It’s hard to believe that there was a time when couriers with yellow, green and orange backpacks didn’t flood the streets of Kiev. But barely two years ago, the first international delivery, the Spanish Glovo, entered the scene.
Now besides Glovo there is also Estonian food Bolt and Ukrainian rocket. And the market they are targeting is constantly growing. Capital investment in the delivery area reached $ 17 million last year, an increase of 635% year-over-year.
But it wasn’t a food delivery service that took the lion’s share of that. Five investment funds, including superstar Horizon Capital, TA Ventures and Genesis Investments, have invested $ 5 million in a Ukrainian startup that supplies medical products.
Called Liki24, the service delivers thousands of drugs per day and offers an innovative approach to market logistics.
Some drugs may be cheaper in a store, others – in a store across the street. A Liki24 courier will go to the two or more pharmacies to get the best deal. Although it takes longer, since the courier collects and delivers 30-40 orders at a time, this approach allows customers to save on the price difference between pharmacies and save on gasoline for the delivery.
Liki24 CEO Anton Avrinsky says this market has a potential of $ 4 billion in Ukraine, and this is how his team is exploiting it. Thanks to Avrinsky’s 15-year experience in a software company, the Liki24 team is equipped with state-of-the-art software that collects orders and builds routes, which sets the company’s delivery apart.
âThe pharmaceutical industry is one of the most conservative in the world,â says Avrinsky. “And we – we’re extra computer scientists, techies, geeks.”
Liki24 started working in 2017. There had already been companies putting pharma online. The MedBrowse and Tabletki.ua search engines had been around for 10 years, but the law didn’t allow them to sell drugs on the Internet – people could only book drugs online.
Avrinsky found a way around it.
âI asked the lawyers, ‘If a person cannot walk, what should he do? He said. And it turned out that we could allow a courier to be his legal representative when taking an order in a pharmacy. âIt was an offline sale initiated by an online order,â he describes.
People liked it and started using the service. In 2019, the company’s revenue, which had been in existence for less than three years at the time, was $ 12 million.
Along the way, Liki24 started to attract investment. Its external money came at the end of 2018, when the deputy director of the investment firm Dragon Capital Oleksandr Ublinskykh invested $ 10,000 for a 3% stake.
In 2018, Liki24 also won $ 10,000 in the Lviv IT Arena startup competition. The main prize, however, was the attention of investors. A year later, in July 2019, TA Ventures and Genesis Investment, along with angel investor Michael Puzrakov bought 15% of the company for $ 1 million.
Puzrakov, who in addition to investing heads the 1,500-person technology company Intellias, observed the founder of Liki24 at IT Arena. He was so impressed that he invested the money without even knowing the founder personally.
When the pandemic hit Ukraine in 2020, more people stayed at home and the Liki24 service became even more convenient. The company has grown six-fold. “The pandemic has helped people get used to ordering products online, including those in the province.”
In the summer, Liki24 attracted an additional $ 5 million, bringing its total funding to $ 6 million.
Elena Mazhuha, investment manager at Genesis Investments, who has twice invested in Liki24, hails the startup’s rapid revenue growth. âWhen we saw their business metrics, we immediately realized that Liki24 had every chance of becoming a large, profitable company,â says Mazhuha.
But the startup also had something else: a good team. Mazhuha claims to have “strong technical skills, experience in managing technology projects and an impeccable sales sense.”
The year 2020 brought another change: Parliament legalized the sale of medicines online. Now pharmacies can also sell and deliver drugs through their websites, just as some restaurants have their own delivery.
Avrinsky says this will help the market grow faster and believes Liki24 was “a very important part of making this happen.”
The company, which has 50 employees and 100 couriers, has been profitable since early 2020.
Liki24 delivers 70,000 articles: 15,000 of them are medicines; the rest are medical cosmetics, diapers, dietary supplements and vitamins. About 550,000 people have used the service at least once; 60% of them ordered more than once. A delivery costs $ 2-4.
Around 7,000 pharmacies have connected to the service. âOften it’s small stores that can increase sales by literally doing nothing,â says Avrinsky.
For pharmacies, this is an opportunity to get additional discounts from distributors and generally gain an online presence, which is important in the country where competition is fierce. Ukraine has 21,000 pharmacies. For reference, Poland has 14,000 pharmacies.
âPharmacies have some super sales,â says Avrinsky.
Alina Sakovska, Commercial Director of Farmasfera, which runs nine pharmacies in Ukraine, has been working with Liki24 for three years. Sales through Liki24 are increasing rapidly as more and more people order online these days, she says.
Sales through Liki24 earn Farmasfera $ 1,100 per month. âFor us, it’s an advantage, we don’t spend any of our resources,â Sakovska says, adding that it’s also promoting the channel. “It’s easy to work with them.”
The company now also works with EVA perfume and cosmetics stores, supplying hygiene products like shampoos and shaving foams, as well as cosmetics.
Liki24 couriers deliver to 300 cities, while another 27,000 cities and towns can place an order on the website and receive it through the Ukrposhta and Nova Poshta postal services.
In a remote village it is sometimes cheaper to order through Liki24 and have it delivered, as local pharmacies have low turnover and are forced to raise prices; they also have small inventories. About 10 million Ukrainians live in small villages.
The service also allows people to book and take medication independently. Liki24 receives a “several percent” commission on the sale. âThis way we cover all possible customer situations. The lowest price here, the fastest delivery here, âsays Avrinsky.
Other sources of income
Besides delivery, the company has other sources of income: website traffic and partnerships with health insurance companies.
Avrinsky is proud that its website receives 72,000 visits per day and over 2 million per month. Liki24 uses its popularity. It offers companies to promote their products for money – when people search for drugs, the website shows the promoted products at the top of the search.
The company also works with insurance companies, offering subscriptions and payments by order. The company does not disclose the prices. When a doctor prescribes drugs, an insurance company orders them for their client through the Liki24 platform, which saves time and money.
Enter Poland, United Kingdom
Liki24 became an international company in 2020 when it moved to Warsaw, Poland, where the drug retail market is three times the size – $ 11 billion. This year, the company plans to expand across the country.
But it won’t stop at Poland. In an interview with the Kyiv Post in August 2020, Avrinsky said the company plans to roll out elsewhere in Europe and the UK. âA perfect fitâ for Liki24, Avrinsky said at the time.
Today, he avoids naming countries, because he wants to “do it first and then talk about it”.
Avrinsky wants Liki24 to work in 10 countries by 2024. âThis is our ambition,â he says. Â·