It’s been raining buyouts for the past 18-24 months in the e-commerce space, even as incumbents are consolidating their leadership positions by growing horizontally and vertically. Last year, Reliance Retail acquired NetMeds while Tata Group acquired 1 MG, both online only e-commerce platforms which cut the traditional stockist- distributor- retailer network to service customers directly. They also offered huge discounts to customers ranging from 10-25% plus cash back offers to acquire & retain customers. While the e-pharmacies were and are considered a huge threat to the offline Chemists, the traditional Goliath that they are, outnumber the business volume as India collectively and has over 14 lakh pharmacies across the length & breadth of the country. Generating an annual estimated revenue of INR 80,000 Crores.
On 19 Nov. 2019, Flipkart, owned by American Retail behemoth Walmart Inc. announced that is has acquired “SastaSundar” for an undisclosed price, adding the “healthcare” platform to it’s ecosystem. Earlier this year, Flipkart acquired unrelated verticals such as Cleartrip which offers air, train and bus tickets to travellers for USD 40 million in what is termed a distress sale, the idea being the ability to cross-sell various products (and services) to customers. Flipkart, which was seen as a laggard among the Top 3 retail businesses in India has now ticked the box with this acquisition. Whether this vertical, like many others, would the “Health+” vertical turn out to be a cost centre or would it make any profits is something that is yet to be seen. For the record, Flipkart which started off selling books online in 2007, founded by Sachin & Binny Bansal raised several millions in Angel, VC and PE Investments for a decade and eventually raised USD 16 Billion to sell the business completely to Walmart US in 2018, the purchase reasoning or logic for which was never comprehendable.
According to their website, SastaSundar.com is an Innovative Information and Knowledge based web portal that helps people on their path to wellness. We are focused on extending our services to our valuable users with an honest and trustworthy approach, providing them information and knowledge about medicines and healthcare products. SastaSundar is an online pharmacy and digital platform of healthcare supported by a network of physical counselling and service centres called ‘Healthbuddies’. The service verticals of SastaSundar are Pharmacy, Diagnostics and Wellness. SastaSundar.Com acts as bridge between users and the Independent Licensed Chemists and enables users to place their enquiry/indent and is supported by a network of Independent Licensed Chemists (sellers). All communications on SastaSundar.com are being forwarded to the said Independent Licensed Chemists. On confirmation of the same, the orders are fulfilled by the said Independent Licensed Chemist and delivered to users by the said Independent Licensed Chemist. The communication on SastaSundar.com are only in the form of enquiry and indent and are subject to conformity by the said Independent Licensed Chemists.SastaSundar also supports small pharmacies through its B2B Platform called Retailer Shakti. The name ‘SastaSundar’ is derived from a popular Indian phrase in terms of consumer experience of Savings and Quality.
In a press release issued for the announcement, Flipkart said: “Flipkart Health + is a health technology ecosystem that leverages the strengths of the Flipkart Group, including reach and technology capabilities across India, and Sasta Sundar’s deep expertise.” BL Mittal, Founder and Chairman of SastaSundar Healthbuddy Ltd, said: Through this partnership with Flipkart, we see the opportunity to grow further and reach a larger consumer base using complementary technology and logistics infrastructure.” Bawari Lal Mittal, Founder and Executive Chairman of SastaSundar.com started his career with M.P. Birla Group. Later in the year 2000, he founded his first company in financial services named Microsec and in the year 2013, he moved on to the domain of healthcare and founded SastaSundar.com. Mr. Mittal is closely associated with Annamrita (a mid-day meal scheme of ISKCON Foundation). Based in Kolkata, SastaSundar has raised $ 48.2 million in multiple rounds so far, according to published data and was last valued at USD 125 million at the time of its last fund raise in 2019.
With growing dissent by the offline traders across categories and the pharmacists being among the worst impacted due to deep discounts by its online peers, the position taken by the Ministry of Commerce in this regard is surely upsetting. The offline pharma retail industry employs about 3 million people directly and another 1 million indirectly such as logistics providers, drivers, warehouse agents and stockists across the country. Being notorious for lifestyle-led diseases such as Hypertension, Diabetes, Thyroid as well as chronic diseases such as Cardiac & Cancer related, the pharma business in India is among the most coveted from the most organised to the world’s largest retail company that is Walmart. It is interesting to note that Amazon hasn’t captured this space (yet) though it is said to be watching the market movements closely.