HealthKart Gets A TC Health Check; It Aims To Be India's Largest Health Store In 5 Years

Online health store HealthKart.com was launched by Bright Lifecare Pvt Ltd in March 2011 and the e-commerce startup recently celebrated its first birthday. While the online store initially sold diabetes care products, home medical and baby products, it has expanded its offerings since and now provides a plethora of items under several categories – right from nutrition, sports & fitness, personal care, beauty and eye care to the latest addition – parenting. While some of these products cost as low as Rs 13 (for ear buds), the most expensive ones can cost you up to Rs 60,000 (for home devices).

The Beginning

Bright Lifecare was founded by IIT Delhi alumni Prashant Tandon and Sameer Maheshwari. Prior to starting the venture, both had worked for the healthcare technology space for more than a year and during this period, they had also realised that there was a pressing need for authentic healthcare products all over the country. Additionally, access to high quality products from all over the world (which are in demand, especially in the Tier II and Tier III cities) also remained a challenge. Hence, HealthKart was born.

Initially, there were only four people working from a living room. But the number has gone up to around 100 and operations have spread. The company had raised $1 million in seed funding from Kae Capital and Sequoia Capital in April last year and recently got a second round funding of $7.5 million from three – its existing backers and Omidyar, a new investor in the firm.

Business Model

The company follows a traditional retail model, which means it stocks the inventory for most of the products on offer and consumers can place their orders online. To suit the buyers' convenience, different modes of payment are available on the site including cash on delivery (COD), net banking and debit/credit cards. Currently, Rs 250 is the minimum price limit for COD, but if a customer buys below that and still wants to opt for COD, he will have to pay an additional Rs 30 as shipping charges and another Rs 50 as COD charges.

"We are basically focused on e-commerce for healthcare and the fact that we are an online health store means we can reach out to the remotest parts of the country which do not have organised retail as of now. But even in the parts where organised retail is present, we offer much more in terms of value since physical stores have limitations. For instance, their product range is directly proportional to their store size and they can only serve a limited number of customers at a time," says Tandon.

HealthKart also offers a referral programme. If a customer refers the site to a friend, he gets a store credit of Rs 100 and the friend gets Rs 100 off on his first purchase. But this is not without a catch. A referral is only counted when the referred person places an order using the referral coupon code and he will get Rs 100 off if the purchase is worth Rs 500 or more. A referral can be done either by putting a referral link on the Facebook wall or by sending an invite via e-mail. Free and value-added services like diabetes management, tools for weight management & growth charts and vaccine reminders are also provided at HealthKart.

The company has various logistics partners as well. While warehousing is done in partnership with the warehousing company Safexpress, the last-mile delivery is handled by companies like Blue Dart, DTDC, Chotu, AFL, FedEx and India Post, among others.

How HealthKart.com Is Faring

Ask Tandon how the site is faring and pat comes the reply, "We have done around 30,000 transactions since the site went live last year. The average transaction size ranges between Rs 1,500 and Rs 2,000, and our top-selling categories are Nutrition, Diabetes and Home Devices."

The company has added a new category called Parenting earlier this month and according to Tandon, the category has been started because a lot of products from other sections fall under that particular head. For example, nutrients required during pregnancy used to be listed under Nutrition while pregnancy planning products like pregnancy kits were placed under personal care. So the company clubbed these products together under Parenting and also added new sub-categories like Toddler and Pre-school to make Parenting a brand new category.

Investment & Expansion Plans

HealthKart plans to use the latest funding of $7.5 million for stocking inventory, scaling up warehousing facilities, expanding the team and beefing up marketing activities for customer acquisition. "As of now, customer acquisition is largely done online and we believe it is an efficient model for us. So we will increase our online presence. We are also planning to use offline channels and are experimenting with the same. But right now, there are no plans for TV ads," says Tandon.

Currently, the company has an office in Delhi and one central warehouse in Gurgaon. It will also open a new warehouse in Mumbai in the next couple of weeks. The company will also scale up hiring and plans to increase the team size from around 100 to 150 in the next six months.

Competitors & Challenges

According to Tandon, the company competes with different e-commerce players for different product categories. For beauty products, it competes with UrbanTouch; in eye care, it faces competition from Lenskart while in baby products, it competes with companies like FirstCry and Babyoye, among others.

Of course, there are the regular challenges like quality of couriers and payment gateways. But the toughest challenges are talent acquisition and improving service levels while scaling up operations. While Net banking remains the most cost-effective payment method for the company, Tandon believes that COD is the most effective in India since it is very convenient for customers.

Opportunities

Tandon believes that the company's biggest opportunity is 'the offline space.' "The market we are in is largely unorganised; only 3-4 per cent of the healthcare market is organised in India. So the remaining 96 per cent unorganised market presents a big opportunity for us. Wherever there is unorganised retail, there is always a challenge in terms of 'authenticity of products' and that is where we come in. We can offer the customers authentic products and also provide them with an assurance of quality," explains Tandon. "Currently we are the largest 'online' health store in India, but five years from now, we want to become the largest health store of the country," he adds.