Businessmodel of 23andMe

Customer Segments

23andMe has a niche market business model, with slightly different customer groups:

Consumers: The company conducts genetic tests for and provides results to individuals.

Professionals: The company provides access to its database to scientists and other researchers.

Value Proposition

23andMe offers six primary value propositions: accessibility, convenience, customization, performance, risk reduction, and brand/status.

The company creates accessibility by enabling consumers to order personal genetic tests and receive results. It also provides researchers with access to one of the world’s largest genetic databases.

The company offers convenience by providing a simple, easy-to-do test and enabling consumers to complete it from the comfort of their own homes. They receive a saliva collection kit in the mail. Afterwards, they collect their saliva in a tube and mail it back to 23andMe’s lab in a pre-paid package. Approximately 6 – 8 weeks later, they receive a notice to see their results in an online account.

The company offers customization through the level of detail involved in testing. Most ancestry services utilize historical records such as marriage, birth, and death certificates to trace customer lineage. 23andMe analyzes DNA for this purpose, making its results more specific and accurate.

The company has demonstrated strong performance. It offers estimates of ancestry percentages down to the 0.1%, and also enables customers to analyze results at different confidence levels.

The company reduces risk through its stringent standards. It bills itself as the first and only personal genetic testing service with FDA-approved reports. Its labs are confirmed to meet the standards of the CLIA (Clinical Laboratory Improvement Amendments of 1988), which ensures quality.

The company has established a strong brand as a result of its success. Its database includes over one million genotyped individuals around the globe. Further, it has gathered over 320 million phenotypic data points (survey responses), and collects over two million responses weekly on average. Lastly, the company has published over 200 peer-reviewed studies in prestigious scientific journals.

Channels

23andMe’s main channels are its Sales and Business Development teams. The company promotes its offering through its website, social media pages, and advertising (TV, radio, and online).

Customer Relationships

23andMe’s customer relationship is primarily of a self-service nature. Customers utilize the service while having limited interaction with employees. The company’s website features resources such as reports, videos, and answers to frequently asked questions. There is also a community element in the form of forums that users can visit to receive advice from peers.

Key Activities

23andMe’s business model entails designing and producing genetic test kits, completing analyses of material obtained from the kits, and analyzing and providing test results.

Key Partners

23andMe maintains the following key partnerships:

Medical Professionals – The company creates resources for clinicians and other medical professionals to help them understand its range of genetic reports. These include carrier status, traits, wellness, and ancestry reports. The goal is to ensure clinicians are prepared if patients discuss the reports.

Educators – The company creates resources for academic institutions to share with students to promote personal genetic testing. The resources include free sample reports, videos, photo books, webinars, and discount pricing on DNA test kits. It works with schools all the way from Kindergarten to graduate school. Its specific partners include the University of Chicago, the Broad Institute of MIT and Harvard, the MRC Epidemiology Unit at Cambridge University, and Stanford University.

Developers – The company, which has an app, enables third-party developers to use its API in order to create complementary applications or to incorporate genetics information into their existing applications. It provides Github examples in JavaScript, Python, and other languages.

Consumers – The company operates the Refer-a-Friend program, through which it invites consumers to send a referral website link to friends and family members. If someone submits an order using the link for a test kit within 30 days, the consumer receives a $20 Amazon gift card when the order ships.

Beyond the above programs, the company maintains the 23andMe Affiliate Program. It invites third parties to promote the company on their platform (website, mobile app, etc.), and provides a $10 commission if any test kit orders are generated through the referral.

Key Resources

23andMe’s main resources are its laboratories, which it uses to process test kits submitted by consumers.  It also depends heavily on its staff of scientists and clinicians to analyze results and write reports. Lastly, as a startup it has relied heavily on funding from outside parties, raising $225.6 million from 16 investors as of July 2015.

Cost Structure

23andMe has a value-driven structure, aiming to provide a premium proposition through frequent enhancements to its service and an emphasis on quality. Its biggest cost driver is likely research and development, a fixed cost, as well as variable test related costs. Other major drivers are in the areas of sales/marketing and customer support/operations.

Revenue Streams

23andMe has one revenue stream: revenues generated from the sale of its genetic test kits. The kits cost $199 plus shipping charges. The price includes access to 60+ reports (ancestry, traits, wellness, and carrier status).