Why is the medicine in Fat Donglai's pharmacy sold so cheaply? A box of cold medicine costs one dollar, two yuan of children's vitamins, and three yuan of anti-inflammatory drugs; compared with other ordinary pharmacies, a box of medicine can easily cost twenty or thirty yuan, so what does Fat Donglai rely on to make money? Is the pharmacy industry really so profitable?
The source in this article comes from the official media [China Net News and News Network], but in order to improve the readability of the article, the details may be polished, please read sensibly, for reference only!
Fat Donglai Pharmacy is extremely cheap
The price of drugs in Fat Donglai Pharmacy can be described as "civilian price". Many common medicines, such as cold medicines, antipyretics, anti-inflammatory drugs, etc., are only sold for 1 yuan, 2 yuan, 3 yuan, 4 yuan, and 5 yuan per box, and the price is incredibly low.
For example, Pudilan anti-inflammatory tablets are only sold for 3.6 yuan a box, while ordinary pharmacies may sell for as much as 20-30 yuan. Qinghuo tablets are only 1.6 yuan, while other pharmacies can sell them for more than 10 yuan. Children's Chai Gui antipyretic granules are also about 10 yuan cheaper than ordinary pharmacies.
These prices can be called "cabbage prices" in the same industry, and one can't help but wonder whether the profit margins of drugs in ordinary pharmacies are too high. Fat Donglai Pharmacy shows the business philosophy of "not making money" with practical actions and brings benefits to consumers.
In addition to the price surprise, Fat Donglai Pharmacy also has an extremely complete range of medicines. From common cold medicines, antipyretics, anti-inflammatory drugs to various Chinese herbal decoction pieces, everything is available. Whether it is a common or unpopular drug, consumers can buy it all in one place.
In terms of traditional Chinese medicine, the materials used by Fat Donglai are even better. Each pair of herbs is individually wrapped for easy cooking. The store can also decoct Chinese medicine for customers free of charge, saving customers the trouble of decoction, which is very intimate.
Fat Donglai's service tenet is to make the general public affordable for medicine. Therefore, when recommending drugs, shopping guides will give priority to effective and cost-effective products. They don't blindly sell expensive drugs just to boost sales.
Even if a customer subjectively asks to buy a high-priced drug, the shopping guide will fully explain the functional characteristics of the drug and recommend alternative alternatives at a reasonable price. Truly achieve "customer health first, commercial interests second".
In addition, Fat Donglai has specially set up a rest area, equipped with comfortable seats and tea facilities, to provide a temporary rest space for customers who come to buy medicine.
For some elderly customers with poor eyesight, the store also has a magnifying glass and other auxiliary equipment to facilitate them to carefully check the medicine instructions.
Earn only what you need to earn
The key behind Fat Donglai's ability to provide such preferential drug prices is that they have always pursued the business philosophy of "benefiting the people" and insisted on strictly controlling the overall profit margin of the enterprise within 5%.
Unlike many pharmacies that blindly pursue profit maximization, Fat Donglai does not raise the price of drugs to the maximum, but provides consumers with the best price on the basis of ensuring the necessary cost.
They are well aware that the essence of medicines is to protect public health and well-being, not just to make money.
In order to reduce drug prices, Fat Donglai has made great efforts in all aspects of the supply chain and operations. They work directly with drug manufacturers, eliminating intermediate links and effectively reducing drug procurement costs.
At the same time, Fat Donglai also uses the self-developed information system to achieve a high degree of automation and intelligence in all aspects of warehousing and logistics, store sales, etc., which greatly improves the operation efficiency and reduces unnecessary costs.
With scale effect and lean operation, Fat Donglai strictly controls the profit margin of the entire enterprise at a low level of 5%, which is far lower than the average profit margin of the pharmaceutical retail industry.
It is this measure of compressing its own profits and transferring benefits to the people that provides sufficient space and guarantee for the sharp decline in drug prices.
In the specific drug sales link, Fat Donglai promises that the sales price of all drugs will not be higher than the average market price of similar products, so that consumers can enjoy the cheap and high-quality drug purchase experience.
Whether it is the commonly used basic medicines such as colds and fevers, or some expensive drugs for chronic diseases and rare diseases, consumers can buy them at preferential prices in Fat Donglai.
The money that should not be earned, not a penny is earned" is the core of Fat Donglai's service concept. This kind of business orientation that puts social benefits and consumer interests in the first place has made Fat Donglai stand firmly on the civilian line and truly become a good pharmacy trusted by the people to "afford medicine".
Ordinary pharmacies make huge profits at high prices
In order to complete the sales task and performance appraisal, some pharmacy shopping guides do not hesitate to use various means to induce consumers to buy high-priced drugs.
They often exaggerate the efficacy of certain drugs or even conceal their potential adverse effects, misleading consumers into believing that the higher the price of the drug, the better the efficacy.
This kind of unethical sales behavior has undoubtedly contributed to the inflated price of drugs and increased the financial burden on consumers.
Many independent pharmacies are located in prime locations, such as bustling commercial centers or high-traffic neighborhoods, where rental costs are very high.
Coupled with the expenditure of labor costs such as employee wages and social security benefits, the fixed expenses of pharmacies are much higher than those of general industries.
In order to obtain sufficient profit margins, pharmacy operators have to increase the price of imported drugs significantly, passing on cost pressures to consumers, resulting in retail prices that deviate far from their original appearance.
More importantly, the current domestic drug circulation link is too complex and lengthy, and the profit margin of the supply chain is over-superimposed, which is also an important incentive for high drug prices.
From drug manufacturers to distributors at all levels, to logistics distributors and terminal pharmacies, each intermediate link will add a certain percentage of additional price increase space on the basis of cost as its own profit guarantee.
When drugs change hands layer by layer, the cumulative effect of this profit superposition is continuously amplified, and eventually the retail price of the drug is several times or even dozens of times higher than the ex-factory price.
Driven by profits, some pharmacy operators have wantonly raised drug prices at the expense of consumers' health, overdrawing the public's trust in the pharmaceutical industry.
Low-profit business philosophy
The reason why Fat Donglai Pharmacy can stand out in the fierce market competition and achieve low-profit operation and small profits and quick turnover lies in its efficient control and reasonable optimization of various operating costs.
Different from those short-sighted ordinary pharmacies that pursue profit maximization, Fat Donglai has always adhered to the overall cost leadership strategy, starting from all aspects such as site selection layout, organizational structure, drug procurement, and price system, and making various operating indicators and cost control at the best level in the industry through interlocking and precise efforts.
In terms of store location and layout, Fat Donglai did not blindly pursue the advantages of the flow of people in the prime location, but chose a relatively low-rent commercial office area to open a store.
Through preliminary market research and scientific evaluation, they have reduced the important expense of rent to a certain extent while ensuring customer flow.
In contrast, many independent pharmacies have resorted to renting storefronts in central business districts at high prices in pursuit of impressive sales performance, resulting in exorbitant rental expenses that have become a major tribute to squeezing profit margins.
In terms of shop decoration and equipment configuration, Fat Donglai also adheres to the principle of simplicity and practicality, and puts an end to extravagance and waste and unnecessary luxury decoration.
Through careful planning and reasonable planning, it not only meets the needs of daily operation, but also saves the cost of building a store to the greatest extent. This prudent and rational investment attitude allows it to avoid excessive capital overcrowding, so as to have more abundant cash flow to cope with market changes.
In addition, Fat Donglai has set up a small but refined management team to lead front-line employees to actively carry out business.
This decentralized and flexible architecture not only reduces the redundancy of management and unnecessary communication costs, but also mobilizes the enthusiasm of employees and improves the overall work efficiency.
At the same time, the perfect staff training system and competitive incentive measures help employees continuously improve their business level and service awareness. It can be said that Fat Donglai has maximized the efficiency of teamwork with the minimum investment in labor costs.
Fat Donglai put aside the traditional hierarchical distribution model and directly established strategic partnerships with pharmaceutical manufacturers.
Through bulk procurement, long-term contracts, etc., the most preferential purchase discounts have been obtained, which has effectively reduced the cost of drug procurement.
However, ordinary pharmacies living in the downstream are often subject to the price control of intermediate distributors, and it is difficult to obtain such a low purchase price.
For different classes of drugs with different efficacy, they have adopted different price increases, rather than selling them at high prices across the board. However, without exception, the price increase space of all drugs is strictly controlled within 20% of the ex-factory price.
This precise and restrained pricing strategy is very different from the behavior of many similar pharmacies that often increase prices by 3-5 times of huge profits, which fully reflects the business philosophy of "benefiting the people" of Fat Donglai.
Set an example
Fat Donglai Pharmacy adheres to the business philosophy of "small quantity and micro profits", and has set up an extraordinary industry model in terms of drug price fairness, drug quality and reliability, and social responsibility practice with practical actions, injecting a new concept of public welfare and inclusiveness into the entire pharmaceutical industry, which has had a far-reaching impact.
From the perspective of the industry price system, the method of controlling the price increase of drugs within 20% of the ex-factory price adopted by Fat Donglai Pharmacy has undoubtedly set a benign price benchmark for the industry.
Compared with those traditional pharmacies that increase the price of drugs by 3-5 times, Fat Donglai's pricing is more reasonable and empathetic, which truly benefits the people.
To a certain extent, this has curbed the improper behavior of the entire industry to raise drug prices and hoard, and safeguarded the rights and interests of consumers.
In terms of drug quality, Fat Donglai purchases directly from manufacturers to ensure source control.
Their high requirements for the professional level of employees, coupled with a flat and efficient organizational structure, ensure the high-quality circulation of medicines. From this level, Fat Donglai has set up the first barrier for the quality of drugs and a solid line of defense for the health of the general public.
More importantly, Fat Donglai uses its own maverick low-profit business model to interpret the social responsibility that enterprises should assume.
As a major plan for people's livelihood, medicine is related to thousands of households, and Fat Donglai took the initiative to give up part of the profit margins and implement the original intention of "people take medicine as their life" with practical actions, which is really commendable at present.
conclusion
The fundamental reason why Fat Donglai Pharmacy is unique in the industry and has become a benchmark for consumer trust lies in their unremitting pursuit of the ultimate service quality.
Whether it is pharmaceutical retail, medical diagnosis, or health consulting and other business fields, Fat Donglai regards service quality as the lifeline of the enterprise, and strives to provide consumers with the best quality and most intimate service experience.
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