Date
23 March 2017
The majority of O2O drug delivery operations in China are very similar to one another and compete mainly on speed of delivery. Photo: internet
The majority of O2O drug delivery operations in China are very similar to one another and compete mainly on speed of delivery. Photo: internet

What does the collapse of a medicine delivery app tell us?

Overcapacity is not limited to China’s old-economy sectors such as steel and coal.

The collapse of a medicine delivery app tells us the same problem is bugging the digital economy on which Beijing places high hopes.

Yaogeili is one of the many online platforms that take orders and deliver medicine to customers’ doorsteps.

Although it claims to have one million registered customers, the business proved not quite enough to cover the overhead.

The company, which is less than two years old, announced earlier this month the suspension of a major portion of its services.

Management denied the business is folding. Rather, it is adjusting its operation and will limit its services to a smaller area, China Securities Daily reports.

The company blamed financiers for its sudden contraction.

“We had reached the final stage of getting fund injection from a traditional pharmaceutical firm but it backed out at the last minute,” a senior executive said.

There are at least 14 such drug delivery firms, some of which are standalone operations. Others are backed by strong parents.

Also called O2O online drug platforms, most of them work like taxi apps.

A customer places an order, drug stores that have joined the platform compete for the order and deliver to the customer.

But in a business culture where few create and most prefer to copy, there are just too many all-too-similar platforms.

– Contact us at [email protected]

RA

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe