Online Pharmacies Get A Boost From Demonetisation
Online pharmacies saw up to 30% spurt in sales due to the cash crunch.
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The government’s decision to withdraw Rs 500 and Rs 1000 notes is proving to be a zero-sum game across many sectors, with those dealing in cash losing out to those that thrive on electronic payments.
That’s certainly the case for the pharmacy industry, where online pharmacies have seen a jump in business as customers chose to conserve cash and move away from local cash-driven purchase of medicines.
Prashant Tandon, founder and chief executive officer of online medicine store 1mg.com, says that business has oscillated since demonetisation. It dipped in the first few days after the announcement, only to jump after that.
There was an initial dip in the first two days after the (demonetisation) announcement but sales quickly rebounded to levels higher than normal. The dip was probably because we stopped taking cash-on-delivery orders but then the Reserve Bank of India allowed pharmacies to accept old Rs 500 and Rs 1000 notes. Since then, our transactions have jumped 25% and continue to rise.Prashant Tandon, Founder & CEO, 1mg.com
The government allowed pharmacies to accept old notes which were withdrawn under demonetisation through a separate notification, providing relief to people dependent on medication. The notification didn’t make a distinction between brick and mortar retailers and online pharmacies. There was also lack of clarity on whether only public chemists are allowed to accept old notes.
In the meantime, online pharmacies benefitted. Tandon said that he saw a host of new customers ordering medicines online for the first time. At the same time, the proportion of money paid upfront went up.
“Earlier, we used to have 70 percent transactions in cash and 30 percent by cards but now 70 percent of all orders are prepaid so it’s going to be a net positive for us,” Tandon said.
Another online pharmacy, netmeds.com, saw a 30 percent spurt in its sales volumes after demonetisation was announced, even though it wasn’t accepting old Rs 500 and Rs 1000 notes, said its founder Pradeep Dadha.
We didn’t accept the Rs 500 and Rs 1000 note because we have a pan-india footprint and our delivery partners weren’t agreeing to accept these notes. Even then, we saw a surge in orders as we were getting as a lot of people ordering through their debit and credit cards. We saw a surge of about 30 percent on prepaid orders.”Pradeep Dadha, Founder, Netmeds.com
Dadha added that as the cash situation is becoming better, volumes have flattened out. He, however, said that customers who shop online once tend to return for further purchases.
Overall, though, the demonetisation exercise is unlikely to impact aggregate demand for medicines.
“Medicine is not something which sees a lot of flicker in demand,” said Hemant Bhardwaj, Co-founder and Managing Director of Zigy.com, an online pharmacy store. Zigy.com didn’t accept old Rs 500 and Rs 1000 notes because their network and delivery partners refused to collect these notes on their behalf. Sales remained constant through the demonetisation phase, said Bhardwaj.
Tandon, however, is hopeful that demand will continue to shift towards online pharmacies till new currency notes fill the gap since there is still no clarity of acceptance of old notes by pharmacies.
“There’s confusion out there about the issue so customers will continue to shop online for medicines they are dependent on,” he added.