The Final Chapter of Internet Healthcare in 2015: Understanding Medicine O2O Through Three Charts

By the end of 2015, the topic of internet-based pharmaceuticals had been revisited numerous times, with opinions varying widely and many adopting a wait-and-see stance. This hesitation indicates that both industry insiders and outsiders have yet to gain a clear understanding of pharmaceutical O2O (Online-to-Offline) models. Existing perspectives are predominantly grounded in business theories, failing to analyze pharmaceutical O2O from the standpoint of user needs. Today, let us shift to a user-centric perspective to examine how pharmaceutical O2O will ultimately impact people’s lives.

“True Needs” from the User’s Perspective

Some claim that medication delivery is a “pseudo-demand,” which is undoubtedly a subjective assessment; however, viewed from the user’s perspective, this issue is readily resolved.

In daily life, illness can strike in a variety of contexts. When patients fall ill, they may be reluctant to go out to purchase medication due to various reasons. Subjective factors include discomfort from pain, emotional vulnerability, and the desire to avoid disrupting work. Objective factors encompass physical difficulty in going out, adverse weather conditions, and long distances to pharmacies. Additionally, there are cases where households have common medications on hand but lack knowledge on how to use them appropriately for specific symptoms. These multiple factors contribute to a lag between the actual access to routine medical services and the “demand” for them, a situation that genuinely exists in everyday life.

In this scenario, the patient’s most authentic experience is as illustrated in the figure above. The “lazy economy” is equally applicable to the healthcare sector. By using pharmaceutical O2O (Online-to-Offline) platforms, users can receive professional and rapid medication delivery services without leaving their homes. This demand mirrors that of food delivery services; however, during illness—a special circumstance—“staying at home” becomes an imperative need for healthcare services.

However, the overall user base for medicine delivery services remains small, a scenario that even applies to industry giants such as Alibaba Health. This is precisely the sole reason why pharmaceutical O2O has been misdiagnosed as a “pseudo-demand.” In this author’s view, the issue with pharmaceutical O2O services does not lie in the invalidity of “user demand,” but rather stems from the pharmaceutical industry itself. Medications are inherently low-frequency purchases, and domestic consumers have not yet cultivated the habit of home delivery. This can be understood by referencing the development of the pharmaceutical O2O sector in the United States, exemplified by TinyRx, which focuses on prescription drugs.

The rise of any business model requires time and educational costs. This can be compared to the emergence of Taobao, which Mr. Ma Weidu once humorously likened to “the entire nation setting up street stalls online.” Yet, not many years ago, some still regarded Jack Ma as a fraud. The situation surrounding Taobao in those early days was vastly different from today’s pharmaceutical O2O landscape.

Therefore, the claim of “pseudo-demand” is unfounded. Consumers need time to transition into users, thereby changing traditional medication-purchasing habits. As the user base grows, people’s healthcare consumption patterns will gradually shift, with home delivery of medications replacing the current practice of purchasing medicines in person.

Core Functionality User Experience

At their core, internet products deliver four key benefits: greater variety, faster service, lower costs, and enhanced entertainment value. Pharmaceutical O2O (Online-to-Offline) services provide users with “faster” and “cheaper” options. Currently, two innovative products are leading the pharmaceutical O2O sector: Dingdang Medicine Delivery, which offers rapid drug delivery within 28 minutes, and Wanying Medicine Delivery, which provides pharmacist-led home delivery services.

Both platforms share the same basic functions: online medication consultations and ordering, coupled with offline home delivery. However, their core functionalities differ slightly. Dingdang Medicine ranks among the industry leaders in delivery speed, while Wanying Medicine provides comprehensive pharmaceutical care services at home, including medication consultations, drug delivery, usage guidance, and efficacy tracking.

Dingdang Medicine Delivery focuses on regional pharmaceutical distribution, continuously optimizing delivery speed to provide a “faster” medical and health service experience that meets users’ demand for rapid access. In addition, the platform offers online self-diagnosis services as well as professional medication consultation provided by licensed pharmacists.

Wanying Medicine Delivery focuses on professional pharmacist services, providing users with affordable, professional at-home medication delivery. In addition, the product offers online pharmaceutical consultations, in-person symptomatic medication guidance, and user health tracking and management.

In addition to these two, the pharmaceutical O2O industry also includes drug delivery platforms such as Yaogeili and Kuaifang Songyao. However, these services are highly homogenized, all adopting the model of one-hour express drug delivery to customers’ doorsteps.

Differences in the O2O Business Models of the Pharmaceutical Industry

Business model is the DNA of internet products; different business logics give rise to distinct products and inevitably steer them toward divergent development paths in the future. Currently, the pharmaceutical O2O sector features a multitude of products. Although user service formats are largely homogeneous, certain products exhibit significant differences in their business models.

Dingdang Medicine Delivery adopts a “precision strike” model, partnering exclusively with well-known chain pharmacies in designated areas within each target city. Backed by substantial resources, Dingdang has built its own logistics team, setting an industry benchmark for delivery speed.

Wanying Songyao adopts a socialized resource collaboration model, partnering with pharmacies in target cities and leveraging its own team of professional pharmacists to serve users. Unlike other industry players, it not only provides medication delivery services but also offers comprehensive daily health management, seemingly creating a “lightweight family doctor” service.

Yaogeli initially adopted the “Ele.me” model, establishing its own logistics team and partnering with pharmacies. Upon receiving an order, the logistics team would pick up the medication from the pharmacy and deliver it to the customer. However, Yaogeli has now shifted to collaborating directly with pharmaceutical manufacturers, officially launching its B2B business, which suggests that it has lost its direction in the consumer (C-end) market.

After securing RMB 200 million in financing, Kuai Fang Song Yao embarked on a major expansion, aggressively acquiring independent pharmacies to establish a self-operated retail model. According to reports, this strategic shift was driven by daily order volumes surging to capacity limits, necessitating the adoption of a self-operated model.

Regardless of the business model or product, “a cat that catches mice is a good cat” from the user’s perspective. Although China’s internet healthcare sector has been developing for many years, it remains in its infancy and requires gradual growth. Cultivating user habits is not the responsibility of any single product or company, but rather a shared obligation across the entire industry. Particularly in the healthcare field, such commercial activities are, in essence, more about social responsibility.

This article was submitted to VCBeat by the author, Da Xiong. The views expressed are solely those of the author and do not represent the position of VCBeat.