How a Bootstrapped, Non-Promoted, Non-Self-Operated Platform Ranked #3 in Pharma E-Commerce with Over RMB 400 Million in Annual GMV

The Story of Yaofangwang Mall: A Tale of an Underdog’s Rise to Success

Without fundraising, promotion, or self-operated sales, they have risen to the forefront of the industry, ranking third among pharmaceutical e-commerce apps, with annual gross merchandise volume (GMV) exceeding RMB 400 million.

However, it took a decade to achieve this result.

VCBeat (WeChat ID: vcbeat) recently interviewed Zhong Yi, founder and CEO of Yaofangwang Mall, who shared insights into the platform’s journey.

 Zhong Yi, Founder and CEO of Yaofangwang Mall

Yaofangwang Mall was among the earliest pharmaceutical e-commerce platforms in China, launching its online pharmacy platform in 2007. At that time, there were few practitioners in the online pharmacy sector, and the industry’s true boom would not occur until five years later.

Zhong Yi recalled that, over the years, Yaofangwang Mall has experienced several key milestones: In June 2011, Yaofangwang Mall obtained the Internet Drug Trading Service Qualification Certificate (Class A) issued by the China Food and Drug Administration; in July 2012, the platform underwent a comprehensive revamp and relaunch; in April 2015, it was honored as the Most Investment-Worthy Pharmaceutical E-commerce Enterprise, and in July of the same year, it was selected by the Ministry of Commerce as a “National E-commerce Demonstration Enterprise”; in June 2016, its sub-brand Yaotu.com was launched, marking its entry into B2B pharmaceutical e-commerce; in 2017, Yaofangwang Mall embarked on a new journey, establishing an online pharmaceutical platform dedicated to serving small and medium-sized pharmacies.

Over the past decade, the pharmaceutical e-commerce industry has also experienced rapid development. The scale of online pharmacies grew from less than RMB 100 million to RMB 28.6 billion in 2016, with an average annual growth rate exceeding 100%. It is projected that the market size of online pharmacies will surpass RMB 50 billion in 2017. The scale of internet-based pharmaceutical wholesale is even larger, reaching RMB 57.6 billion in 2016 and expected to approach RMB 80 billion in 2017.

E-commerce has become a vital channel for pharmaceutical distribution and retail, profoundly transforming the pharmaceutical industry.

The pharmaceutical industry is a “policy-driven market,” and this is especially true for the pharmaceutical e-commerce sector. Zhong Yi noted that he remains deeply impressed by several key policy milestones over the past decade of development.

One key development was the release of the “Measures for the Supervision and Administration of Internet Food and Drug Operations (Draft for Comments)” in May 2014. The draft stipulated that online drug retailers could sell prescription drugs against valid prescriptions, in accordance with the classified management requirements for pharmaceuticals, and could entrust logistics and distribution companies with storage and transportation. This policy initiative briefly ushered in a “spring” for the pharmaceutical e-commerce industry, triggering a surge of market entrants and a sharp rise in investment.

For Yaofangwang Mall, a more immediate impact was that the China Food and Drug Administration (CFDA) successively approved three platforms—95095, 800 Fang, and Yihaodian—as pilot third-party online pharmaceutical retail platforms in 2014 and 2015. This held significant benchmarking implications for Yaofangwang Mall, which is also positioned as a third-party platform.

However, in July last year, the China Food and Drug Administration terminated the pilot program for online retail of pharmaceuticals via third-party platforms, leading to a period of pessimism regarding industry development.

By February this year, the General Office of the State Council issued another document encouraging the promotion of “Internet + Pharmaceutical Distribution.” It supports pharmaceutical distribution companies in strengthening cooperation with internet enterprises, promoting the integrated development of online and offline channels, and fostering emerging business models. Meanwhile, new delivery methods such as “online ordering with in-store pickup” and “online ordering with store-based delivery” are being promoted. In addition, the State Council has successively abolished the qualification approvals for the A, B, and C certificates required for pharmaceutical e-commerce, renewing optimism about the prospects of “Internet + Healthcare.”

However, just before VCBeat scheduled an interview with Zhong Yi, the China Food and Drug Administration (CFDA) released the Administrative Measures for Online Drug Operation and Supervision (Draft for Comments), which to some extent dashed industry expectations. The draft stipulated that online pharmacies are prohibited from displaying or selling prescription drugs, making the policy on online sales of prescription drugs a Damocles’ sword hanging over pharmaceutical e-commerce companies.

Zhong Yi commented, “While policies may experience fluctuations and exhibit a certain lag, it is essential to recognize the opportunities within the industry. More enterprises are expected to participate, and the overall development of the pharmaceutical e-commerce sector remains positive, sustaining high growth.”

 Recognizing the opportunities within the industry and aiming to grow alongside it, Yaofangwang Mall has positioned itself as a third-party online pharmacy platform, dedicated to serving small and medium-sized pharmacies by offering them “one-hour store setup” and complementary pharmaceutical procurement services.

“Small and medium-sized pharmacies recognize the market opportunities in pharmaceutical e-commerce and wish to participate, but they lack capital and technical expertise, while facing high upfront investment costs. This leaves them eager yet unable to fully engage in pharmaceutical e-commerce. Targeting this industry pain point, Yaofangwang Mall provides a systematic e-commerce solution to help small and medium-sized pharmacies embrace pharmaceutical e-commerce.”

Yaofang Mall provides small and medium-sized pharmacies with resources such as platforms, technology, and traffic, and adheres to an open strategy to enable more pharmacies to participate. According to Zhong Yi,Yaofang.com Mall has currently connected 600 cities and counties across China, with over 1,000 pharmacies, establishing the largest online platform for small and medium-sized pharmacies in the country.

Yaofangwang Mall has been highly effective in supporting the development of small and medium-sized pharmacies.A single store can achieve average monthly sales of RMB 200,000–500,000 through the Yaofang.com platform, representing two to three times its original sales volume.

“Yaofangwang Mall extensively connects small and medium-sized pharmacies, creating a large-scale pharmaceutical resource pool that offers consumers greater variety in product categories and pricing, enabling them to enjoy internet-based pharmaceutical services more conveniently and efficiently,” said Zhong Yi.

Yaofang Mall also ensures consumer rights through a series of process controls, including drug expiration date management, return and exchange policies, and customer complaint handling mechanisms.

“Years of accumulated experience in standardized platform operations have minimized the risk of non-compliant business practices. To address the challenges of ‘difficulty and high cost in purchasing medications’ faced by users with medication needs, Yaofangwang Mall has launched a ‘Medication Price Comparison’ system. This system enables users to select suitable pharmacies based on comprehensive factors such as proximity to their location, drug prices, pharmacy ratings, and service quality. Through the ‘Medication Price Comparison’ system, users benefit from reliable service guarantees while effectively reducing medication costs, thereby achieving affordable and accessible medication purchases for the public.”

The series of “combo moves” implemented by Yaofangwang Mall to safeguard consumer rights and interests has also gained recognition from consumers. As of the end of November,Yaofangwang Mall has over 1.3 million registered users, with more than 800,000 app members.According to the data report issued by Analysys, the monthly active users of the Yaofangwang Mall APP reached 391,700, representing a month-on-month increase of 8.4%,Ranked third among pharmaceutical e-commerce apps.

“Many of Yaofangwang Mall’s users are repeat buyers; our overall repurchase rate is 52%, while the repurchase rate among app users has reached 86%.” Zhong Yi projects that the platform’s total transaction volume for the full year will exceed RMB 400 million, representing a 130% year-on-year increase.

Such rapid growth has been driven entirely by organic traffic from website referrals and word-of-mouth, with Yaofangwang Mall never engaging in paid promotion throughout its development. As a result, the platform has maintained positive cash flow, faced minimal financial pressure, and has not sought external financing. To better serve small and medium-sized pharmacies, Yaofangwang Mall launched Yaotu Wang last year, dedicated to addressing their procurement challenges.

“No fundraising, no promotion, and no self-operated business” became the “hallmark” of Yaofangwang Mall for a long period.

In the face of new developments in pharmaceutical e-commerce, Zhong Yi candidly stated that capital will provide significant support to the platform. Yaofangwang Mall will select investors who are committed to fostering the platform’s sustainable growth rather than pursuing short-term gains, working together to build a smart medication purchasing service system.

Zhong Yi’s development plan for Yaofang.com Mall in the near future is to build a team of pharmacists and provide “shared pharmacist” services to small and medium-sized pharmacies; additionally, the company may pilot electronic prescriptions to enable consumers to enjoy one-stop convenient services.

From an industry perspective, pharmaceutical e-commerce is gradually maturing. In the future, as relevant policies and industrial practices are implemented, the sector will unlock significant growth potential. Trends such as mobile integration, specialization, diversification, smart technologies, and multi-format convergence will become increasingly prominent, transforming traditional pharmaceutical distribution and retail. Meanwhile, Yaofang.com Mall demonstrates the value of service platforms for small and medium-sized pharmacies, sustaining positive development.