Ayurveda Online1

“Advait, I know this is a difficult time for you given COVID-related disruptions to your own
procurement and distribution system, but can you please try to deliver Ayurvedic medicines to
our area in Mumbai? We are in a green zone, but our regular doctor is unable to send our monthly
medicines from Pune. In fact, we were in a discussion with our doctor to see how he can route
everything through you. He is willing to get on your platform.”

Emails such as these were becoming increasingly common for Advait these days. While Ayurveda Online,
the organization that Advait had founded in Bengaluru about a year ago could only cater to local doctors
and help their patients buy genuine Ayurvedic medicines, demand from across India was increasing.
Advait had started his platform wherein doctors practicing Ayurveda could connect with patients, conduct
physical as well as online consultations, and help them get their prescribed medicines via Ayurveda Online.
With the increase in popularity of Ayurveda, both doctors and patients were reaching out to Advait.

Advait was an accidental entrepreneur. The seeds of his venture were sown when his grandparents had
difficulty reaching their family physician Dr. Ashok Ghate in Bengaluru and he had offered to link them
with Dr. Ghate through Skype. That turned out to be the first Skype based consultation even for Dr. Ghate,
who was so happy that he requested Advait to help him connect with other patients – many of whom
were elderly and found it difficult to reach his clinic located at the outskirts of Bengaluru. Advait was
happy to help Dr. Ghate and set up a simple platform that enabled prospective patients to book an
appointment and an option for online consultation through Skype. Within a few months Dr. Ghate came
back to Advait telling him that his practice has boomed, and since he was unable to meet the demand of
his patients, he would like some of his Ayurveda doctor-friends to come onto the same platform.
Moreover, many of his patients often struggled to get genuine Ayurveda medicines and it would be great
if Advait’s platform could also have a facility for procurement of medicines.

While Advait was thrilled about the development and could sense an entrepreneurial opportunity, he
realized that creating an integrated platform was beyond him. He therefore called two of his friends,
Sharath and Rajavel, both working for software companies in Bengaluru, told them about his developing
venture, the potential demand for an integrated platform specializing in Ayurveda medicines, and
enquired whether they could create a suitable platform. He even offered them the prospect of registering
a company where all of them could be equal shareholders. Both Sharath and Rajavel liked the idea
because they came from families that used Ayurveda products. While they were unsure about being
partners in a company – they felt rather secure in their present organizations as managers – building the
platform was a good technological challenge for them. They spent the next few weeks talking with Dr.
Ghate, his doctor- friends, and some of their patients, understanding their needs and mapping them onto
product functionalities. Once the platform was built and tested, Sharath agreed to maintain the code and
deal with regular maintenance issues while it was decided that Rajavel would assess and create a plan for

1
Sourav Mukherji and Mukta Kulkarni, Professors of Organization Behaviour at the Indian Institute of Management Bangalore,
developed this case for classroom discussions. The copyright of the case rests solely with the authors. (July 2020)
future development. The doctors paid them INR 25 for each appointment that was made through the
platform.

While creating an appointment and on-line consulting platform was not that difficult, supply of Ayurveda
medicine through the platform turned out to be tricky. Ayurveda medicines were typically supplied by
FMCG retailers and pharmacists, most of who were not interested in getting into a partnership with an
unknown entity like that of Ayurveda Online unless there was promise of large volumes. Moreover, they
viewed the Ayurveda medicine segment to be too narrow and therefore dealt with a range of Ayurveda
products, such as soaps, toothpaste, shampoo and food items which had traditional herbal ingredients in
their composition. If they were to sign-on to a platform, they expected the platform to sell their entire
range of products. Advait was not comfortable diversifying into non-medicinal Ayurvedic products
because he felt that having the doctors on the platform and focusing only on Ayurveda medicines gave
them a distinct identity. While Sharath and Rajavel agreed with Advait, they thought that if Ayurveda
Online was to grow as a business, they needed to revisit this issue sometime later.

Since no formal partnership with retailers looked suitable, it was decided that whenever patients wanted
Ayurveda Online to procure medicines for them, Advait would transmit the demand to a few trusted
retailers who would make arrangements to deliver the medicines to the customers. The patients would
fill up an online form with their requirements and other details which would then be transmitted to their
chosen retailer for fulfillment. In case the particular retailer was unable to fulfill the demand, patients
could choose other retailers. Like most online platforms, Ayurveda Online asked their customers – the
patients – to rate their experience with the doctors as well as the medicine retailers. This enabled them
to keep track of the quality of service delivered as well as to decide which partnerships should be
continued and which should be terminated. It was decided that the retailers would pay Ayurveda Online
5% of the billed amount as commission.

Ayurveda Online did not have any marketing budget and demand was driven mostly through word-of-
mouth. Their patients and doctors were their best evangelists. One such patient had arranged a session
where he had invited doctors to a seminar conducted within the special economic zone (SEZ) where he
worked. Advait had enjoyed moderating this session and disseminating the virtues of Ayurveda. Over a
period of time, they started to have three streams of visitors to the platform. Their traditional customers
were patients who consulted with doctors via their platform and subsequently purchased prescribed
medicines through their platform. Some of their patients used their platform only to consult with the
doctors and made their own arrangements for medicines. Finally, there were customers who used their
platform only to procure medicines. Either they consulted with doctors who were not on Ayurveda Online
platform or they bought medicines without prescriptions.

While the COVID-19 situation created new demand for Ayurveda Online, Advait had to decide the kind of
growth that he would like to pursue. Demand for Ayurveda was growing in India, thanks largely to growing
health-consciousness among Indians as well as increasing awareness about the harmful effects of
chemicals. A 2018 report estimated the market for Ayurveda products and services in India to be US$ 300
billion and growing at a CAGR of 16%2. Advait was content with his work in Bengaluru, was happy that he
was doing something good and impacting the lives of people in a positive manner. Yet he also felt a tinge
of sadness every time he had to refuse someone. Should Ayurveda Online continue with their business
model and replicate it in other Indian cities? Or should they diversify into non-medicinal Ayurveda
products that would make them attractive to retailers? This would not only increase their revenue but
also their profitability because with a formal agreement, they would be able to get a larger margin from
the retailers. Their third option was to tie up with one of the leading Ayurveda brands in India such as
Dabur or Himalaya Wellness which could give them a pan India reach provided these big players saw value
in partnering with a niche player like Ayurveda Online. As he looked at the customer numbers from last
twelve months (see Table 1) he wondered why there was so much growth among customers who were
only using their platform for consulting and not for buying medicines.

For any of the growth options, he needed to think how he would design a suitable organization. He needed
someone who would focus on marketing and leverage social media to create awareness about their
platform. While Sharath and Rajavel had been able allies, they were doing this more as a hobby and Advait
needed them to adopt full time roles if he were to take this company to the next stage. Were they ready
to give up their secure jobs to work for a fledging venture? And finally, the question of financing.
Bootstrapping had served them well so far because they were operating in a resource-light model.
However, if he wanted to employ professionals on a full-time basis, his expenses would increase
dramatically on all fronts, which would require substantial investments. Advait decided it was time for a
meeting with his friends. But before that he needed to do his homework regarding the various growth
options.

***

Based on your reading of the case, answer the following questions:

How should Advait grow Online Ayurveda? Can he meet the growing demand without changing the basic
nature of the organization? Identify the growth options and discuss their advantages and disadvantages.
How is the organization going to change based on the chosen options for growth?

2
The Ayurveda Market in India 2019 report by ResearchAndmarkets.com. Ayurveda products comprised personal
care, food and beverages, household, and healthcare. Products contributed about 74% of industry revenue while
the rest comes from services such as healthcare services, spa, and rejuvenation centers.
Table 1: Number of Customers at Ayurveda Online during 2019

Consulting + Medicine Consulting

Medicine* only only
January 297 2 7
February 355 14 32
March 432 16 154
April 479 113 250
May 568 159 342
June 465 207 456
July 331 186 508
August 483 276 567
September 567 121 602
October 452 295 655
November 620 230 597
December 709 194 756
*Average bill value of medicine was INR 600 in 2019