Dingdang Express APP Product Analysis

As epidemic prevention and control becomes normalized, medical e-commerce and digital healthcare have also ushered in new developments. In this article, the author analyzes and evaluates the Dingdang Express Pharmacy APP based on the current development status of Internet medical care and other medical e-commerce products, and gives his suggestions for future development. Let’s take a look.

On June 22, the company that owns the medicine delivery platform "Dingdang Express Pharmacy" submitted an application for listing to the Hong Kong Stock Exchange, with CICC and CMB International as joint sponsors. Not long ago, in early June, Dingdang Express Pharmacy just completed a new round of financing with a total amount of US$220 million, equivalent to RMB 1.32 billion. It is reported that this round of financing will be used to implement the "medical care + pharmaceuticals + insurance" health home strategy. In addition, this round of financing will also be used for multi-scenario, one-stop consultation, drug purchase, chronic disease management, psychological counseling and other medical services.

As an early entrant in the pharmaceutical e-commerce platform, Dingdang Express Pharmacy is not among the top in terms of market share in the pharmaceutical e-commerce market. Even after multiple rounds of expansion, it still has not reached the top market share, which led to Dingdang Express Pharmacy being "abandoned" by capital for a time.

However, in the current social context of normalized COVID-19 prevention and control, the demand of Chinese residents for digital medical care and pharmaceutical e-commerce has become increasingly obvious. Since the beginning of last year, Dingdang Express Pharmacy has seen a surge in daily visits and orders.

In order to explore how Dingdang Express Pharmacy can continue to rejuvenate when multiple large platforms such as Ali Health and JD Health have entered the Internet medical and pharmaceutical e-commerce markets, this article will analyze the Dingdang Express Pharmacy APP from multiple dimensions.

1. Industry Analysis

O2O drug delivery platforms emerged rapidly and fell rapidly between 2015 and 2016. As one of the early entrants, Dingdang Express Pharmacy broke through the siege and ushered in a surge in business volume and continued growth in user base after the outbreak of the epidemic. Recently, it successfully completed a new round of financing in just one month and has submitted an application for listing on the Hong Kong stock market.

As a special commodity, the online consumption pattern of medicine is greatly affected by policy factors. The author will use the PEST model to conduct industry analysis.

1. Politics

The purpose of implementing the pilot policy of separate accounting for medical care and separation of medical care is to sever the interest relationship between hospitals and drug revenue. The implementation of this policy has led to new changes in the pharmaceutical profit distribution pattern and brought new development opportunities to the retail pharmaceutical industry.

On May 28, 2014, CFDA issued the "Internet Food and Drug Operation Supervision and Administration Measures (Draft for Comments)", allowing Internet companies to sell prescription drugs based on prescriptions in accordance with the requirements of drug classification management regulations. The release of the draft for comments has prompted a large number of pharmaceutical companies and Internet companies to turn their attention to the field of medical e-commerce.

In 2017, the State Council announced the cancellation of the approval of B, C and A certificates for Internet drug transactions and replaced them with a filing system. This means the full liberalization of pharmaceutical e-commerce. Influenced by the policy liberalization, the pharmaceutical e-commerce industry has become a new outlet, and the scale of market transactions has surged.

In 2018, the classification and definition of "Internet + Medical" were clarified in the "Notice on Issuing the Measures for the Management of Internet Diagnosis and Treatment (Trial Implementation)". In 2019, it was clarified for the first time that Internet medical care can be included in medical insurance. The relaxation of Internet medical care has also promoted the expansion of medical e-commerce.

In August 2019, the Drug Administration Law was revised and the online sale of prescription drugs was officially lifted. Except for vaccines, blood products, narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs and other categories of drugs that cannot be sold online, all other prescription drugs have been lifted.

Judging from the above series of policies, relevant policies show a trend of gradual relaxation. The categories of drugs available for online sales have been liberalized, and Internet medical care is also being widely promoted. With the help of the Internet medical care reform, medical e-commerce will also usher in a new round of development opportunities.

2. Economy

According to the results of the seventh national census, compared with 2010, my country's population is still growing and the proportion of children has rebounded, indicating that the adjustment of the fertility policy has achieved positive results. The growth in the total population shows that at the current stage, my country still has a demographic dividend.

At the same time, with the further deepening of population aging and the increase in the number of children and the elderly, it can be expected that there is still a lot of room for development in the medical and pharmaceutical industry.

According to census data, the proportion of urban residents is increasing significantly, and the expansion of urbanization across the country will greatly benefit the continued development of the O2O medical e-commerce industry.

Affected by the COVID-19 pandemic, e-commerce sales in 2020 showed a slight downward trend. However, in terms of commodities, in the first quarter of 2020, automobiles saw a large decline, down 30.20% year-on-year; clothing, shoes and hats, and needlework textiles, which accounted for a relatively large proportion, fell 16.10% year-on-year; and tobacco and alcohol categories increased by 41.60% year-on-year.

The online retail sales of Chinese and Western medicines grew the most, with an increase of 108.80%. Against the backdrop of the normalization of COVID-19 prevention and control in my country, it is estimated that the sales scale of pharmaceutical e-commerce will still maintain a growth rate of more than 10% in 2021.

3. Social and cultural aspects

In recent years, my country's e-commerce industry has developed rapidly. According to data, from 2010 to 2019, the scale of my country's e-commerce transactions increased from 4.55 trillion yuan to 34.81 trillion yuan, with an average annual compound growth rate of 25%.

With the rapid development of the Internet, my country's online retail sales have maintained a growth trend before 2020, and the growth rate is greater than the GDP growth rate. It can be inferred that residents have formed online consumption habits, which will greatly benefit the sustainable development of medical e-commerce.

With the changes in consumer consumption behavior, strong policy support for Internet medical care, and the continuous development of the industry and technology, and the integration of medicine and medicine, medical e-commerce will further demonstrate its vitality.

Especially during this epidemic, in response to the country's epidemic prevention measures, residents have adopted contactless delivery and other forms to purchase daily necessities. Against the backdrop of the normalization of epidemic prevention and control, the frequency of residents purchasing epidemic prevention drugs has increased significantly. At the same time, the sales of chronic disease drugs have also been steadily increasing, bringing business growth to the O2O model of pharmaceutical e-commerce industry.

It is understood that during the epidemic, Dingdang Express Pharmacy's daily online order volume was about 8 times the order volume in the same period, and the daily active users of the APP increased more than 10 times compared with the same period last year. The cumulative number of health home services provided to consumers reached more than 4.5 million times.

4. Technology

The continuous development and progress of technology has brought many improvements and changes to the O2O model of the pharmaceutical e-commerce industry.

The e-commerce format reduces the cost of offline manual services, allowing users to have a more efficient and easier experience in purchasing medicines. Drugs based on Internet big data can be distributed more reasonably and economically in warehousing and transportation, reducing storage and transportation costs. Technological improvements have also reduced the delivery time for users when consuming medicines, solving the problem of residents being lost due to long waiting times when they have urgent needs.

Survey data shows that the transaction volume of China's pharmaceutical e-commerce market reached 195.6 billion yuan in 2020.

The rise of live streaming and short videos, and the influx of more product categories into e-commerce platforms, have prompted the pharmaceutical e-commerce industry to make corresponding optimization adjustments. In addition, the participation of leading platforms such as Alibaba Health and JD Health has brought new competitive pressure to the previously slow-growing pharmaceutical e-commerce industry, prompting the industry to upgrade its structure. Especially affected by the epidemic in 2020, it is estimated that the transaction volume of China's pharmaceutical e-commerce market will exceed 200 billion yuan in 2021.

The promotion of the Internet medical industry can also provide users with more services such as online consultation, pharmacist guidance, etc., so that users can obtain comprehensive services in disease consultation, drug purchase and use, and reduce the risk of users blindly purchasing drugs.

5. Conclusion

Based on the above aspects, the author believes that there is still a lot of room for growth in the areas of online medical consultation, drug delivery, and medical treatment. Based on the research results of major institutions, it is predicted that the pharmaceutical e-commerce industry will still maintain a large growth rate in 2021, and pharmaceutical e-commerce will continue to increase its proportion in the pharmaceutical sales industry under the policy of normalized epidemic prevention and control.

2. Competitive Product Analysis

In the early stages of medical e-commerce, a large number of competitors emerged, such as Dingdang Express Pharmacy, Kuaifang Drug Delivery, Good Pharmacist and other products.

As a survivor of the 2015 pharmaceutical e-commerce war, in the context of digital-driven retail transformation, Dingdang Pharmacy has continuously carried out product and service innovation, improved user experience, reshaped the pharmaceutical industry chain, and achieved disruptive innovation in its business model. In the current Internet medical market, a large number of competitors have emerged, including Jianke.com, which has been deeply involved in medical e-commerce for many years, as well as new entrants such as Alibaba Health (Yilu) and JD Health, which rely on large platforms.

In the field of pharmaceutical e-commerce, according to iResearch data, the usage rates of Alibaba Health, Meituan, and JD Health are all above 30%, ranking in the first echelon; Dingdang Express Pharmacy and Jianke.com follow closely behind, ranking in the second echelon; 1drug.com, Good Pharmacist and other products have lower usage rates, ranking in the third echelon.

JD Health and Dingdang Express Pharmacy have similar platform usage rates and are both direct competitors in the O2O model. The author will take the growth paths and business models of the two products as the entry point to have an in-depth understanding of the two products and compare the differences between them.

1. Dingdang Express Pharmacy

1) Growth Path

• In 2014, it received an angel round investment of RMB 5 million from Renhe Group;
• In early 2015, Dingdang Express APP
  Launched online, featuring a delivery model of "free home delivery within 28 minutes in core areas";
• In 2016, it received RMB 300 million in Series A financing from Tongdao Capital to help build a new retail model for pharmaceuticals and health;
• In 2018, the company completed its Series B financing, led by SoftBank China. The financing will be mainly used to increase the number of pharmacy outlets in existing cities, shorten the delivery distance, and quickly expand to other cities to complete the national layout as soon as possible.
• In 2019, a new round of financing led by CMB International, CICC Capital, SoftBank Capital and others was completed, with a total financing amount of RMB 600 million. The investment will be used to consolidate Dingdang Express Pharmacy's existing business and expand innovative business;
• In 2020, it received a total of RMB 1 billion in Series B+ financing from Taikang, Haier Medical, Longmen Investment and other institutions. The financing was mainly used to accelerate the urban layout of Dingdang Express Pharmacy's "Thousand Cities and Ten Thousand Stores";
• In early June 2021, the company completed a new round of financing of US$220 million, led by TPG Asia Fund, OrbiMed Capital, and Hongwei Capital. The company will adjust its strategy to align with JD.com and Alibaba, and build a "medical + pharmaceutical + insurance" health ecosystem.
• At the end of June 2021, it submitted an IPO application to the Hong Kong Stock Exchange, with CICC and CMB International as joint sponsors.

2) Business model

• Fast medicine delivery : The O2O model focuses on delivering medicines to homes for free within 28 minutes in core areas 24/7, solving the problem of users who have urgent need to purchase medicines;
• Self-operated mall : online pharmaceutical e-commerce business, with a delivery time of 1-3 days, targeting users with different levels of urgency, satisfying the needs of users who want to get price discounts at the expense of some timeliness;
• Dingdang Express Doctor : Practicing doctors provide free online consultation services to solve the problem of patients wanting to buy prescription drugs but not having prescriptions/drug purchasing qualifications;
• Expert doctors : Expert doctors from top three hospitals across the country provide online paid consultations, providing more convenient and authoritative medical services;
• Pharmacist guidance : Licensed pharmacists provide online guidance on drug purchase/use services to ensure users can purchase drugs effectively and use them safely;
• Source of medicines : We have worked with 200 well-known pharmaceutical companies to jointly create the "FSC Pharmaceutical Alliance Health Service Project" to compress the supply chain from the source, connect users and manufacturers, reduce drug costs, and truly achieve direct industrial access to high-quality products;
• Product types : mainly sell cold medicines, heat-clearing and detoxification, high blood pressure, high blood lipids, diabetes, gastrointestinal discomfort, nourishing and replenishing, health food, children's medicines, gynecological medicines, men's medicines, sexual life, skin topical medicines, rheumatism and bone injuries, health care equipment, household supplies and other types of products;
• Quality assurance : Dingdang Express Pharmacy's products are all from well-known brands in the pharmaceutical field and have relevant sales qualifications. You can buy medicines and medical devices with confidence;
• Delivery : Dingdang Express Pharmacy has set up direct stores in first- and second-tier cities across the country and built a dedicated delivery team. If you buy express medicine in the core area, it can be delivered within 28 minutes. If you buy medicine from the self-operated mall, it can be delivered within 1-3 days. The two delivery modes give users more choices;
• Shippers : Dingdang Express Pharmacy's shippers are all its own stores, which can be assigned to the nearest store for delivery based on the buyer's delivery address, maximizing the delivery time;
• Users : Dingdang Express Pharmacy's main user group is young and middle-aged workers in first- and second-tier cities aged 20 to 40. According to the user data released by Dingdang Express Pharmacy, the proportion of male users is slightly higher than that of female users, accounting for about 54.8%;
• Business expansion : In addition to selling medicines and equipment, Dingdang Express Pharmacy has also expanded its daily necessities group buying business, mainly selling daily necessities such as anti-itching cream.

Dingdang Express Pharmacy not only pioneered the online and offline integrated operation model of "online ordering and store delivery" and "online ordering and store pickup", solving the users' pain points of "urgent, lazy, late, dedicated, and private" health medication, but also based on its own offline pharmacies, online medical platforms, its own delivery team, and its own team of professional physicians and pharmacists, it has established a new health ecosystem of "online consultation" + "online ordering and store delivery" around the consumption scenarios of end users, providing full-scenario health services covering "urgent medication, follow-up visits for chronic diseases, pre-disease care, and family health."

By operating its own Dingdang Smart Pharmacy and building its own professional drug delivery team, Dingdang Express Pharmacy can provide users with medical services that are open 24 hours a day in core areas, allow users to find a doctor in 1 minute, and have medicines delivered to their homes in 28 minutes.

2. JD Health

1) Growth Path

• JD Group established JD Health in 2019 and received over US$1 billion in Series A funding led by CICC Capital and other institutions. This round of funding will help JD Health further expand its core business, attract industry talents, and actively explore new businesses in the field of big health.
• In 2020, JD Health received a total of US$830 million in Series B financing led by Hillhouse Capital. This round of financing will be used to continue to strengthen its pharmaceutical supply chain and further explore more business opportunities in the medical and health field;
• At the end of 2020, JD Health went public in Hong Kong. Its pre-listing valuation was less than HK$200 billion. On the first day of listing, its stock price soared 56%, and its total market value once reached HK$340 billion. JD Health's strong momentum once again confirmed the future potential of the Internet medical industry.

2) Business model

• Online consultation : Providing online expert paid consultation and Internet hospital services, which can quickly solve the problem of patients having difficulty in getting prescriptions online;
• Self-operated pharmacy : Provide online pharmacy to solve patients' drug purchasing needs in one stop;
• JD.com's medicine delivery service : It has covered more than 300 cities nationwide, providing users with next-day, same-day, 30-minute, 24/7 medicine delivery services;
• Source of drugs : The drugs in JD Health's self-operated pharmacy come from brand manufacturers, and some drugs come from companies with Internet drug trading C certificate certification, while JD Drug Express cooperates with many well-known chain pharmacies;
• Product types : JD Health and Dingdang Express Pharmacy have the same business scope of medicines, mainly selling medicines for colds, heat-clearing and detoxification, hypertension, hyperlipidemia, diabetes, gastrointestinal discomfort, nourishing and replenishing, health foods, children's medicines, gynecological medicines, men's medicines, sexual life, skin topical medicines, rheumatism and bone injuries, health care equipment, household supplies and other types of products;
• Quality assurance : Only chain stores that have obtained the Internet drug sales qualification certificate can enter JD Health. The drugs sold in JD's self-operated pharmacies are all from well-known brands and have relevant sales qualifications. Drugs and medical devices can be purchased with confidence;
• Delivery : JD Health's self-operated pharmacies use JD Logistics for delivery, and can deliver to the door within 1-3 days nationwide. JD Express can assign well-known pharmacies connected to the JD platform according to the user's location. During the pharmacy's working hours (9:00-22:00), Dada Express provides offline delivery services with the fastest delivery time of 30 minutes and an average delivery time of 1 hour.
• Shipper : The shipper for self-operated pharmacies is JD Health’s warehouse, while the shipper for the drug emergency delivery model is major offline pharmacies;
• Users : JD Health's main user group is young and middle-aged people aged 20 to 40, and the proportion of female users is slightly higher than that of male users.
• Business expansion : JD Family Doctor, one person buys, the whole family uses, 300 full-time family doctors form the health steward for you and your family.

JD Health has achieved outstanding performance since its establishment and has quickly gained the favor of capital. It was successfully listed after completing multiple rounds of financing, which gave a shot in the arm to the Internet medical industry. There are many types of existing online Internet medical apps with different positioning tendencies. JD Health APP, as an Internet medical health platform, aims to provide users with online consultation, smart medical care, pharmaceutical e-commerce services, and health management services.

According to the financial report released by JD Health, JD Health achieved double growth in service revenue and retail revenue, and has formed a healthy and complete profit model by focusing on both Internet medical care and pharmaceutical e-commerce. The improvement of the profit model has also helped JD Health to continue to deepen its presence in the fields of Internet medical care and pharmaceutical e-commerce.

3. Conclusion

Relying on JD Group, JD Health quickly expanded its influence in a short period of time after entering the market, achieved outstanding results, and successfully listed in Hong Kong, forming a business model in which Internet medical care + pharmaceutical e-commerce go hand in hand.

Dingdang Express Pharmacy has been deeply involved in the industry for many years. With the help of the prevention and control of the new crown epidemic, it ushered in explosive growth in e-commerce business volume in 2020. Under the O2O model, Dingdang Express Pharmacy relies on its strategic layout over the years and has more advantages than JD Health in terms of categories, prices, and offline delivery. However, in terms of Internet medical care and B2C, JD's resource integration capabilities and profitability are ahead of Dingdang Express Pharmacy.

3. User Value Analysis

Dingdang Express Pharmacy is a product of the new retail industry in the pharmaceutical field. Under the strategic layout of Dingdang Express Pharmacy, patients can consult online and receive medical treatment conveniently. They can also receive home delivery of medicines through the platform’s 7×24-hour 28-minute core area service, forming a closed loop of online “medical + pharmaceutical” services.

Since Dingdang Express Pharmacy focuses on delivering medicines to homes within 28 minutes in core areas and delivering medicines non-stop at night, its core users are:

• Users who need to purchase health products, over-the-counter drugs and prescription drugs;
• Users who have a minor illness but are unwilling to go to the hospital;
• Users who do not have enough time and cannot go to the clinic;
• Late at night or early in the morning, users suddenly need to buy medicine;
• Frequent consumer of medication for chronic diseases.

According to data from Baidu Index, the cities with the highest search volume for Dingdang Express Pharmacy are Beijing, Guangzhou, and Shanghai, which is in line with Dingdang Express Pharmacy's concept of focusing on the "core areas". At the same time, rapidly occupying the markets in first- and second-tier cities has also been Dingdang Express Pharmacy's main strategy in recent years.

Judging from the attributes of the search population, Dingdang Express Pharmacy’s target user group is concentrated in the 20-40 year old age range. This group of people tend to be more receptive to new things and are more familiar with the Internet. Therefore, the main users in the beginning will be mainly young and middle-aged people.

Dingdang Express Pharmacy is a pharmaceutical e-commerce platform that also has Internet medical functional modules. Its main participants are: drug consumers, patients and the platform.

1. Drug consumption users

The main consumer group of Dingdang Express Pharmacy is drug consumers. According to the Baidu Index of Dingdang Express Pharmacy, the platform's user groups are mainly distributed in first- and second-tier cities, and their ages are between 20 and 40 years old. In the past, before the development of the Internet, patients who needed to consult a doctor or buy medicine could only go to offline hospitals or pharmacies for services.

1) Urgent and night users

As a low-frequency but necessary consumer product, it is inevitable that drugs will be urgently needed in daily life. In the past, when patients needed drugs urgently, they or their relatives and friends could only go to the hospital/pharmacy for consultation and purchase drugs. This method is not only troublesome but also inefficient.

White-collar workers living in first- and second-tier cities are in sub-health conditions due to busy work and irregular work and rest and diet. If they experience emergency symptoms such as acute gastroenteritis, urticaria, periodontitis, etc. at work, they will choose services that are fast and delivered to their workplace.

Even in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, there are very few pharmacies that are still open in the early morning. Hospitals are also limited by the reduction in staff on duty during this time period. When white-collar workers or their family members (children or the elderly) suddenly suffer from minor emergencies in the early morning, this group will also have the demand to buy medicine online.

2) “ Lazy” users

Technology changes lifestyles. After years of development in the e-commerce field, contemporary middle-aged and young people are becoming more and more accustomed to online consumption scenarios. More and more online consumption scenarios and more convenient delivery services have also spawned more and more "lazy" users. Although medicines are necessities whose safety is of primary concern to users, in real life, reliable platforms and quality assurance will prompt users to give priority to the consumption method of buying online and picking up offline.

With the prevalence of "stay-at-home" culture and the increasing variety of online entertainment projects, young and middle-aged people in first- and second-tier cities will give priority to online purchasing channels if they need to buy medicines in their spare time.

3) “ Specialized” needs

It is necessary for ordinary people to buy medicines, but not everyone has professional knowledge related to medicines. Lack of professionalism will cause users to be more inclined to go to hospitals or offline pharmacies when buying medicines online due to lack of relevant guidance. Therefore, providing professional and authoritative drug guidance has become a pain point that needs to be urgently addressed in online consumption scenarios.

4) “ Private” needs

Drug consumption is a private behavior. When consuming drugs, users will subconsciously protect their privacy, especially young and middle-aged consumers, who will pay more attention to the protection of their own privacy. Therefore, protecting user privacy during delivery is also one of the pain points of the pharmaceutical e-commerce industry.

2. Patients

1. In daily life, due to the uneven medical standards in different cities and regions, patients in areas with relatively backward medical standards need to seek medical treatment across regions if they want to obtain higher-level diagnosis and treatment services;
2. Cross-region medical treatment cannot avoid the fatigue of traveling, which will cause physical burden on patients;
3. Cross-region medical treatment not only increases the physical burden on patients, but also the travel expenses and accommodation fees will cause financial burden on patients;
4. Famous doctors are hard to find, and even local residents have trouble getting an appointment with a specialist director at a well-known hospital;
5. Some patients will subconsciously refuse face-to-face consultations out of privacy, procrastination, and fear of seeing a doctor.

Therefore, patients have channels to obtain online diagnosis and treatment services from famous doctors before seeking medical treatment, which can not only save patients' treatment time and economic costs, but also improve the efficiency of diagnosis and treatment. Providing online diagnosis and treatment services and establishing Internet hospitals staffed by famous doctors from many locations are also exciting demands of patients.

3. Platform

From the above analysis, we can see that in the pharmaceutical e-commerce module, the source of goods, the effectiveness of delivery, the duration of service, the service during purchase, and the protection of user privacy have become pain points for online purchases of medicines and equipment. In the Internet medical module, reasonable charges and the number of authoritative experts are the pain points that the platform needs to solve.

1) Drugs and equipment

More and more residents face the five major pain points of "urgency, laziness, night, specialized and private" when seeking medical services or purchasing medicines. Therefore, Dingdang Express Pharmacy pioneered the online and offline integrated operation models of "online ordering and store delivery" and "online ordering and store pickup" to address multiple pain points. The main service it promotes, "7×24 hours, 28 minutes home delivery in core areas", directly addresses users' pain points of " urgency", "laziness" and "night" . Offline self-operated pharmacies continue to expand and build their own logistics and distribution teams, which improves the efficiency of drug circulation in the entire chain from pharmaceutical companies, pharmacies to end users, and promotes the digitalization of the entire medical ecosystem.

At the same time, the new Internet "medical + pharmaceutical" health home service model based on Internet information technology allows users to conveniently complete "mobile phone consultation and drug purchase" without leaving home, making up for the lack of relevant professional capabilities of ordinary users when purchasing drugs.

Regarding privacy protection, when users consult online pharmacists through Dingdang Express Pharmacy, the name that appears in the conversation record is the registered nickname instead of the user's name, so there is no need to worry even when consulting about private diseases; secondly, after the user has selected the medicine and placed an order, the pharmacist at the offline Dingdang Smart Pharmacy will pick up the goods according to the order number and put the medicine directly into professional matte covert packaging; finally, the "privacy label" and sealed seal are enabled, so that even the delivery guy will not know the drug information in the delivery order, thus protecting the user's privacy and security very well.

Therefore, Dingdang Express Pharmacy has managed to protect the privacy of users throughout the entire process from consultation, ordering to home delivery.

After obtaining the online sales agency for Renhe Pharmaceutical's full range of products, Dingdang Express Pharmacy accelerated its cooperation with major pharmaceutical companies and improved the supply chain of direct supply from pharmaceutical companies, making the source of drugs more transparent and lower in price.

In the early days, Dingdang Express Pharmacy was positioned as a third-party pharmacy + door-to-door drug delivery service. The disadvantages of this model are:

• The overall attitude of third-party pharmacies towards cooperation is not positive;
• Pharmacies use platform traffic to sell high-profit drugs, which can easily lead to loss of platform users.

Through strategic adjustments, Dingdang Express Pharmacy now adopts its own pharmacies + door-to-door drug delivery services, and by continuously replicating its own stores and building its own distribution team, it has shortened the time to occupy the market to the greatest extent.

Image source: mob Research Institute

2) Internet medical care

As for Internet medical services, Dingdang Express Pharmacy invites many well-known expert doctors from authoritative hospitals across the country to join the platform to provide online diagnosis and treatment services, which solves the problem of "difficulty in registering and seeing a doctor" for patients and avoids the patients' hard work. The arrival of well-known experts also provides higher-level medical services to areas with underdeveloped medical conditions. At the same time, online diagnosis and treatment also saves patients the extra transportation costs they would otherwise have to pay when seeing a doctor.

Dingdang Express Pharmacy’s online medical service allows expert doctors to provide consultations via text and pictures, which avoids patients having to face doctors directly. This reduces the psychological pressure on patients when facing doctors and also protects their privacy and security.

After obtaining a new round of financing, Dingdang Express Pharmacy has accelerated its layout in the Internet medical field. The expert doctor module it launched is clearly highlighted in the layout of the homepage, which is in line with Dingdang Express Pharmacy's overall layout of accelerating the development of Internet medical services.

Through investigation, it is found that young and middle-aged people are the main force of medical e-commerce and registration and consultation. Young and middle-aged people aged 25-44 prefer online registration and consultation. Therefore, the platform's inclusion of Internet medical care in its strategic focus will help promote the activity and retention rate of users in this age group.

4. Commercial Value Analysis

Dingdang Express Pharmacy's current core businesses are still 28-minute express pharmacy and self-operated malls. Affected by the COVID-19 pandemic, Dingdang Express Pharmacy saw a surge in daily views and orders last year, and its monthly active users have continued to grow. In order to determine whether Dingdang Express Pharmacy's e-commerce business can continue to maintain healthy development, the GMV (gross merchandise volume) indicator will be used for analysis below.

GMV=number of users×conversion rate×average order value. The improvement of any one of the following indicators, namely the number of users, conversion rate, and average order value, will have a positive impact on the growth of overall revenue. Therefore, the author will focus on analyzing the means by which Dingdang Express Pharmacy improves these three key indicators.

1. Number of registered users

In order to achieve sustainable growth in platform revenue, it is necessary to introduce a steady stream of new users. So how does Dingdang Express Pharmacy increase its user base? In order to increase the number of registered users, Dingdang Express Pharmacy has taken the following measures.

1) Advertising and cross-border cooperation

In August 2020, my country has entered the normal stage of epidemic prevention and control. Dingdang Express Pharmacy launched new advertisements in 15 cities including Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, etc., from online to offline, from residential communities to office buildings, from bus stops to subway stations, and launched the slogan of "Urgently needed medicines are delivered quickly, and chronic disease medicines are extremely cost-effective", so that residents subconsciously associate Dingdang Express Pharmacy with "fast" and "cost-effective".

On the occasion of Double Eleven in 2020, Dingdang Express Pharmacy, in conjunction with NetEase Youdao Dictionary Pen and Fenbid, jointly planned the "Fenbid - Parent Emergency Service". This case targets the common phenomenon that parents have headaches when tutoring their children's schoolwork. It focuses on the concept of "letting parents no longer have anxiety and headaches, and let children get it right", creating a co-branded customized "Fenbid" translation pen, and putting it on the Dingdang Express Pharmacy platform and Beijing Dingdang Smart Pharmacy.

The "Fenbide" pun was jointly released on the official channels of Dingdang Express Pharmacy, NetEase Youdao, and Fenbid, and was disseminated billions of times on Weibo, WeChat, and Douyin. This marketing campaign won the gold award in the cross-border marketing category of the 13th Golden Yuan Award, and expanded the brand's awareness.

2) Pushing new customers

Recruit part-time staff to conduct ground promotion at subway entrances and shopping mall entrances and exits with high traffic flow by distributing small gifts, giving away coupons for registration, etc.

We launched the "Winter Warmth" marketing campaign and started a new marketing model - "owners' word-of-mouth guidance for conversion". Assign activity tasks to online car-hailing drivers, conduct strong exposure throughout Shenzhen, bring warmth to more people, and successfully complete the task of attracting new users.

3) Assisting in resuming work and production

During February and March 2020, due to the sharp increase in the number of new infections caused by the epidemic every day, there was a serious shortage of medical masks in China, and there was no demand for them. In this scenario, Dingdang Express Pharmacy launched a marketing campaign to help resume work and production, sell medical masks at a reasonable price every day, and limit each user to purchase 2 masks.

This move has enabled the monthly active users of Dingdang Express Pharmacy APP to exceed 1.5 million, ushering in a small peak. As user habits develop, the overall monthly active user scale of Dingdang Express Pharmacy has shown an upward trend.

Image source: mob Research Institute

Eight anti-epidemic measures have been introduced to ensure supply, guarantee prices, and increase services: insisting on "Spring Festival non-closing" service for four consecutive years, launching a global supply chain to ensure the supply of epidemic prevention materials, and professional doctors provide users with free chronic disease follow-up and online prescription review services for the "Chronic Disease Worry-Free Protection Plan". At the same time, a 24-hour "New Epidemic Consultation Green Channel" has been opened to help citizens prevent the epidemic scientifically and reduce psychological pressure.

We launched a "contactless delivery" service to increase users' sense of security when receiving goods. We also provided 500,000 contactless delivery sites across the country for free, and launched a fully contactless 28-minute home delivery service for medicines, strengthening our "responsible" corporate image. It also received exposure coverage from CCTV's "First Time" program team.

2. Improve conversion rate and average order value in multiple dimensions

After guiding users to register on the platform, you also need to establish consumption scenarios to guide users to consume and increase the conversion rate of registered users. So what methods does Dingdang Express Pharmacy use to improve conversion rate? The author will conduct analysis based on a series of operations performed by users after opening the platform.

The average order value is mainly affected by the single purchase amount and purchase frequency. Dingdang Express Pharmacy APP displays its convenience and preferential strength on multiple pages to increase the single purchase amount and purchase frequency.

1) Exclusive offers for new users

We launched a promotion where new users can buy a variety of products such as hot steam eye masks, longan, wolfberry and red date tea, aloe vera gel, toothpaste, ginger tea, wet wipes, etc. for 1 cent, and offer free shipping for the first order from Beijing/Shanghai/Guangzhou/Shenzhen/Chengdu/Hangzhou, which increased the platform conversion rate.

2) Home page

① Consumption protection

As a relatively special commodity, the safety and consumption protection of drugs are of great concern to users. The consumer protection agreement is displayed on the right side of the search box and on the page, allowing users to purchase with confidence and solving their worries before and after sales.

② Special sale

For daily consumers of medical products, we launched the "Health Sale" store, and for patients with chronic diseases, we launched the "Chronic Disease Sale" special event. These two sale entrances are displayed regularly, showing the sale prices and emphasizing their cost-effectiveness.

③ Promotional offers

Display promotions on the homepage to guide users to collect coupons or enter the promotion area.

④ Group buying activities

We have launched the “Group Buying” game, where old users can invite two new users to form a group and enjoy preferential prices of 1 yuan/4.9 yuan/9.9 yuan for aloe vera gel, face towels, facial masks and other products.

⑤ Membership bonus

We launched a coupon for members to purchase for 8 yuan with a total value of 88 yuan, which is valid for 60 days. This will increase the barrier to user loss and maintain user activity.

⑥ Display products

Simply display the products on the homepage, emphasize preferential prices and delivery time, and improve conversion rate.

front page

Group Buying Page

3) Product details page

① Delivery within 28 minutes

Display delivery time to increase the conversion rate of users with urgent needs.

②Discount display

Display multiple discounts on the product details page to increase conversion rate or average order value, such as displaying discounted prices and offering better discounts on package purchases.

③ Details tab displays user reviews

In e-commerce, the display of user reviews is an important component and can even directly affect whether the user decides to buy the product. Displaying the reviews of users who have already purchased the product as a reference can increase other users' willingness to buy.

④ Display drug instructions

Medicines are special commodities, and instructions are one of their main components. Displaying the instructions is helpful for users to prescribe the right medicine for their condition and increase their willingness to buy.

⑤ Evaluation tab

Display the reviews of users who have purchased the product to provide reference for users who are willing to buy.

4) Online consultation page

Authoritative experts/doctors from Grade-A tertiary hospitals allow patients to have worry-free online consultations. Online consultations are cheaper, reducing the financial burden.

List Page

Details page

5) List (shopping cart)

On the checkout list page, promotional activities such as pop-up discounts, coupons, and red envelope redemption are performed to increase the average order value based on the products selected by the user.

6) Checkout page

Continue to display product discounts on the checkout page, and focus product functions on improving conversion rates.

7) Order details page

Add a coupon sharing entrance on the order details page. Sharing with friends can get extra coupons, increasing the number of registered users and conversion rate.

3. Conclusion

While continuously demonstrating the advantages of "fast medicine delivery", Dingdang Express Pharmacy APP also continuously optimizes its GMV model by providing users with various discounts and launching multiple promotional activities. In the special scenario of the outbreak of the new crown epidemic, by optimizing warehousing and logistics services and continuously optimizing product functions, we quickly seize market share and gain further user and revenue growth.

5. Product Iteration Analysis

In order to more in-depth analysis of the product iteration rhythm of Dingdang Fast Drug and explore its product logic, the v6.0.0 version of Dingdang Fast Drug has been sorted out since its launch. The core iteration version after sorting is as follows:

According to the cumulative download volume curve of Android platform from 2015-02-04 to 2021-06-22 obtained on Cool Pass, we can see that since October 2015, the user growth curvature of Dingdang Fast Drug has continued to increase, which overall belongs to the "J" curve.

According to the cumulative download volume curve, Dingdang Express Pharmaceutical is divided into two stages:

From 2015/02/04 to 2015/09/3, Dingdang Express Pharmaceutical was in the cold start stage. During this stage, the main goal of Dingdang Express Pharmaceutical is to improve core functions, verify user needs, and improve user experience in purchasing drugs. At the same time, the city scope is continuously expanded and the business scope is spread to 30 provinces.

During this stage, multiple iterations revolve around the core business process of delivering medicine to home in 28 minutes. Add national marketing scenarios, add new reward portals for old users to attract new products, add new product recommendation functions, expand user selection range and increase customer unit price. Remove tedious functions, simplify the purchase process, and improve user experience. At the same time, it also optimizes the basic functions of users' login and verification code acquisition to improve the functions of the APP.

The second stage is the growth stage from 2015/10/01 to the present. In this update from 2015/10/01, Dingdang Express Pharmaceutical found that users wanted to receive goods in their spare time during their operation. In response to this user needs, Dingdang Express Pharmaceutical has added the function of appointment delivery, providing a range of delivery time for the same day and next day delivery time for the appointment.

Since drugs are a type of products with thresholds for use and need to place an order for the disease when purchasing drugs, Dingdang Express Pharmaceutical has launched an online consultation pharmacist and online customer service function to better solve various pre-sales and after-sales questions of drug purchasers; in order to meet the needs of adult users, it was launched in the sex toy mall; this iteration of multiple updates has achieved a slight increase in the number of daily downloads in the short term.

Due to the outbreak of the domestic COVID-19 epidemic at the end of January 2020, Dingdang Express Pharmaceutical ushered in a surge in the short term in March 2020. During the outbreak of the epidemic in my country, Dingdang Express Pharmaceutical maintained a 7×24-hour delivery service in the core area for 28 minutes, and launched a contactless delivery model to provide protection for users placing orders. It is also the impact of the new crown epidemic that Dingdang Express Pharmaceutical has maintained a relatively considerable download growth rate since its launch in 2015 v1.0.0.

6. Product structure analysis

After iterative analysis of Dingdang Express Drug, in order to better grasp the product logic of Dingdang Express Drug, understand which functions of Dingdang Express Drug meet the needs of users, and how these functions are distributed in the APP, the author will conduct a product structure analysis of Dingdang Express Drug.

The following figure is the brain diagram of the structure analysis of Dingdang Express Drugs compiled by the author.

For the sake of analysis, the author further sorts out the needs of users before, when and after consumption:

Because the main target users of the APP are users who need to purchase medicines or consult, these two types of users have consumer demand when using Dingdang Express Drug.

When drug purchasers use APPs, they will have various needs before, at, and after purchase:

• Before purchasing medicine, go through the APP
  Understand what you care about;
• When purchasing medicine, perform a series of operations;
• After purchasing the medicine, track after-sales issues such as order status and drug use.

As an O2O e-commerce platform, users need to find the right medicine before purchasing medicines , and users need to understand the brand, price, efficacy and instructions for use of the medicine.

In response to the above needs, users can learn about the right medicine through the doctor's prescription/pharmacist guidance , find the medicine through the search box and product list , and finally learn about the basic information of the medicine through the product details page . Through these functions, users can get a relatively complete pre-sales experience on the Dingdang Express Pharmaceutical Platform and have a preliminary understanding of the drugs they are about to purchase.

When purchasing medicines , users need to change the type and quantity of the purchase process, select delivery time, select delivery address and payment, etc., to achieve the accurate completion of the drug purchase needs.

In response to this demand, Dingdang Express Pharmaceutical has continuously improved the list function and settlement page to enhance the user's purchasing experience.

After purchasing the medicine , users need to track the order information in real time, understand the drug's instruction manual, etc.

In response to this scenario, Dingdang Express Pharmaceutical has added a delivery status function to the order details page , allowing users to follow up on the delivery progress of the order in real time. The drug instruction manual is also displayed on the product details page . If it is a prescription drug, the " My Prescription " function is also added to the Dingdang Kuai Medical page to make users worry-free after-sales service.

When using the APP, there are many needs before and after consultation:

• Before consultation, through the APP
  Understand what you care about;
• After the consultation, follow up on the consultation results and keep the consultation records, consultation prescriptions, etc.

Before the consultation , the user believed that he had mild symptoms and chronic diseases and wanted to have a preliminary diagnosis, but he did not want to spend extra money. Dingdang Express Pharmaceutical launched a free consultation module for this type of users. In this module, users can find doctors in the corresponding field based on their initial symptoms and conduct online free consultations.

Users who want to find experts in the corresponding field for their own diseases can enter the Expert Doctor Module to find doctors in related fields across the country, and independently choose trusted doctors for online consultation.

After the consultation , the patient needs to obtain the consultation results and record the prescription prescribed by the doctor. Therefore, Dingdang Express Pharmaceutical has added two functions: consultation records and my prescription on the consultation page, so users can check it after the consultation is over.

Through the above analysis, we can find that in the drug purchase process, Dingdang Quick Pill has opened up the purchasing link well, bringing users an easy-to-use and convenient purchasing experience.

At the same time, for consultation users, Dingdang Express Pharmaceutical has also launched two modes of free consultation and paid consultation, allowing users to have more autonomy in the selection of consultation. It meets the high-frequency functions of different users at the functional level, and highlights the focus and distribution in the product structure.

7. Operational Analysis

In the life cycle of a product, operation is also the key to the success of the product. Product is the starting point, and operation is everything after the starting point. Therefore, there is a saying in the industry that "product gives birth to children, operation raises children", which can also summarize the relationship between product and operation.

Next, the author will conduct an operational analysis of Dingdang Express Pharmaceutical from the following aspects.

1. User acquisition

1) Ground recommendation

After it was launched on February 6, 2015, Dingdang Express Pharmaceutical cooperated with major chain pharmacies to promote ground in the pharmacies' business areas and promote ground in the form of official account follow-up in communities and business districts.

2) Advertising

2019/1/1 Launched the first warm family TVC of 2019, telling warm stories from 5 different families.

2020/8/8 The slogan "Emergency needs medicines to be delivered quickly, and chronic diseases is very cost-effective" was launched in 15 cities including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou and Chengdu. The advertising issuance covers multiple public places such as buses and subways, business district office buildings, etc.

3) Cross-border cooperation/cross-platform cooperation

2017/3/20 United 7 Days Hotel launched a free shipping eye mask event in Beijing, Shanghai, Guangzhou and Shenzhen delivery range.

2017/8/28 Jointly held a promotion activity for the Chinese Valentine's Day shopping festival with Shouqi Car Departure.

2019/6/28 Join hands to raise and protect Qingshang, launching 6 million medical insurance to build a more complete medical insurance system for users.

2020/11/6 Co-branded with Youdao Dictionary and Fenbide, the "Fenbide" Youdao Dictionary Pen was launched, and the homophone marketing cases were spread at billions.

4) Star cooperation

2016/8/27 Hu Bing "joined" Dingdang Quick Pill and served as the Ambassador for Love and Health.

2017/8/28 Cooperate with Zhang Xinyi to launch short videos for the promotion of the Chinese Valentine's Day, Jiang Yingrong and other 14 stars took turns to distribute red envelopes of 100 million yuan.

2. User activation

After users download and register the Dingdang Quick Drug APP, they need to activate the user to open the APP to increase the DAU and MAU of Dingdang Quick Drug. Dingdang Quick Drug uses the following methods to increase user activity:

• Via APP
  Push new users with orders full discount messages, red envelopes have arrived, and other types of push;
• Via APP
  Push marketing activities, such as 618 Shopping Festival, summer heat-relieving and health-preserving flower tea special events;
• Via APP
  Push messages with push related health knowledge, such as: Pay attention! If uterine fibroids have these symptoms, beware of cancer!
• Send discount promotional information through SMS, such as collecting coupons for 618 Shopping Festival, link jump to open the APP
  wait.

3. User retention

After activating users to promote user activity, it is also necessary to improve user retention rate in order to allow users to continuously use the platform and bring benefits to the platform. Another interpretation of improving user retention is to reduce user churn. Then, Dingdang Express Pharmaceutical mainly improves user retention through the following methods:

• After registering, signing in every day and placing an order, you will receive Dingdang coins (similar to member points). Dingdang coins can be used for riders to reward, exchange goods and cash;
• An activity that pays 8 yuan to get 88 yuan coupon + 280 Dingdang coins with a validity period of 60 days will be launched. After users spend money to purchase coupons, a cost barrier will be established, and the threshold for users' churn will be raised accordingly;
• Launch a group buying activity for old users in self-operated malls. If two old users participate in the group formation, they can purchase plant essential oil sprays with an original price of 33 yuan for 29 yuan. The delivery is expected to be 1-3 days after payment;
• Using the APP
  Recall methods such as internal push and text messages can reach users with lower activity and reduce churn.

4. Get profits

After obtaining users, activating and improving their retention, users can generate actual consumption (conversion rate) and increasing customer unit price to bring benefits to the platform. The method of Dingdang Express Pharmaceutical to obtain benefits can be simply summarized as (see Commercial Value Analysis for details):

• After registering, new users will issue new coupons to guide users to place orders;
• Launch a variety of discount activities such as value-for-money purchases and discounts;
• Continuously optimize the APP
  The functional modules meet user needs and reduce the user's ordering process.

5. Recommended communication

With the rise of social networks, viral transmission based on social networks has become an important way for platforms to acquire new users. This method is low in cost and may bring good customer acquisition results. Dingdang Express Pharmaceutical is important to increase the user's transmission through the following methods:

• Launch a 1 yuan coupon event, that is, an old user invites a new user to form a group to enjoy discounts on aloe vera gel with an original price of 29.9 yuan in group buying price of 1 yuan;
• After placing an order, you can get the Dingdang coin reward by sharing it with your WeChat friends or Moments. Friends can click to receive coupons;
• Teaming up a red envelope to open the event, inviting new users can double the amount of the red envelope.

Based on the above aspects, we can see that Dingdang Express Pharmaceutical's success in the pharmaceutical e-commerce field is traceable. By constantly exploring and optimizing functions to meet the needs of users and combining scientific and reasonable operational methods, Dingdang Express Pharmaceutical is a sufficient condition for achieving great results.

8. Future Outlook

Through the above analysis, we have understood the reasons for the rise of Dingdang Fast Drug. As of now, Dingdang Express Pharmaceutical has received 7 rounds of financing in just 8 years and has submitted an IPO application. If it can be successfully launched, Dingdang Express Pharmaceutical will obtain more funds to expand the market.

According to the founder of Dingdang Express Pharmaceutical, Dingdang Express Pharmaceutical will fully lay out "medical + drug + insurance". We have now learned about Dingdang Express Pharmaceutical's layout at the medical + drug level, but we still don't know the layout of "insurance".

So how should Dingdang Fast Drug develop in the future? Combining the above analysis of Dingdang Express Pharmaceutical and the current market entrants, the author will analyze Dingdang Express Pharmaceutical using the SWOT model, hoping to get effective conclusions from it.

Through the above analysis, we can find that Dingdang Express Pharmaceutical is already preparing to go on the market, but in order to obtain a platform for continuous development, the author believes:

1) We should accelerate the layout of Internet medical care and strengthen the platform's competitiveness under the competition surrounded by wolves.

After receiving a new round of financing in early June, the platform said it would fully deploy the "medical + drug + insurance" model and face JD.com and Alibaba head-on. It is foreseeable that in the next time, Dingdang Fast Drug may change its development pace, from the original self-operated store expansion → seizing urban share model to the online medical + medical e-commerce + health insurance to advance together.

In terms of online medical care, the pain points that the authoritative and well-known experts need to solve when entering the platform. For patients, obtaining more expert doctor resources can seize more patient markets.

In terms of health insurance, JD Health has laid out a new health management model of "insurance + service", launched "home medical insurance", and Ping An Good Doctor, who has been deeply engaged in Internet medical care for many years, has also become increasingly perfect in medical care, and has a wide range of products. Therefore, if Dingdang Express Pharmaceutical wants to fully deploy "medical + drug + insurance", it needs to consolidate the advantages of medical e-commerce while strengthening the integration of Internet medical resources, and optimizing and promoting insurance functions in the APP.

2) After JD.com and Alibaba entered the market, Dingdang Express Pharmaceutical was inevitably forced to join the price war in order to maintain its existing market share. At the same time, it was inevitable to join leading chain pharmacies such as Neptune and Dasanlin on the takeaway platform. Because offline chain pharmacies were established early, their rental costs and turnover had more advantages than Dingdang Express Pharmaceutical, so they could also get lower cost prices when bargaining with pharmaceutical companies.

Faced with the dual pressure of online price wars and offline pharmacies, Dingdang Express Pharmaceutical should pay attention to strengthening its own bargaining chips to achieve the purpose of reducing costs and increasing profits.

According to the above analysis, we learned that the current development model of Dingdang Express Pharmaceutical is to first set up smart pharmacies (self-operated stores) in first- and second-tier cities, and then gradually expand online business with smart pharmacies as the center. However, with many competitors joining the market, the rental cost and time cost of setting up self-operated stores are relatively high. If you want to continue to develop your business, Dingdang Express Pharmaceutical needs to "surround the countryside" to actively expand the market in second- and third-tier cities.

Therefore, the author believes that in cities with low population density, in order to save rent costs and labor costs, Dingdang Express Pharmaceutical can change the strategy of opening a smart pharmacy to a forward warehouse model. This measure is also conducive to accelerating expansion, increasing market share, increasing bargaining chips and reducing costs when bargaining with pharmaceutical companies.

3) The country is further relaxing its Internet medical policies. Prescription drugs are a major category with a high proportion of medicines, and the prescription drug market is also a high ground for Dingdang Express Pharmaceuticals and JD Alibaba to compete for it.

However, according to media reports and user feedback, Dingdang Express Pharmaceutical Platform's review of drug prescriptions is still relatively relaxed, so the platform should pay attention to strengthening the review of prescriptions and supervision of prescription drugs to avoid similar incidents that violate relevant laws and regulations again.

Author: Lin Cole

Source: Lin Cole