Specialist
Former C-Level executive at Medlife Wellness Retail Pvt Ltd
Agenda
- Key business deployed models, revenue streams and GMV trends
- Major OPEX and CAPEX buckets, set-up costs and economies of scale
- Profitability potential, anticipated break-even timeframe and industry consolidation implications
Questions
1.
The online pharmacy retail sector in India has numerous business models at play, including marketplace models, inventory models, hybrid models, etc. Can you comment on the popularity of the models being deployed and the key differences between them?
2.
You mentioned that to get better margins, the marketplace model has experienced some degree of backward vertical integration. Can you comment on the nature of this vertical integration, how it has played out so far and whether there are any margin benefits?
3.
Last year there was massive onset of the hybrid model. How accurate are comments around more players moving to an inventory model and away from a marketplace model. Do you think the inventory-led model is the way forward?
4.
How do GMV growth, EBITDA margins and general profitability vary across the different models? Does any model have an advantage in terms of GMV, EBITDA or profitability?
5.
Where do the EBITDA margins stand for the different models and what advantages are there to an inventory model vs a hybrid model vs a marketplace model?
6.
What is the difference between the gross profit margins and EBITDA margins for different players?
7.
Can you elaborate on economies of purchase and quantify how you expect this to improve EBITDA margins or GMV?
8.
What are the typical revenue streams available for e-health players? What percentage of revenue do they typically contribute? What are margins like across the different streams?
9.
How have the growth rates of the different revenue streams evolved over the last two years? How have they been affected by coronavirus?
10.
How have market players adapted their revenue streams? I believe some are trying to move towards a subscription model focusing on chronic patients vs acute symptoms. How have subscription models fared? Have they been accretive or have they not stuck with customers?
11.
Where does discounting stand? Is there a decrease in discounting? What is the margin impact of this?
12.
How have GMV growth rates trended over the last two years? What is driving GMV growth? Is it discounting? Is it volume increases?
13.
How has AOV been trending for the different models?
14.
Is the GMV growth rate beginning to stabilise after the initial spike amid coronavirus or is there still an exponential increase in GMV growth rates?
15.
What is the AOV like for a basic player across the different models? How has it shifted amid coronavirus? What is the YoY increase in AOV?
16.
People might have been ordering greater AOVs less frequently in the earlier stages of coronavirus because of apprehension with delivery. Are you noticing a reversion back to pre-coronavirus AOVs or are customers still spending a greater amount of money in general?
17.
Where did order frequency stand before coronavirus and how has it shifted? Is frequency going back to what it was or is the spike here to stay?
18.
What are take rates like across the different models? How have they evolved over time?
19.
How have the numbers of MAU [monthly active users] or monthly subscribers shifted amid coronavirus? Has there been a huge uptick in MAU? Where did churn rates stand pre-coronavirus and where do they stand now? Are more players switching between other platforms or is it mostly stable?
20.
How would a typical player model CAC [customer acquisition cost]? Where does CAC stand for the different players in the market?
21.
Where does CLTV [customer lifetime value] stand? What is it like across the major players and business models? What are the different segments and how have they trended over time?
22.
How would you model out retention costs? How have retention costs changed with so many players entering the market and a massive wave of consolidation? Where do retention costs stand and how has this impacted CLTV?
23.
What are the major OPEX costs as a percentage of revenue for a typical player? How has this trended over the last two or three years? What are COGS, procurement, SG&A and fulfilment like?
24.
What are the different models for the major logistic and fulfilment cost categories, so warehousing, last mile delivery, etc? What are these costs like for major players? What is the variance across the business models?
25.
What is the warehousing cost as a percentage of GMV? What are the cash conversion cycles or the three components, so DSO [days of sales outstanding], DPO [days payable outstanding] and DIO [days of inventory outstanding], like for players in the market?
26.
What are the major CAPEX categories? How have these trended? Is more CAPEX being allocated to technology or warehousing? How has it played out so far?
27.
How are unit economics changing amid recent market consolidation trends?
28.
How much of an additional cash burden is created by players going into full-suite mode and entering markets such as telemedicine? How much higher is CAPEX? Do you think this is going to impact the time taken for companies to reach profitability? Being a higher-margin business, can companies reach profitability faster or will the costs be too much in the first few years?
29.
There has been a wave of private equity investment in this sector. What are your thoughts on the sector’s overall profitability, given that companies might still be in the cash burn phase? What would be your major red flags and your positive catalysts for analysts and investors studying this sector?
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