Direct To Consumer Trilogy: Part 3 – The Niche Market

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The Direct to Consumer (D2C) market has been perhaps the success story of recent eCommerce initiatives. Bypassing retail middlemen, these brands develop, manufacture, market and sell their products to eager consumers, saving on traditional brick and mortar merchandising costs and online retailer partnerships.

In Part One of this series, we explored the progress of major debuts like AllBirds, Casper, and Peloton and considered multiple D2C brands. In Part Two, we focused on shakeups to classic CPG categories, analyzing personal grooming subscriptions like Dollar Shave Club and Gillette On Demand, and the oral hygiene category with electric toothbrush makers Quip and Goby, as well as trends within a set of D2C glasses companies, including Warby Parker who went from digital to physical.

In the concluding installment of this trilogy, we examined the genealogy kit trade and the newly saturated market for at home genetic testing and analysis. This type of data collection and performance review would not have been possible without Jumpshot’s Insights tool which allowed us to map the year-over-year transaction growth for leading websites that sell DNA kits. With Insights, we compared 23andMe.com to eCommerce mogul, Amazon, to visualize how the marketplace was doing as a whole.   

Just How Obsessed is the U.S. With Genetic Testing?

Short answer, meh.

It seems for the past few years, the United States has grown more and more intrigued with testing and analyzing their genetic makeup. 2016 was the year genetic testing kits began to catch on, and 2017 was the year consumer DNA testing blew up. We looked at five D2C domains in the genetic testing market: 23andme, Ancestry.com, LivingDNA, MyHeritage.com, and Orig3n.com and studied them against sales of testing kits on Amazon.

Across all domains, including Amazon, we see DNA kit views and sales are declining annually. Viewership for the websites fell 7.8% YoY in 2018. Q1 was the strongest quarter for product views across all domains in both years. Total product views reached 575k in 2017 and 553k in 2018.

For the selected domains, sales peaked in Q4 2017, when more than 22,000 kits were sold. 12,000 of those transactions occurred in November 2017 alone, as they were a hot holiday gift. Sales posted similar, though more muted, results in 2018. Total transactions in the category fell 25% YoY, dropping to 16,000 in Q4 2018 and 9,000 transactions in November.  For the whole year, purchases saw more modest declines, falling 8.4%. This past holiday season, consumers were bombarded with advertising for genetic kits with commercials promoting sales during Cyber Week, starting on Thanksgiving and going thru Cyber Monday.

The conversion rate for sales grew from an average of 2% for January through October 2018 to 5.4% for November 2018.

Who is the Leader in the Marketplace?

While genetic kits as a whole are declining year-over-year, there are clear winners and losers in the marketplace. The champion in this product category is 23andme.com. The brand is ahead of Amazon with 8x the potential consumer views – 23andMe with over 300k clicks in 2018 and Amazon barely reaching 40k. Further, 23andMe is dominating in transaction volume with approximately 20,000 completed purchases from 2017 through 2018. Amazon converted 13,000 for 2017 and 2018 jointly. November is a strong month for both retailers year-over-year. Amazon gave 23andMe a run for first place during November year-over-year with 23andMe dominating by just over a hundred transactions.

While 23andMe is the champion, that is not to say that the domain is untouchable. Although sales are crushing Amazon and product views are increasing (up nearly 30% in 2018) they fell annually in terms of transactions, with a 3.5% decline YoY. Additionally, the conversion rate average for 23andMe is at 3% while Amazon is an impressive 16%. Amazon also showed modest transaction growth year-over-year, increasing by 1.2%.

Next Steps in This Niche Market?

Once the testing is complete, companies are now finding new ways to target consumers. No longer is it just about where your family is from, but now kits are able to tap into the wellness market. Society is moving past the FitBit era of helpful insight on workouts to now testing to help the individual make healthier lifestyle choices and understand their genetic predisposition to diseases and health conditions. While the genetic testing kit appears to be a fad that is slowly fading, the market is evolving to continue to keep consumers engaged and interested. Genetic kits might not be a need, but they are certainly a popular want that has an option for every buyer.  

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