How the Chennai floods led two techies to create AroundU, a Swiggy for medicines
Monday August 13, 2018,
6 min Read
For Aravindh Rajendran and Arunbabu Tamilselvan, growing up in Tamil Nadu’s Sivakasi, a hub for the manufacture of firecrackers and matchboxes meant they got a close look at the successes and failures that come with entrepreneurship.
The school friends, who studied engineering, however, chose different career paths. Arunbabu went on to run his family business in Chennai, while Aravindh worked for an IT firm. Whenever they caught up, they spoke about starting a venture of their own, but couldn’t zero in on an idea.
That changed in November 2016, when Chennai experienced devastating floods. “We saw people in need of medicines as much as they needed food. It was an essential need which was very difficult to meet. After the floods subsided, we observed how difficult it continued to be for people to procure prescription medicines. Sometimes, the medicines they needed were not available in the neighbourhood’s small medical store, but at a larger medical store 10 km away. It wasn’t just access to medicines, even routine lab tests were cumbersome for people who had to travel a few kilometres to get to the nearest lab.”
A winning strategy for customers and pharmacies
Their observations led the two to set up AroundU, an online pharmacy, in February 2017. In addition to delivering medicines within 24 hours of placing an order, AroundU also offers lab tests at home, paleo diet consultations and doctor consultations, among other services. There’s also an express delivery option for emergency cases where the order can be fulfilled within an hour. “But in most cases, we respond within 20 minutes from the moment the order is received,” says Aravindh. Customers can choose to order on the AroundU app, or even through a phone call.
While speed of delivery is definitely a business driver, the real USP for AroundU comes from its business strategy. Aravindh says, “We don’t see the offline local pharmacies and medical shops as competitors. While most online pharmacies offer discounts, thereby taking business away from local medical shops and pharmacies, we give them more business. Usually, you have people who have been going to a particular pharmacy or medical store for years and there’s mutual trust involved. We believe that this equation of trust deserves to be respected. And we are only providing a platform to help them continue that transaction, albeit digitally.”
Once an order is received, it is routed to the pharmacy where the medicine is available and is closest to the customer’s location. The partner pharmacy validates the prescription, raises the invoice and within 10 minutes the customer is notified of the bill amount. Once the customer accepts this, the order is delivered.
AroundU also has an option where customers can show the prescription at the time of delivery. In cases where the pharmacy doesn’t have a delivery source, AroundU uses its own team. At the moment, the startup works with 70 pharmacies and medical stores in Chennai, and 40 pharmacies across other cities in the state.
They’ve also collaborated with four pharma chains which have a presence all over Tamil Nadu. Aravindh says, “We see that by collaborating with AroundU, pharmacies and medical stores are able to increase their revenue by 30 percent.”
Arunbabu adds, “With more than 84 percent of the retail pharma market belonging to the unorganised sector and lakhs of transactions taking place every hour, we have a huge market to tap and expand.”
AroundU also acts as an aggregator platform for booking lab tests and blood sample collection at home, for which it has partnered with leading diagnostic centres and Labs. It also offers a free online consultation service with five leading doctors. Currently these services account for 20 percent of the business.
Of mountains to climb and miles to go
At AroundU, the founding duo manage two different verticals. While Arunbabu, with his prior experience of managing the family business, takes care of operations, Aravindh manages marketing. He is also pursuing an MBA in Marketing from IMT Ghaziabad to upskill, a key requirement in today’s rapidly evolving markets.
Reflecting on their 18-month old journey and the challenges they braved as first-time entrepreneurs, Aravindh says, “When we started up, the traditional pharma retailers didn’t have a strong understanding of the scope of the online pharma sector. Hence they saw us as competition and were against anything that had an online presence. The biggest challenge was to break that strongly-held belief by clearly communicating how AroundU would actually provide them an additional revenue stream and not take away their business.”
Today, the market understanding has improved, and traditional pharmacies are showing an interest in getting online through AroundU. Now the challenge, according to Arunbabu, is, “aligning these pharmacies as per our pre-defined service standards. But, we hope to bring in greater efficient in organising the seller partners down the line.”
From Chennai, AroundU is now present in other cities in Tamil Nadu – Madurai, Theni, Trichy, Salem and Coimbatore, and is looking at expanding its services to other cities in the state as well. It also plans to include additional healthcare services such as home healthcare, elder care, diet and fitness consultation and post-operative care by 2019.
In just 12 months, AroundU has been able to generate revenue of Rs 24 lakh, which the founders say, is set to grow exponentially. From February 2018, a year after they began their operations, they have been growing at a rate of 40 percent month-on-month in terms of their top-line and the volume of transactions, which in turn has led to an increase in revenue of over 50 percent month-on-month.
The 11-member strong team is now working to facilitate quick and quality access to medicines and healthcare for customers. AroundU averages about 80 orders a day, with 70 percent of orders coming from Chennai and 30 percent from other parts of the state. “We are yet to capitalise on the other verticals such as paleo care, but that’s on our radar. Our primary focus, however, will be to increase the volume of transactions and get more customers and partners onboard,” says Aravindh.
A glance at the sector
The pharma industry is currently pegged at $15 billion, and some of the issues that the sector faces include low fill-rates, delivery delays, and expired and spurious medicines. Despite the regulatory challenges, the pharma space is growing significantly. The main other players in the space include Matrix Partners-backed Myra, Sequoia-backed Practo and 1mg.