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Tandon was working in San Francisco and often ran into Sameer Maheshwari, an alumnus of Harvard Business School and Indian Institute of Technology, Delhi, which also happened to be Tandon’s alma mater. Both realised they wanted to return to India and start their own venture.
They now run healthkart.com, which has raised three rounds of private equity funding. A chunk of the online company’s sales come from fitness equipment and dietary supplements bought by India’s youth, in cities as well as Tier-IV towns such as Barmer and Gurdaspur. Of course, it gets queries about traditional unusual items such as mosquito nets, which it is equally happy to supply. And, after the heinous December rape in Delhi, sales of pepper sprays took off all over the country. “Fitness is the area people are spending, people are focusing. They want to look good,” says Prashant Tandon, 33, in the company’s Gurgaon office.
Against the tide
Healthkart.com, a two-and-a-half-year old company, has stuck to the inventory model in the face of the change to marketplace that swept e-commerce in India. Most companies allow independent merchants to sell products directly to shoppers due to poor logistics and the cost of holding inventory.
HealthKart is swimming against the tide. It has three warehouses, sources directly from big brands and stocks items to tap into the Indian nutraceuticals market, pegged at about $2 billion. The founders say a reason why they hold inventory is a risk of spurious products.
“Things like health care where there is a lot of adulteration and spurious products that come in through random suppliers, you might want to be very, very tight on who you deal with,” said Tandon.
Added Maheshwari: “We import a lot of brands; we import, we stock these brands.”
The company employs seven trained nutritionists to answer 200 queries a day from a customer base of 300,000. While a number of callers are concerned about weight loss, an equal number of young, male callers want to know about weight or mass gain– in short, how to build muscle like their Bollywood heroes.
Can online pharmacy work?
Healthkart.com has tied-up with the US-based health supplement retailer, Vitamin Shoppe, to stock and sell their products. It also stocks products of Johnson & Johnson, Roche, Reckitt Benckiser and Glaxo SmithKline.
It started Healthkart Plus, a mobile app and online medicine delivery service, which connects consumers with chemists.
Healthkart founders and their investors, whom Business Standard reached separately, declined to share sales numbers of their company. An analyst and experienced investor in e-commerce in India said it was difficult to predict HealthKart’s trajectory.
“Nutraceuticals are the big one they are playing in. It is one large piece of opportunity,” says the analyst, declining to be identified, as he knows the founders. “Gross margins in dietary supplements are fairly high”.
He pointed out, though, that online medicine delivery might not take off – every country has its own set of rules. “It is kind of tough to say how much will move online. Many countries do not allow online orders.”
For the moment, HealthKart verifies prescriptions by asking customers to upload the prescription on the mobile application or the healthkartplus.com.
Healthkart has raised roughly $22 million (Rs 140 crore today) from its three rounds of funding. Sequoia Capital, Kae Capital, Omidyar Network and Intel Capital are the private equity investors who fund the venture.
“We liked the management team; felt they had thought through the business. We thought this business is apt to grow online as there will be huge amounts of rural demand,” Sasha Mirchandani of Kae Capital, a venture capitalist who has backed companies such as Inmobi in his Mumbai Angels avataar, said in a telephone interview.
HealthKart is getting competition from gym chains such as Mumbai-based Talwalkars, which runs its own online delivery store. The gym chain declined to give its comments on healthkart, after initially indicating it will do so.
Ecosystem
Tandon and Maheshwari say e-commerce in India is unusual in that there is both horizontal and vertical growth. In a recent bout of consolidation, vertical businesses such asesportsbuy.com and urbantouch.com merged with bigger players.
“The whole ecosystem has grown. There used to be suspicion of giving your card online,” said Tandon. “(Now), the big payment (gateway) guys are all pretty decent”.
Indian e-commerce relies heavily on cash-on-delivery to get over people’s hesitancy about online payments. The challenge is turnaround time. “The biggest point of friction in e-commerce is the time it takes for an item to get to you,” Bom Kim, who heads Coupang, South Korea’s fastest-growing e-commerce company, told Forbes in an August interview. Tandon and Maheshwari try to keep this time down to two-three days for metros though this can go up to seven-eight days for remote areas, such as for a customer from Nagaland who regularly orders gluten-free snacks from their company.
