How Medikabazaar is trying to replicate Amazon model for hospital medical supplies

Besides the bustling Western Express Highway adjoining Vakola in Mumbai lies a calm bylane where temples, tuition centres and small offices jostle for space.

A small doorway and a narrow stairway leads into the cluttered yet buzzing office of Medikabazaar, the online aggregator for medical supplies needed for hospitals and clinics.

That small office is the nerve centre for the complex web of e-commerce operation — that stocks up around 100,000 products ranging from a machine as complex as an MRI scanner to a cotton roll, and ensure it is delivered to around 16,000 pin codes spread across the length and breadth of the country in less than three days. Around seven fulfillment centres aid in the process of receiving, packaging and shipping orders for goods.

The company follows a B2B market place model where it acts as an aggregator charging a service fee for packing and delivering products depending on category and size. In addition, the company maintains a limited amount of inventory of fast moving goods where it sells directly to customers for a commission.

"At any hospital, the cost of materials constitute between 22 and 24 percent of total expenses, we are helping hospitals to cut down on their procurement inefficiencies and bring down the costs to about 17-19 percent," said Vivek Tiwari, CEO and Director of Medikabazaar.

“This we are doing by eliminating middlemen in supply chain, providing choice, bringing transparency to pricing and ensuring delivery of medical supplies on time,” Tiwari explains.

Medikabazaar has 15,000 active registered users that includes hospitals, clinics, diagnostic centres and individual doctors.

Founded by Tiwari, an alumnus of IIM-Calcutta, Medikabazaar started operations three years ago and has been seeing two-fold growth in sales without losing money.

Tiwari says Medikabazaar has opened up new avenues for manufacturers to penetrate deep into the market, who were otherwise relying on sales people and channel partners to reach out to hospitals and clinics to sell products.

“Even some of the largest manufacturers, both directly and through channel partners, are able to reach out to around 5,000-10,000 hospitals. That’s the tip of the iceberg when you consider 2,40,000 medical establishments in the country,” he added.

"Manufacturers now understand the power of technology, they directly come to us and say how can we partner and increase the market share, how can we take the products to Tier 2-3 towns," Tiwari says.

The company recently raised around $5 million Series-A funding from venture capital fund HealthQuad, promoted by founders of private equity firm Singapore-based Quadria Capital and existing investors that include Rebright Partners, Sunil Kalra, an independent angel investor for early stage startups and Arun Venkatachalam, an active India-focused angel investor.

Tiwari says he set a target of reaching 250,000 stock keeping units (SKUs), 50,000 hospitals and clinics, 20,000 pin codes and expand fulfillment centre network in the next one year.