China’s e-commerce industry has exploded over the past several years, and with it successful speciality shops have cropped up online for just about every type of product you could imagine. But there’s one big product category that isn’t selling online: medicine. It’s not for lack of trying, either. China has licensed websites to operate B2C medicine shops online since 2006, and plenty of companies have thrown their hats into the ring, but selling medicine online is especially difficult for a couple of reasons.
One is that buying drugs online is actually less convenient than buying them in a brick-and-mortar shop. In accordance with Chinese regulations, online pharmacies can only sell over-the-counter medications, so anyone looking for prescription drugs online is out of luck. According to e-commerce expert Lu Zhenwang, around 80 percent of the medicine purchased in China is by prescription, and online shops are completely shut out of that market. Plus, generally speaking when you’re sick you want to get medicine (and thus relief) immediately. Even with China’s comparatively fast delivery services, it’s often more convenient just to walk to a nearby pharmacy.
But another big problem with selling medicine online is trust, or rather, the lack of it. Thanks to numerous fake medicine scandals and high-profile media reports about counterfeit drugs being sold online, many Chinese consumers are wary of buying any kind of medicine from the internet, even if it’s cheaper and easier than buying from a brick-and-mortar store. And this suspicion is not unwarranted. China’s State Food and Drug Administration licenses only 127 websites to sell medicine, but many more are operating illegally. An IT Times reporter found medicine e-commerce sites selling prescription medicines illegally while claiming they were over-the-counter medicines, among other illegal behavior. It’s no wonder Chinese consumers don’t tend to feel confident about buying drugs online.
Despite this, competition in the medicine B2C market is fierce, and specialty e-commerce sites like Golden Elephant’s have to compete with the other sellers in the pharmacy platforms on major B2C sites like TMall and Yihaodian in addition to the other smaller competitors. Price wars have also driven profits down across the industry.
More than any other specialty e-commerce market in China, the medicine market seems to be a speculative one. Golden Elephant, for example, generated more than a billion offline transactions last year throughout its retail stores, as opposed to just 60 million through its website. If e-commerce companies can get more consumers into the habit of buying drugs online, there is a lot of money to be made. But the road ahead does not look clear. For medicine e-commerce companies, it’s likely to be a long, uphill battle.
(IT Times via Sina Tech)
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