The Product

Apollo 247 is essentially an e-pharmacy that facilitates buying of medicines and other healthcare wellness products from their vast & trusted network of Apollo pharmacies, delivered straight to the user's doorstep, in a timely manner. This could be to the user's home, their office, their family's home or any other servicable area.

The products delivered range from medicines (over-the-counter and others), supplements, personal hygiene, wellness and fitness products.

The users also have access to features to book appointments at partner clinics and hospitals, schedule lab tests where the tests are taken at home, and also consult doctors online - telemedicine.

Litmus Test

Retention

As per industry data, e-pharmacies have a retention rate of 72% in urban areas and 77% in tier 2 & tier 3 cities. Source

Of the user base in Apollo 247, many are Circle members who have shown their commitment to the app by purchasing a membership. The retention of such users is for a longer time.

Using the above facts, Apollo 247 can be said to have a retention rate of about 54%.

Depth of Engagement

Casual Users

These users do not require medicines on a recurring basis. They buy when required, based on any illness that may have come. Usually, a season change is every 3-4 months, making the probability of someone falling sick and ordering medicines high.

Core Users

These users not only order medicines but also order other associated items like supplements, personal hygiene items etc. The frequency of buying these items conveniently is higher here.

Power Users

These users order medicines on a recurring basis, keeping in mind the functional goal of staying organised and prepared for the medicines they have to take. The users also buy other items as it is a convenient way of buying everything together.

From user calls of 8 users, 2 were power users, 3 were core users and 3 were casual users. From this data, more than 50% of users are in the core & power user segment.

Willingness to Pay

From the above table, it can be inferred that willingness to pay exists across different user segments.

Substitute Pricing

Core Value Proposition

The CVP of Apollo 247 is quick and convenient delivery of medicines and other essential products usually within a couple of hours.

What are users buying into?

• Users are buying into Apollo's CVP of quick and easy doorstep delivery of medicines, supplements and other healthcare related essential items.
• Apollo 247 offers a wide range of products as well as services that the user has access to, ensuring that the user is given the opportunity to take care of their health.
• Apollo 247 Circle membership is one of the cheapest of all competitors with benefits that outweigh the value for which the user is purchasing the membership.
• Users are also buying into the trust of the Apollo brand.

Substitutes
Please note that these delivery dates were taken on Friday, December 1st a 7PM.

Pricing Design

Who to Charge

RFM Analysis

For delivery, every user who is not a Circle member (paid member), will be charged delivery fee if the order value is under Rs. 400.

For membership, the frequent users, Champions, Loyalists, potential loyalists and 'Can't lose them' segments can be monetised. This is mainly based off the fact they since they use other features of the app, the perceived value is higher with a circle membership that gives various benefits which are monetary in nature - unlimited free delivery, cashback on lab tests and doctor consults as well as higher discounts on products.

When to Charge

Perceived value is highest at,

• Checkout
• Post delivery

The user should be charged for delivery if they do not meet the criteria for free delivery. The user, based on their segment, should be asked to join the Circle membership program by showing them the value of the membership. The perceived value of the membership is much higher than the cost of the membership. This needs to be articulated well.

What to Charge

Primarily, Apollo 247 should charge for output. Delivery fee per order.

Secondarily, Apollo 247 should charge for access of features such as at-home lab tests, which come with discounts through the circle membership.

Delivery

The core action performed by the user is to place an order.

The platform currency for Apollo 247 is HC - Health Credits.

Each time the user buys medicines from the physical pharmacy, they get HC as cashback. This is redeemable in the app as well as the store.

But the user cannot go to the store every time to buy products and hence will not have much HCs.

Every user is charged for delivery. This is if the order value is less than Rs. 400.

The perceived value at Rs. 400 order value is saving Rs. 75 to Rs. 100 on delivery as well as the time taken for the user to go out and get the products by themselves. On Rs. 400, Rs. 75 is ~ 19% of the value while Rs. 100 is 25%.

Circle Member

Some users, mainly Champions, Loyalists and Potential Loyalists can be charged a membership fee - monthly, quarterly, semi-annually or annually.

By becoming a Circle member, the user has the following benefits:

• Unlimited free 2-hour deliveries
• Get additional 5% cashback on medicines and health essentials.
• Enjoy 7% additional cashback on diagnostic tests.
• Enjoy up to 15% savings on doctor consultations.
• Get access to Emergency Doctor on Call 24|7.
• Priority customer support and delivery.

On an order of Rs. 400, Rs.75 to Rs. 100 is waived on delivery along with 5% additional cashback. The user also gains value in ordering lab tests (7%) and 15% on doctor consults.

The perceived value of ordering a lab test is Rs. 1499 while perceived price is Rs. 1390. When they order medicines after the lab test results, the perceived value of an order of Rs. 500 has the perceived price of Rs. 380 (remove delivery and 5% cashback).

Circle membership for 12 months costs Rs. 299 currently. This means that the saving of Rs. 120 on a single order and Rs. 100 on the lab test is covered by the user already. Hence, perceived value of Circle membership is much higher than perceived price.

How much to Charge

Perceived Value vs Perceived Price

In the table below, 4 ICPs with different earning powers, have been considered when taking into account the value of a Rs. 75 delivery charge.

Taking into account the average time saved, the effort put into procuring products otherwise, the perceived value has been calculated. The perceived price is the delivery charge.

From the last (right-most) column, we can see that the perceived value for power and core users is much higher than for casual users. This being said, if the user were to take Circle membership, they would benefit a lot. At Rs. 299 for 12 months with free delivery and not counting the cashbacks on medicines and sub-products, the user greatly benefits, including the casual user within 7 months.

Current vs Proposed Pricing

Based on the above math, the pricing for power users and core users can be increased to around Rs. 299 for 6 months and Rs. 499 for 12 months. This would be in direct comparison with Tata 1MG that charges Rs. 275 for 6 months and Netmeds that charges Rs. 499 for 12 months.

Given that Apollo 247 has other services integrated into the app, while leveraging on the trust factor and vast accessibility of services, the higher charge comes with a lot more perceived value than its competitors.

The new pricing would affect the casual users more than anyone else. However, as mentioned above and as calculated in the table, the casual user would get back more than what they pay for, by atleast 20%. The newly married ICP has a 6 month perceived value of Rs. 247.50 on deivery charges alone being waived. Adding the 5% cashback of circle membership on 4 orders of Rs. 300 would bring the overall perceived value to Rs. 555 - the user would have paid Rs. 499 for this. They get more value if they schedule a lab test in the 12 months.

How to Show Pricing

Current Pricing Page vs Competitor

Apollo 247 has a Circle membership pricing page where the user has to scroll down to see the different plans. The pricing section is also scrollable from left to right with the middle option (of 3 options) pre-selected. This is shown in the picture below.

Comparing this to Tata 1mg, the pricing is shown one below the other with better UI. The user need not find the different plans and they are presented well. The picture below shows the Tata 1mg subscription page.

The major difference is that for 1mg, the amount of savings based on the use case is shown. The screenshot on the right shows Rs. 1490 as the savings based on the two check boxes below the number.

Both apps show the benefits before the price and the price varies solely based on the term of the membership and has no difference in benefits to the user for longer term commitment.

The pricing page is designed to prime the user about the benefits and nudge them towards enrolling themselves in the membership program. The middle option is autoselected as most users prefer going for the middle option (cognitive bias). There is no slashed price - good idea.

System 1 or System 2

Healthcare is a very sensitive segment. User needs to build and have trust in the system and make a well-educated purchase. This means that system 2 should be used. However, for the user to buy again, repeat orders of the same items, the trust is already built and this flow can be made through system 1.

There is another use case where the user only needs OTC (over the counter) products. This should be done through system 1 for quicker checkouts.

Pricing Page Design

The pricing page above depicts all three plans that are available for the user to enroll themselves into the membership. Showing all three plans at once gives the usr a better idea on the plans and heir pricing in one screen without the need to scroll. The user can click on any one of the plans and checkout to enroll.

The befits are given below the pricing so that the user can easily see how much they are paying for all benefits. By showing the price first, it puts the benefits into perspective.