Zeno Health Enters E-Commerce Format, Targeting to Serve 23k Pin Codes with Trusted Medicine Delivery

With over 190 stores and serving 30 lakh customers already, Zeno Health, one of India’s leading omnichannel pharmacy networks has forayed into the e-commerce format. The company plans to roll out its Pan India medicine delivery with two warehouses and inventory partners including Delivery and Blue Dart. In a recent conversation with FE Retail, Girish Agarwal, Co-founder & CEO of Zeno Health shares how this e-commerce play aligns well with the ambition of providing affordable and trusted medicine delivery across India.

 

What’s the concept of Zeno Health?

To mark our eighth year, our core mission has not changed—it is to bring healthcare to every Indian in the country. We identified that, for most people, medicine is both the most frequent healthcare need and the largest out-of-pocket expense. We uncovered a dark disparity—pharmaceuticals that cost INR 100 can be accessed for as little as INR 5- INR 10, but the consumer hardly ever benefits from this because of the marketing practices that are still prevalent in the pharmaceutical sector.

We decided to reverse the situation. From the beginning, we were a consumer-focused company, so we do not engage with doctors or other intermediaries to drive the demand for our products. Instead, we send the customers power by informing them about cheap but good quality products and assisting them to become confident in the change, thus enabling savings of 60–65% on the prescriptions.

In fact, we have just started our journey and there is a great demand and opportunity still out there. The next phase of our journey to connect healthcare to millions of people across India is really the stage of taking this endeavor to the whole country.

You have already served 30 lakh customers through your 190 plus stores. What are the reasons for venturing into the e-commerce format now?

While we are continuing to scale our offline play, what we could see was that offline expansion has some linearity in terms of pace of expansion and reach that we have as a business. Given how the overall internet usage and online payment usage has grown over the last 10 years, we see that there is a legit use case of reaching out to people who need this solution much faster than purely by offline expansion. So that's where the e-commerce play came in.

And overall logistics network in India has also evolved over the last 10-15 years in such a way that it allows companies including us to serve those 23,000 pin codes where people do not have access to these basic solutions. It allows us to kind of scale that easily from a logistics standpoint. So, there is no reason for us to hold back and rather we wanted to get to every user as soon as possible so that they can access this solution of high-quality affordable medicines from them.

We will keep expanding our offline play. This e-commerce play allows us to establish a presence, feed the brand in the user's mind across India sooner than later.

How are you going to manage the inventory? 

We have fulfillment centers, warehouses basically. These are approximately 20,000-25,000 square feet warehouses where we stock around 35,000-40,000 SKUs. We have integrated with third-party logistics players such as Delivery and Blue Dart to do the last mile. Our inventorisation happens at these fulfillment centers and we are continuing to expand that network of fulfillment centers also. Currently we have one in the East and one in the West.

And as we scale this play, we will add more fulfillment centers. We plan to add 10 fulfillment centers across India.

We are serving around 23,000 pin codes already. But we are not going to set up fulfillment centers in very small towns because that is solved by the logistics network that is present in India.

So we are going to establish our fulfillment centers closer to the sourcing points where we can ensure a strong availability and fulfillment of SKUs rather than closer to the Tier-II, Tier-III cities where the sourcing is a larger problem. We'll be largely present in terms of fulfillment centers in major cities where sourcing is solved for.

How will you operate? As in, will you operate as an e-pharmacy company by being a connecting platform between licensed pharmacies and medicine buyers?

We operate as a full-stack company, where we have our own fulfillment centers, our own inventory from where we serve. Right now, we are not thinking of aggregating the offline pharmacies, the third-party offline pharmacies, into this right now. We are planning to operate as a full-stack model where we source, stock, and serve through our own fulfillment centers. Maybe going forward we could think of bringing in a franchise in the fulfillment center operations, but not aggregation of third-party pharmacies.

Is there any regulation from CDSCO, that bars online companies from selling medicines? Is there any regulation that will come into your way?

I think the regulations are still under draft is what we understand, specifically with respect to e-pharmacy or sale of medicines online. But there are some practices which have got established over the past 10 years thanks to all the other e-pharmacy players that have been into the space. There has to be a legitimate prescription of the user, which sometimes doesn't happen at an offline pharmacy. There has to be a pharmacist who should be attending to the patient for all the confirmation and those kinds of things or any kind of other consultation.

So those regulations we are taking care of. Of course, the fulfillment center has to be a licensed fulfillment center, licensed by FDA for B2C medicine sales. So, all those regulations that are being followed by all the long-term e-pharmacy players are fully incorporated in our workflow from day one.

Once the draft regulation goes to a final stage and if there are any changes, they will be  appropriately incorporated in our workflows.

So how are you going to position yourself? You are selling medicines; you have 190 plus stores and now you are entering into the e-commerce format.

For the pan-India play, positioning is of an e-pharmacy company, but very, very focused on generic medicines, which is our core offering and which is close to our mission also. Even if you look at our app versus other e-pharmacy products, you would see that it is heavily optimised for generic users or users who want to buy generic medicines.

So yes, we are positioning ourselves as an e-pharmacy player, but focused on saving people money through generics.  

How does your e-commerce play fulfil the ambition of affordable healthcare?  

It beautifully compliments the work that we are doing in the offline world. As I said, our e-pharmacy play is also focused on helping users get educated about high-quality, lesser-priced alternatives.

With this pan-India play, we will be able to reach out to 150 crore Indians rather than 2.5 crore Indians in Mumbai and Pune. So, it allows us to take the affordable healthcare solution to all Indians rather than just Mumbai and Pune. It definitely and very beautifully extends what we have been doing here for the last eight years.

As now generic medicines and high-quality alternatives will be available to everybody. Maybe somebody sitting in a remote village can also access this on our platform rather than having to wait for our offline network to expand to them.