It’s hard to believe that there was a time when couriers with yellow, green and orange backpacks didn’t flood the streets of Kyiv. But it was just two years ago when the first international delivery, Spanish Glovo, entered the scene.
Now apart from Glovo, there’s also the Estonian Bolt Food and the Ukrainian Rocket. And the market to which they cater keeps growing. Capital investment in the delivery sphere reached $17 million last year, a 635% increase year over year.
But it’s not a food delivery service that got the lion’s share of this sum. Five investment funds, including superstar Horizon Capital, iClub, TA Ventures and Genesis Investments, put $5 million in a Ukrainian startup that delivers medical products.
Called Liki24.com, the service delivers thousands of medicines per day and has a novel for the market approach to logistics.
Some drugs may be cheaper in one store, others — in a store across the street. A Liki24.com courier will visit the two or more pharmacies to get the best bargain. Although it’s more time-consuming, as the courier collects and delivers 30–40 orders at a time, this approach helps clients save on the price difference across pharmacies and save on petrol for the delivery.
Liki24.com CEO Anton Avrinsky says this market has a $4 billion potential in Ukraine, and this is how his team is tapping into it. Thanks to Avrinsky’s 15-year experience at a software company, Liki24.com’s team is equipped with cutting-edge software that collects orders and builds the routes, which makes the company delivery stand out.
“The pharmaceutical industry is one of the most conservative in the world,” Avrinsky says. “And we — we are extra IT, tech guys, geeks.”
A Liki24.com courier visits multiple pharmacies and collects 30–40 orders at a time, saving on the price difference across pharmacies and petrol for the delivery. (Kyiv Post)
Crazy growth
Liki24.com started working in 2017. There had already been companies bringing pharma online. Search engines MedBrowse and Tabletki.ua had been around for 10 years, but the law didn’t allow them to sell drugs on the internet — people could only book medication online.
Avrinsky found a way around it.
“I asked lawyers, ‘If a person can’t walk, what should he do?'” he says. And it turned out one could authorise a courier to be their legal representative when picking up an order at a pharmacy. “It was an offline sale initiated by an online order,” he describes.
People liked it and started using the service. In 2019, the turnover of the company, which had existed for fewer than three years at the time, was $12 million.
Along the way, Liki24.com started attracting investment. Its external money came at the end of 2018, when deputy head of investment company Dragon Capital Oleksandr Ublinskykh invested $10,000 for a 3% stake.
In 2018, Liki24.com also won $10,000 at the Lviv IT Arena startup competition. The main prize, however, was attention from investors. A year later, in July 2019, TA Ventures and Genesis Investment, as well as angel investor Michael Puzrakov bought 15% of the company for $1 million.
Puzrakov, who apart from investing runs the 1,500-person tech firm Intellias, observed the Liki24.com founder at IT Arena. He was so impressed that he invested money without even meeting the founder in person.
When the pandemic hit Ukraine in 2020, more people stayed home and the Liki24.com service became even more handy. The business grew sixfold. “The pandemic helped people get used to ordering stuff online, including those from the province.”
In summer, Liki24.com attracted $5 million more, bringing its total funding to $6 million.
Elena Mazhuha, an investment manager at Genesis Investments, which invested in Liki24.com twice, praises the startup’s fast revenue growth. “When we saw its business metrics, we immediately realized that Liki24.com has all the chances to become a large and profitable company,” Mazhuha says.
But the startup also had something else — a good team. Mazhuha says it has “strong technical skills, experience in managing tech projects and impeccable salesmanship.”
The year 2020 brought one more change: the parliament made it legal to sell drugs online. Now pharmacies can too sell and deliver medication via their websites, much like some restaurants have their own delivery.
Avrinsky says this will help the market grow faster and believes Liki24.com was “a very important element for this to happen.”
The delivery
The company, which has 50 core staff members and 100 couriers, has been operationally profitable since the beginning of 2020.
Liki24.com delivers 70,000 items: 15,000 of them are medicines; the rest is things like medical cosmetics, diapers, dietary supplements and vitamins. About 550,000 people have used the service at least once; 60% of them have ordered more than once. A delivery costs $2–4.
Around 7,000 pharmacies have connected to the service. “Often, these are small stores that can increase sales by literally doing nothing,” Avrinsky says.
For pharmacies, it’s an opportunity to get additional discounts from distributors and generally get online presence, which is important in the country where the competition is cut-throat. Ukraine has 21,000 drug stores. For reference, Poland has 14,000 drug stores.
“Pharmacies are getting super sales,” Avrinsky says.
Alina Sakovska, commercial director at Farmasfera, which runs nine pharmacies in Ukraine, has worked with Liki24.com for three years. Sales through Liki24.com grow fast, because more people order online nowadays, she says.
Sales through Liki24.com bring Farmasfera a net profit of $1,100 a month. “For us, it’s a benefit, we don’t spend any of our resources,” Sakovska says, adding that it’s also promoting the chain.
“It’s easy to work with them.”
The company is now also working with perfumery and cosmetics stores EVA, delivering hygiene products like shampoos and shaving foam, as well as cosmetics.
Liki24.com’s couriers deliver in 300 cities, while 27,000 other cities, towns and villages can place an order on the website and receive it through postal services Ukrposhta and Nova Poshta.
In a remote village, it’s sometimes cheaper to order through Liki24.com and get it delivered, because local pharmacies have low turnover and are forced to increase prices; they also have small inventories. About 10 million Ukrainians live in small villages.
The service also allows people to book drugs and take them away independently. Liki24.com gets a “several percent” commission from the sale. “This way we cover all possible clients’ situations.
The lowest price here, the quickest delivery here,” Avrinsky says.
Other revenue streams
Apart from delivery, the company has other sources of income: website traffic and partnerships with health insurance firms.
Avrinsky is proud that his website has 72,000 visits a day and over 2 million per month. Liki24.com uses its popularity. It offers companies to promote their products for money — when people look for drugs, the website displays promoted products at the top of the search.
The company also works with insurance companies, offering subscriptions and payments per order. The company doesn’t disclose the prices. When a doctor prescribes drugs, an insurance firm orders them for its client through the Liki24.com platform, saving money and time.
Entering Poland, UK
Liki24.com became an international company in 2020 when it entered Warsaw in Poland, where the drug retail market is three times bigger — $11 billion. This year, the company plans to expand across the entire country.
But it won’t stop at Poland. When talking to the Kyiv Post in August 2020, Avrinsky said the company planned to roll out elsewhere in Europe and the U. K. The British pharmaceutical industry is among the seventh largest in the world, with a market value of around $29 billion, which makes it “a great fit” for Liki24.com, Avrinsky said at the time.
Today he avoids naming the countries, because he wants to “have it done first and then talk about it.”
Avrinsky wants Liki24.com to work in 10 countries by 2024. “This is our ambition,” he says.
