Tata1mg has set its sights on expansion in Tier 3 cities as the online medicine retailer aims to reduce the time taken for delivery by half by the end of 2023, says co-founder and Chief Technology Officer Gaurav Agarwal.
Although 40 percent of Tata1mg’s business already comes from Tier 3 cities, fluctuating demand makes it a challenge to set up a supply chain in these areas.
“There are multiple models for us to try. The drone for diagnostics is one model. We are thinking can retail be one such model? So the supply chain model will continue to change…today we do Tier 3 delivery in like 48 hours plus, our goal for this year is: can we bring it down to 24 hours by creating a supply chain,” he said in an interview to Moneycontrol.
Tata1mg is mulling several models for enhancing medicine delivery in far-flung areas of Tier 3 cities.
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Asked if the company was planning to venture into physical retail in Tier 3 cities, the Tata1mg co-founder said the firm was trying different ways of improving services in these cities.
“Retail for us is a pilot, we are trying to figure out different ways in which we can service Tier 3 cities. In Assam, we have cancer hospitals, we are now setting up pharmacies there, we are thinking through these cancer hospital retailers, can we foray into e-commerce of the city,” Agarwal added.
Predatory pricing just an allegation?
On allegations of predatory pricing and heavy discounts on drugs offered by online pharmacies, Agarwal said Tata1mg had never engaged in such practices and urged the Centre to spell out clear guidelines.
“There should be reasonable price caps on what discounts you can offer; just because we don't indulge in that practice doesn't mean that some of our competitors don't either. So we are clear that the government should come out with clear guidelines on what, let's say, some of these pricing norms are,” he added.
Small chemist retailers and wholesalers have previously told the government that they would launch a country-wide campaign if it fails to rein in the predatory pricing and discounts being offered by online pharmacies.
A delegation of the All India Organisation of Chemists and Druggists (AIOCD) met Dr. V.K. Paul, member of the policy think tank NITI Aayog, and requested action against the indiscriminate discounts they said were being offered by corporate retail chains and online pharmacies.
Agarwal said heavy discounts, in general and as a long-term strategy, don't work in the online pharma sector.
“We were very clear that we don't want to support any predatory pricing. We have been very diligent about how much additional discounts we want to give only as marketing expenditure for new customer acquisitions and repeats,” he added.
Flying high with drones
Agarwal said Tata1mg Labs was using drones to transport diagnostic samples daily between Noida and Okhla on Delhi’s outskirts and was also planning to use drones for augmenting pharma supply chains.
“What we are doing with this drone pilot is that we are basically now flying direct from the aggregation point to the Okhla lab without any need for stabilization in the middle because the samples are traveling real time,” he said.
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The company has also done a pilot project in Dehradun to assess the remote area access problem. “The company is also exploring if drones can deliver pharma products in retail stores,” he added.
With coronavirus cases ebbing and demand for infectious disease medicines demand slowing, Agarwal said customers were using online platforms for medicine delivery.
“Today, I don't think anybody questions online, like online pharmacy, online diagnostics, it's a standard part of the experience. What COVID has done is basically accelerated the growth of consumers coming online and even after COVID, a lot of consumers are choosing to stay online and just continue to transact,” he added.
The Tata1mg co-founder said that the company’s e-pharmacy business grew by 40 percent last year and the diagnosis business jumped 60 percent.
“Our growth has not been affected at all. The only thing that has changed is that earlier we were able to get all this growth with zero marketing spend; today we have to spend some money on marketing,” he added.
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