What is common between Uber, Ola, Zomato, Swiggy and many such start ups?
Their ultimate vision for their business does not involve their existing stakeholders — drivers, fleet operators, restaurant owners and delivery boys. So once the honeymoon period is over, i.e., when they heavily depend on the the service delivery of these stakeholders to set up a functional business, acquire customers and offer incentives to build fundable metrics, they start short-changing them.
By the time these stakeholder start reacting, its too late as enormous funding, discounts, subsidized services and scale has forced a changed consumer behavior at-least for a significant portion of the customer base.
Today optimistically the quantum of consumer base that is comfortable in making purchases and availing services online in India stands at about 70–100Mn. Remove Amazon and Flipkart, that user base is about 10–12Mn.
To build a business, the traditional way, one of the most important element is trust. Having joined an 80 year old family business, which included a 33 year old pharma distribution business in 2009, I understood how much trust is valued. Business relationships between suppliers, peer distributors and customers spanned decades.
Yet, the mistake which all these stakeholders made was trusting the intention of these companies and investing their time, efforts & money into helping them grow, in return expecting to forge the same kind of lasting business relationships.
A similar trend has started in the Pharma industry as well. Acquisition of CSquare — an ERP for pharma retailers and distributors by Reliance, Marg ERP and Redbook by PharmEasy, DigiHealth Technologies acquiring Pharmarack technologies — a B2B marketplace for pharma and AIOCD AWACS — a pharmaceutical Market Research organization which collected the stock and sale data from thousands of distributors every month for the convenience of Pharma companies.
Distributors, pharmacies and pharma companies trusted these software solutions with their data. These are instances where CCI should have got involved and blocked the acquisition of these companies. Decades of data belonging to thousands of distributors and lakhs of pharmacies are at stake.
We all know how much IP is valued and the defensibility of NDAs in India. These deep pocketed companies can get away with using this data for their structuring their supply chain, pricing and inventory.
What we are seeing today in the pharma industry is unsustainable deep discounting at all levels fueled by VC funds which is severely impacting the business viability of existing stakeholders.
Traditional businesses need to come together to find a way to counter the risk posed by these startups. Our pharma distribution business will turn 50 in 2026. Its very clear what worked for the last 46 years will not work for the coming years.
About Atto:
AttoMarket is pioneering Collaborative OmniChannel commerce which can help companies use their existing distributor and retail network for order fulfillment.
Our unique microstore technology enables OEMs to configure their web-shop as a collection of sub-stores managed by their distributors / retail partners. OEMs can configure the sub-store by allocating geography of operation, products, pricing & offers as well as regulatory workflows required in the particular location. Language and content can also be customized at a sub-store level. Distributors can configure inventory, set up drop-ship rules, link payment gateways and bank accounts to the store.
Customers are routed to the sub-store based on the delivery location and their orders are fulfilled by the local channel partner of the OEM.
This allows OEMs to offer convenience of ecommerce to B2B and B2C customers with a local touch, saving huge operational and set-up costs while getting a huge ROI on digital marketing.
To know more about our solutions visit https://attomarket.com/
