Short story
Ramesh is a 35-year-old, self-made entrepreneur who runs a pharmacy in the suburbs of Mumbai. He completed his Diploma in Pharmacy followed by a B.A in Economics and opened a medical store 12 years back. Ramesh lives in Mumbai along with his extended family of 10; the parents, wife, the kids and his brother’s family. Together, they live in a house owned by Ramesh.
Business
- Ramesh bought the pharmacy from its previous owner by borrowing money from the local co-operative society.
- The store primarily sells pharmaceutical items and also sells basic food and beverages to attract all kind of customers.
- The store caters to customers in the local neighbourhood and runs the store with the help of an assistant.
- Ramesh takes up business advice from his brothers and family when needed.
“I did take a loan to start my business, from a local co-operative society, also referred to as path pedi locally. It was an easy procedure to secure the loan. They only required two witnesses.”
When asked about peak seasons, Ramesh mentions that the nature of his business is such that business remains the same throughout the year.
“People fall ill all the time and require medicines throughout the year. You can say that sales increase during the monsoons, but nothing extraordinary. So before taking a loan I have to actually calculate how and when I am going to pay it back.”
Banking:
- A trip is made to the bank whenever possible, which is in close vicinity to the shop. Ramesh visits the bank to deposit the cash collected from everyday transactions at the shop.
“Almost all the business related payments I make, are through cheques. Be it payments to suppliers or giving out salaries. I either use NEFT/RTGS services to make these payments. There is barely any payment I make using cash.”
“I go the bank almost every day, since I need to deposit cash into the respective bank accounts. The closest bank is 15 minutes away from my store and turns out to be convenient. There is some metro construction work that is going on, due to which there is no place for me to park my two-wheeler. But I don’t have any issues with the bank procedures, other than the long queues during peak hours.”
Payments
- In order to cater to all kinds of customers both young and old, Ramesh accepts payments from customers through all mediums.
- With more than 20% of his customers paying through the digital payment apps, he finds receiving money through QR and UPI more convenient when compared to card payments; the reason being that the money paid through the digital payment apps is credited on the same day as the payment made.
“I accept payments through apps like GPay, PayTM, PhonePe, etc. as youngsters who are always on the move prefer such fast methods of payment.”
“In today’s time, there are a lot of people who don’t want to keep cash on them and are very comfortable using such modes to make payments. Hence, I have to be in line with shifting trends.”
“The best part is that the money gets settled the very same day, unlike card payments. Plus, the younger generation prefers this mode of payment. So, I try to cater to everyone.”
Loans
- Ramesh had previously taken loans from banks and other financial services. He has also taken loans from online lending services.
“I have taken a two-wheeler loan and a personal loan,both of which have all been paid up. The loan that I had taken was from <bank name>, to make purchases and the rate of interest was around 16%. Previously, I have taken loans online lenders too.”
“This is not the first business loan that I have taken. I still haven’t taken any property loan. The goal is to clear all my small loans and take on a massive loan for something big in the time to come.”
- To Ramesh, taking a loan online is much easier, faster and convenient. He mentions that the previous loans taken by him were solely based on need, requiring him to turn to the easiest and fastest way of borrowing money, which according to him happened to be an online lending service.
“I would prefer taking a loan from a bank because of the low rates of interest they have to offer. But in terms of ease of transaction, I would like to take loans from online mediums since these loans are processed faster.”
“I’ll tell you about an experience I had with a bank. I received a phone call from the bank, telling me that my loan request had been approved and that all my documents were duly verified and there was absolutely no problem. But the next day when I went to the bank, they told me that my loan application had been declined only because of a technical error in their system because of an employee. I was frustrated and turned to the online lending market for help.”
“I take need based loans more than being calculative about it. For example, recently I had taken a Rs. 50,000 loan to make a payment urgently. At that instant I did not look at the rate of interest charged as it was an obligation from my end which had to be fulfilled.”
“I have never faced any difficulties in this area and raising a loan online is definitely easier. As for my EMI, it gets debited automatically from my registered account. I just need to ensure the availability of funds.”
“I have no problems with the lenders I have ever encountered, other than the fact that the interest rate charged could be a little less to take off some interest burden. Till now, the lowest interest rate that I have received is from FlexiLoans for such a high amount, in a matter of days.”
“According to me, if there is an impending obligation I would not really consider the interest rates charged. I obviously do compare my options but at this point you never have full guarantee about the fact that your loan will get processed.
I’ll tell you about this time that I had applied for a loan for my two-wheeler, which just got rejected because of a wrong phone number that I received. This affected my CIBIL requirements. Hence, I don’t trust my chances of raising a loan all the time. I would rather focus on my EMI payments and make sure that I don’t default even on a single one. It just increases my chances of raising capital in the future.”
“I do fall short of cash, I borrow money from personal sources like friends and family.”
Accounting and taxation
- Ramesh uses a retail software called MediVision [1] to keep track of the store’s inventory. Copies of bills and invoices are also preserved for referral purposes.
- Ramesh visits his CA with the required invoices once in every 3 months. The business is registered under composition GST and taxes are filed every quarter.
“I actually don’t keep a tally of payments received through the different modes in a day. It’s more like a total figure that I calculate for a day. This is only because I choose to not keep a record of it. Since I am present at the store at all times, I don’t feel the need to record such particular transactions.”
“The most important one being the Drugs License Number, which has to be renewed after a period of 5 years.”
“I have to file my professional tax, income tax, GST and an F&B license which needs to be paid for only once. But nowadays, whoever has a Ghumasta license, does not have to issue anything else. It’s a BMC license. I pay it online and my CA has all the necessary details required to do so.”
[1]MediVision: A retail software for medical, pharma and drug shops, covering many aspects involved in running daily medical retail business such as point of sales, inventory management and accounting online billing, up to finalization stage.Employee management
- Ramesh’s employees have stuck around for long periods of time. He mentions that the friendly work environment he maintains at his shop makes it a suitable place to work at. When one of his previous employees had to move to a new place, he managed to find a new employee through a common contact.
- The size of the store restricts him from employing more than one person for the shop. This also affects the possibility to scale and grow the business.
“I was in dire need of an employee and I luckily found someone who lived closeby. I found him through a common contact. So, you can say that word of mouth is enough. Anyway, there are not many employees that I have had to hire in the past as they stick around for the longest.”
“Currently, I have only employed one boy at my store. I don’t feel the need to employ more man-power because the size of my store/business is very small. There is barely space for more than two people.”
“Even though, JustDial had approached me, I declined the offer. It’s because they would give any bigger medical store more preference than me. Since I don’t have that kind of man-power, having a greater market presence won’t help my cause.”
Vendors
- Ramesh has around 30–35 suppliers that he regularly deals with. The store which he bought was earlier a medical store managed by the previous owner. This helped him network with existing vendors who were already supplying to the store.
- On a normal day at the store, 3–4 suppliers visit to enquire about new materials needed at the store. They also educate him about the new medicines which are out in the market.
- Ramesh pays his vendors through cheques. Different vendors offer him different credit periods. He maintains duplicate copies of the bills against each order. The vendors also maintain a register with themselves. This helps to compare and verify during any discrepancies.
“I do place orders on WhatsApp or get on call with the vendors. But most of all they come directly to my store, where I can easily deal with them in person. Sometimes I also place orders through various apps like Retailio.”
“Some vendors give me a 7 day credit period, some 15 and some even 30. It’s not fixed as such. Different vendors have different policies which I have to honour.”
“Vendors are usually selected based on the discounts they have to offer. Rather, very need-based. If a vendor approaches me, I check my stock and place orders according to the requirement.”
Customer management
- Although most of Ramesh’s customers do not ask for credit, he does offer 30 days credit to the ones who are regular and on a need basis.
- The lack of man-power at the shop restricts him from taking bigger orders from customers. He fears that not being able to deliver on time might ruin the reputation of his store and affect his business.
A: What do you think gives you an edge over your competitors, i.e, small medical stores?
R: I think the biggest service I provide is by having all kinds of medicines in stock at all times of the year. Plus, I also give them advice on what medicines they should take for their various ailments. So I guess I add a personal touch to my services, which they like and prefer.“Since medicines are required by all kinds of people with all kinds of diseases throughout the year, there is no such peak season. Although, there are more customers visiting the store in the evening time.”
“I do take orders on WhatsApp. But the only reason why I refrain from doing so is because I don’t have enough man-power. Even if the order is of a great amount, it still does not incentivize me. What’s the point of taking such huge orders if I can’t deliver it the same day? I feel I can sense the urgency and want to render exceptional services to my customers. Otherwise, people would be bad-mouthing my business and I can’t afford any negative publicity.”
Technology adoption
- Ramesh makes online purchases on apps such as Flipkart which are installed on his phone.
- He uses apps such as Facebook and Youtube to get more knowledge about the do’s and don’ts of the business. Ramesh had once tried to advertise the business on Facebook, but he soon realized that the business will thrive only if he understands and adopts based on customer needs.
“ I do watch videos on Facebook and YouTube related to these things to get a better idea of what’s going on in the business world and how I can use this knowledge in my business.”
- Ramesh is a member of a WhatsApp group for the members of the medical association. This group keeps him updated with recent changes in the medical/pharmaceutical industry.
“I am a part of this medical association group on WhatsApp from where I get my updates about what’s going on in this market, what’s new, etc. I get to know about this through the group sometimes. Otherwise, the suppliers convey it to me directly. In this business, you have to know your schemes and discounts well, to give the most attractive offers to earn more customers.”
“I use apps like GPay and PayTM. In addition to this, I also have bank apps on my phone which I use for business-related purposes. I feel these apps are the future of this business. They have a huge margin these medicines and also offer attractive discounts. I don’t have the set up to provide efficient services at this point.”
“ I had tried to post an add on Facebook. But that did not really help, because at the end of the day it was just a post. I have never really tried to enlist or register myself online for anything. Sometimes, you have to run your business according to the area you operate in. In this locality, people want single medicines instead of whole leaves or want to exchange various items. It really depends on the demand and supply of the demographics here.”
Credits:
- Interviewed and transcribed: Ansh Chawla, Flexiloans
- Analyzed and published for Medium: Apoorva Shetty & Dharmesh Ba
About the research:
This documentation is a result of the in-person interview, along with the participants’ consent. The interviews might be conducted in their native languages and translated to English in the best possible way to reach a large audience.
Disclaimer: The identities of people and places in this documentation have been changed to honour the privacy of the participants.
About D91 labs:
This research was executed and documented by D91 labs. D91 labs is an open-source initiative by setu.co to help Bharat build great fintech products. We organise and publish user research, insights, and frameworks for fintech in India. Please follow us on medium for more exciting stories and insights on Bharat.
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