Poised with growing challenges, “innovations” and “transformations” have been trending in the healthcare industry. What could be the leverages to take inside your current organizations? How do you already have what it takes to succeed? The following are a few of the practices that shed light on the innovative breakthroughs of Dingdang.
Strategize Intrinsic Competitive Advantages
As the Chinese adage goes: “An inch of time is as precious as an inch of gold, but you can’t buy back that inch of time with an inch of gold.” Time is universal to all humans, and a perishable resource with no substitute. Businesses offering time values are augmented by the intrinsic characteristics, which form a natural competitive advantage.
Dingdang Medicine Express, China’s No.1 real time medicine delivery unicorn, lives the proverb to dominate via the competitive advantages which forged its speed supremacy. Aiming to raise $100 million, Dingdang Medicine Express has passed its Hong Kong market listing hearing. In 2021, the platform generated 60,300,000 orders and a stunning 3.679 billion CNY revenue with a 69.8% compound annual growth rate from 2019 to 2021.
- Leverage your backers & Exploit economies of scope.
To generate first mover advantages and catch market share, parent companies and investors are typical leverages to take for business development and market insights.
Dingdang’s initial parent company and investor, Renhe Group is a local OTC drug behemoth. Though ranked merely 413rd by Torreya’s The Pharma 1000 in 2021, it had already commanded 18,000 sales staff by the end of 2015.
Moreover, Renhe had OEM and sales contracts with more than 260 pharmaceutical partners. Directly supplying 320,000 pharmacies from metropolitans to villages with its supply chain facilities, the conglomerate had everything it took to grow economies of scope and generate synergies with new businesses.
Starting as an asset-light platform distributing orders to its pharmacy partners, Dingdang’s iconic 28 minutes door-to-door delivery was instantly forged by Renhe’s sales force and distribution network. Renhe also guided Dingdang’s strategic transition into an asset-heavy proprietary O+O health service provider to boot, establishing 200 pharmacies within a year.
Naturally, purchasing directly from Renhe brings a pricing edge to Dingdang. To this day, we still find more than 30% of the products offered on Dingdang are from Renhe.
Renhe accounts for around 1/3 of Dingdang’s Product Offering
Besides, to proliferate its product offerings, endorse the authenticity of medicine sources, and increase pricing competency, Renhe’s sales team helped build FSC (Factory Service Customer) Pharmaceutical Alliance for Dingdang, involving more than 860 pharmaceutical companies to lower the package, supply chain, and raw material costs via economies of scale.
- Deploy top talent strategies as much as possible.
Back in the beginning, the founder of Renhe and Dingdang, Yang Wenlong assigned a top management team from Renhe — his two sons — to take the CEO and leadership role of Dingdang. Though trained by a centralized control model in Renhe, the entrepreneurial and vigorous leadership team trailblazed the path of a partnership model, creating a new company culture with Internet style culture.
The top talent strategy certainly worked out, and had been intensified by a top-down innovation approach. In a 2019 interview, Yang openly acknowledged that, as a second undertaking, he had shifted most of his energy and focus from Renhe to Dingdang. Compared to his “boss” title in Renhe, the associates in Dingdang calls him a “classmate”. Confronted with the pandemic, when the daily order quantity surged by 8 times, the 57-year-old veteran entrepreneur personally led an emergency team to expand the service capacity. The top-down approach came with high ambitions and brought more people, support, and budget to contribute to the project.
Correspondingly, the executive team needs to watch over highlighted innovation projects. We’ve seen a lot of cases where phenomenal innovation cases faded because of talent loss, and the top decision-makers only got to know when it had been too late.
What if the top-down internal support is yet to gain?
Build New Competitive Advantages
- Create win-win external partnerships with open innovations.
Lightning never strikes twice in the same place. Keeping a company’s dominant position on the curve requests fast resource allocations, but innovative projects very often challenge the traditional ROI-centered decision-making process. ZHANG Ce, former Senior Vice President of Dingdang, who led Dingdang’s post Series B round fundraising and business strategies, gave an example of how external partnerships drove the landing of Dingdang’s Internet hospitals.
The market was highly competitive and whoever provided that value first would glean the majority of the users as a competitive advantage. Confronted with rigid policies and uncertain markets, there wasn’t sufficient proof for ROI which could convince the leadership to set up Dingdang’s own Internet hospital. In another word, neither the ROI nor the internal value chain was clear.
While insisting on the proposition, the takeaway was really about figuring out what was the possible support to gain from the leadership team and starting to scout the missing puzzles externally.
“ After Series B round, we re-positioned Dingdang as the next-generation family healthcare and medication service platform, therefore building Internet hospitals was fundamental. Confronted with many internal and external challenges, our strategies were to partner with Medlinker via a mutually beneficial and complementary model to acquire the traffic dividend. ”
By engaging with the healthcare innovation ecosystem, Dingdang eventually identified a partner with resonance, whose business scope was complementary, and was willing to generate a mutually beneficial partnership. The leadership team was invited to sign the strategic partnership, connecting Medlinker’s healthcare expertise to Dingdang’s medication delivery service. In this way, both platforms shared the traffic and developed the minimum viable functions to redirect the users to the corresponding service pages.
On the very first launch day, the orders for Rx drugs broke 1,000 and it kept going up. In addition to showing the addressable market size to the boss, the retail business unit rooted the project instantaneously. In a joint effort, Dingdang’s Internet hospitals were finally landed, and the order amount exponentially grew to over 30,000.
What could drive more “Internet Hospital Ideas” for Dingdang?
- Spark Paradigm Shifts with digital technologies.
The initial conception of Dingdang was to catch China’s O+O business zeitgeist. Receiving feedback on the needs for customer acquisition innovations and shelf sales management, Renhe decided to arm itself with digital technologies. To keep its 28 minutes commitment, Dingdang developed a revolutionary e-commerce system. A mobile-device-based order picking system shortens each picking to 3 minutes; a smart route planning system saves on average 7 minutes delivery time; an AI logistics scheduling system boosts delivery efficiency by 46%; a virtual order sandbox plans regional order capacities; a digital fence system optimizes the pharmacy site selections in different cities. As a blessing of digital technologies, Dingdang covered the whole Beijing city with merely 100 offline pharmacies. Allegedly, Dingdang is delving into self-driving delivery vehicles with encrypted pickup, AI routing, and visual identification technologies to augment its delivery specialty.
With online prescription and Rx drug delivery becoming possible around 2019, Dingdang again achieved the utmost efficiency for its time-sensitive customers — by connecting its online hospital, a prescription can be released as fast as 10 seconds.
As a matter of course, Dingdang has been proactively trying new business models based on its drug delivery platform, including digital insurance, health screening, disease diagnosis, HCP home service, and more.
While Renhe’s marketing team used to dig sales understandings based on offline networks, all the digital channels now generate revolutionary distribution and consumer insights with data, indicating the right product portfolios and scale-out deployments for shelf sales.
- Generate a new source of revenue with data.
User needs are where data generated by digital technologies exert strengths, such as delivery destination and peak hour analysis. Multi-dimensional data gleaned by O+O digital tools might pinpoint value awareness gaps. As its end-to-end e-commerce system observed morning order surges, Dingdang found that many of its users weren’t aware of the 24-hour delivery service. There were the automatic assumptions that since all pharmacies closed during midnights, no treatment would be available until the next morning.
Over and above that, its “next-generation family healthcare and medication service platform” positioning was grounded on the data insight that the majority of payers were female and they purchased for their families. Therefore, the data indicated high-value scenarios which influence family buying decisions. To cater its services to more specific pain points, Dingdang identified the following ten time-sensitive “Fast Scenarios” from a report Dingdang Institute of Health Research released in 2019, and for each scenario launched corresponding mostly seen product packages to solve the user needs:
- Fast Health Knowledge Acquisition
- Fast Chronic Disease Consultation
- Fast Night Time Consultation
- Fast Pediatric Care
- Fast Ophthalmic Care
- Fast Overtime Worker Care
- Fast Business Trip Care
- Fast Feminine Care
- Fast Sport Care
- Fast Delivery Booking
For some commonly seen scenarios, it’s hard for patients to select medication combinations to treat multiple symptoms, also it’s hard to decide the right dosage to purchase. For example, if we search pediatric care on the app, we will see the recommended medication combinations for pediatric cold. User can purchase at one click products which deal with headache, sneezing and fever. There is also combinations for maldigestion, which includes a pack of probiotics and two packs of laxative.
- Set user-value-driven developments as the engines of growth.
In contrast to those who design products ahead of convincing users of real values, at Dingdang, creating solutions as per user needs and value perceptions has become a competitive advantage, and it involves offering extra convenience and speed to solve problems. In the spirit of delivering a supreme user experience, Dingdang acutely perceived that providing free consultations was a general value to create. Free consultation acts not only as a differentiation point to attract extra traffic but also as a trigger for repeat purchases. For patients requesting expert physicians, paid service is also available. The offering creates a closed loop from online diagnosis, medication prescribing, medication counseling, drug purchase, and delivery to follow-up and prescription refilling.
With proprietary Internet hospitals, Dingdang built a closed loop solution inside its APP
As Yang Wenlong puts it, “Prosperity only comes with user-centric solutions and greatness in service. The market is entering a service-oriented new retail model. Understanding of users and capacity to meet their needs gradually form unique barriers to knockoffs.”
Conclusion
In 2021, the scale of China’s digital economy reached 45.5 trillion yuan, accounting for 39.8% of the national GDP. In the day-by-day growing Internet industry, unicorns represented by Dingdang wield competitive advantages and crafted the new “Chinese speed” to generate supreme values. On August, 17 2022, Dingdang passed its HK IPO listing hearing, taking the stock market into its competitive advantage matrix.
Special Guest Intro:
Zhang Ce 张策
- VP, Strategic Innovation & Medicial Service Center at Pingan Good Doctor
- 10+ years experience in new retail, corporate management and innovative platform operation, expert in strategic transformation and innovative business planning
- Previous Division GM & Executive Officer at Linkdoc
- Previous SVP & Strategic GM at Dingdang Fast Medicine
- Previous Head of New Retail User Marketing Product at Alibaba Group covering Tmall product operation, retail data center build-up and Alipay scan-and-pay function landing
Keywords: Dingdang Fast Medicine; Pingan Good Dcotor; Medical Service; Strategic Innovation; New Retail; Alibaba; Tmall; Alipay