Unbelievable that MedPlus isn’t even on the list. One needs to read DRHP of PharmEasy and MedPlus to understand the difference.
E-commerce players earn commission from sales which reduces their gross margins (SS has 9% compared to 21% for MedPlus)
E-commerce players earn commission from sales which reduces their gross margins (SS has 9% compared to 21% for MedPlus)
https://twitter.com/jstinvestments/status/1484178977527070721
And because of cluster based approach of MedPlus it ensures that in a given city that it targets, it has stores sprayed all over. Kolkata has 200 MedPlus stores. Hyderabad and Bengaluru have over 300.
Result? Brand visibility, stores acting as micro fulfilment centres.
Result? Brand visibility, stores acting as micro fulfilment centres.
Why does fulfilment matter? Because customers of acute segment are less price sensitive but care more for delivery times. MedPlus can deliver in under 2 hours in some of these cities. And it will only improve as the store density goes ⬆️
Result? Cross subsidising chronic segment
Result? Cross subsidising chronic segment
Cross subsiding chronic segment adds to customer stickiness. MedPlus for example is the only player to give 20% flat discount at 1k plus orders and still report positive PAT.
It had 2k stores in FY21. Will add another 3k in next 2/3 years. We are seeing a FCF behemoth emerging
It had 2k stores in FY21. Will add another 3k in next 2/3 years. We are seeing a FCF behemoth emerging
Store level economics is vital for MedPlus
Store Capex = 0.5cr
Annual Sale = 1.5cr
Store level EBITDA = 0.15cr (10% margins)
Store level ROCE = 60%!
Nearly 70% of its stores break even within 6 months.
Store Capex = 0.5cr
Annual Sale = 1.5cr
Store level EBITDA = 0.15cr (10% margins)
Store level ROCE = 60%!
Nearly 70% of its stores break even within 6 months.
As the co doubles / triples it’s store count in next 2/3 years, the store level EBITDA and co level EBITDA will converge. Corporate expenses are semi fixed.
Result? Greater operating profit margin? But MedPlus says it will pass on better margins in the form of greater discounts!
Result? Greater operating profit margin? But MedPlus says it will pass on better margins in the form of greater discounts!
What is evident here is the pricing power of MedPlus. Ability to earn a 4 to 5% PAT even after offering 20% plus discounts on a sustainable basis.
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