That E-commerce is the poster child of the pandemic is no secret. Growing by leaps and bounds, and bringing hordes of first-time users into the fold, it has become the definitive strategy pivot across industries.
Today we focus specifically on online pharmacies — Big names infusing capital, acquiring controlling stakes and market consolidation; this sector has been seeing a lot of action in the recent past.
Reliance Retail has acquired Netmeds; PharmEasy and Medlife are merging, the Tatas are on the look out to pick up significant stake in 1mg; even Amazon and Flipkart are not far from the playground.
First, a quick look at the lay of the land, and key players as they stand today.
In terms of penetration, 1mg has been leading the pack for a while now, with PharmEasy (Standalone) coming in second. Post-merger, PharmEasy and Medlife will offer stiff competition.
It isn’t surprising that the Reach of all e-pharmacies spiked during the lockdown (May), given that medicine delivery was part of essential services. Assuming the number of 16+ smartphone users to be ~433 million (Based on AC Nielsen IAMAI 2019 Report), the number of active app installs for various players are as below:
Looking at the Monthly Active Customers/Transactors gives a clearer picture of the relative strength of the players:
PharmEasy has a consistent lead in the market, servicing nearly twice as many customers than its closest competitors — Medlife and MedPlus who are fighting it out for the number 2 slot.
Surprisingly, it is Netmeds that brings up the rear. Despite its acquisition by Reliance, it has failed to take advantage of the scale that Jio brings so far.
More importantly, PharmEasy also has a clear edge in how often customers order — on average — 12% more often than 1mg.
Even on Average Order Values or Ticket Size, PharmEasy enjoys a ~40% premium vs. 1mg. Its strategy on servicing chronic patients could be key in maintaining customer loyalty, as well as a price premium.
In this regard, a merger with Medlife, which has more of a “value” base (with an AOV of ~893), could help PharmEasy in consolidating its overall position in the market.
Given the phenomenal performance of PharmEasy in getting customers to transact on its platform, frequency of serving these customers and the price premium it enjoys, PharmEasy emerges as the clear market leader with over 40% of the market! Medlife also has strong underlying metrics, becoming the second largest player — at nearly quarter of transaction value share.
While it is still early days in the online pharmacy space — the entry of corporate conglomerates and consolidation amongst incumbents marks a new stage in the industry.
If you’re keen to use data in your business or to understand your customers better — get in touch!
Thanks for your time,
- Aman
aman@kalagato.co
www.kalagato.co
+91–9818180295
