Chemist Direct – thrills, pills, startups and VC funding

As an ardent fan of high street chemists – Boots for their loyalty points and Superdrug for their cut-price tactics – I was looking forward to talking to Mitesh Soma, brains behind the online pharmacy Chemist Direct.

Not only does it seem husband and wife team Mitesh and Krishna Soma have successfully squared up to stiff online competition, but they’ve also achieved pain-free VC funding from investors including Skype’s founders.  No mean feat.

Formerly a management consultant for Deloitte, Mitesh graduated with a degree in business and computing before persuading his wife to sell her pharmacy in Westminster to take the business online.

Mitesh says:

I used to occasionally pop in to see her (Krishna) and I noticed some of the prices that she was buying goods in for. Comparing them to what the retail prices of those products were there seemed to be huge margins. Items were being bought for pennies and sold for £7 or £8.

Mitesh had stumbled on a golden ticket. By going online he had a far greater market at his feet. With ‘smaller margins and greater volume’ he was suddenly in a position to undersell the high street giants and beat them at their own game.

An online consumer-led business model meant the couple could now provide: ‘everything you can buy at your local pharmacy for a lot less’.

Mitesha Soma persuaded his wife Krishna to sell her London pharmacy and move online

Boots of course is a national chain, employing thousands of people across the country, and it would be wrong to assume in the light of increased online spending that they were not taking their own online push seriously.

Online pricing in the sector is becoming increasingly competitive.

Yet Mitesh believes it is Chemist Direct’s ‘small and agile team’ which puts the business ahead of the game, allowing them to react at speed to competition, changing consumer needs and market advances.

With the original business sold and an office in the garden shed, the Somas employed a team of web designers and in November 2007 the site was launched.

Less than twelve months on and the business had grown from a handful of people into the Hitwise number 1 online pharmacy complete with warehouse, a 50 strong team of employees, a product list in excess of 1,000 items and turnover of £4 million.

Fast forward to the end of last year and it was apparent the business was moving on from its pioneer phase.

While looking to expand services, their team and their warehouse Mitesh was not actively seeking funding, and yet a meeting with the former Skype co-founders Niklas Zennstrom and Janus Friis, now of Atomico, led to Chemist Direct achieving £3 million in VC funding.

You only need to look at LoveFilm to realise that such a consumer led business model can feed off a downturn. People will always need toothpaste and soap, and they’ll always want to enjoy films.

Chemist Direct hoping to do for pharmacists what Glasses Direct did for opticians

You might imagine adding whole new product ranges would prove challenging, but Mitesh and his team have frequently shown startup agility in practice.

In January 2009 a pet team was developed and pet drugs added to the online catalogue.

As Mitesh explains:

I was talking to a pet owner who said she was thinking she’d have to put her cat down because she couldn’t afford the drugs … I thought well we can get hold of these kinds of items as we are a pharmacy. The move has been hugely successful since we launched at the start of the year. People couldn’t get these items for less before and now they can.

All this sounds like the perfect startup story. But it’s only when you dig a little deeper you really sense why Mitesh left the corporate world – his entrepreneurial instincts burn too bright for office politics.

It may be early days for the business, but Mitesh is driven by the desire to create a household name. Yet he recognises that if there comes a time when he’s no longer happy, he will move on. Indeed like all entrepreneurs he already has a number of ideas brewing, although none he would divulge.

It’s very difficult to find fault with Chemist Direct. To get VC funding in today’s economy is impressive. Persuading a partner – which Mitesh calls ‘the power of the entrepreneur’- to sell her family business to set up an online startup in a garden shed is astonishing.

And yet Mitesh’s powers of persuasion and vision have held sway.

This and the recession-fuelled desire for people to cut bills by finding bargains online, mean I reckon it’s a safe bet to predict Chemist Direct is set to enjoy a very prosperous year.

With a degree in civil engineering Beth started life as a structural engineer for Arup. Looking for a change in direction, she became editor & blogger for startup website London Amigo before joining The Next Women team as a writer. Initially planning to cover her first love, cycling, she's discovered a new passion for writing about startups and entrepreneurship. http://www.smallbizpod.co.uk/blog