. The company has partnered with Pigeon, a logistics company, to manage its deliveries. The company has also invested in building out its backend infrastructure, which includes warehousing, a robust IT network, and a team of trained professionals to manage its supply chain and logistics operations.
Move towards a marketplace model for growth
While PharmEasy will initially be selling its own inventory, the company is primarily focusing on building a marketplace. PharmEasy has already added a host of sellers to its platform and is offering them a platform to sell their products. The company expects such sellers to account for 50% of its revenues by the end of this year. PharmEasy’s focus on building a marketplace will allow it to tap into a larger number of sellers compared to what it would have been able to with its own inventory. This will also make the platform more attractive to customers since they will be able to choose a wider range of products.
PharmEasy is aiming to become India’s first digital healthcare marketplace by leveraging its robust SaaS platform and the trust of its millions of customers. If successful, the company will not only be able to sustain but also scale up its business in the highly fragmented e-pharmacy market. While some success stories exist in the e-commerce space, such as Amazon and Flipkart, most online ventures in India remain niche players. PharmEasy has built a strong foundation to become a significant player in the e-commerce space, but it will have to scale up its operations quickly with increased competition from Amazon and BigBasket.