The subscription business model is no secret thing. Employed by the likes of Netflix, Dollar Shave Club and HelloFresh, it can be an incredibly lucrative way of making money. Now a new business called Waldo is attempting to replicate that success in an industry with a well-known number of sticking points.
Founder Ashleigh Hinde laid the current scene out by explaining that, for the most part, the contact lenses market is dominated by four big pharmaceutical companies which manufacture them. Below that, the lenses are sold through a “complex” set of distribution channels before ending up on the shelves of high street opticians – and then finally the customer. “There are lots of people along the way taking a piece of the pie,” Hinde add.
Having been in the US for the last year, Hinde saw the razor-based success stories of Dollar Shave Club and Harry’s – businesses which had been successful in building engagement with customers. “Businesses like mattress company Simba are making industries, which look boring from the outside, fun and engaging,” she commented.
“Customers are now saying that buying mattresses and glasses can be a positive experience. It’s powerful when you combine a recurring sales model with excitement and customer engagement.”
Before officially launching in the UK, Hinde and her team have focused primarily on ensuring the product is of the highest quality – good enough that people will want to use it on a repeat basis. Another important consideration, she told Real Business, was developing the supplier relationships required. These two factors have eaten up 80 per cent of her time, but are issues the entrepreneur firmly sees as impossible to not place in the position of highest importance.
Waldo will recruit the first of what Hinde hopes will be lots of customers by offering a free one-month trial. In a similar move to those employed by other subscription offerings, consumers will be able to try the service risk free – and then have a “simple” way of opting out of a continued subscription.
“People will be automatically enrolled into the longer-term subscription, we make that very clear. But it is very easy, within that month, to cancel the service at any time. Amazon Prime is an example of a company that has done this very well. You can’t put up a barrier to exit, otherwise you won’t build trust. With us, you can sign up and leave at your own discretion.”
Waldo in the UK
Despite choosing to set her business up in the UK, Hinde believes US consumers are more likely to take a risk on a new product. This means she’s had to put a lot of effort into making sure the brand she is building is trustworthy. “We have endorsements from highly-regarded people in the medical industry, and have all the checks and balances in place to make the customer feel they are trying a high-quality product,” she added.
Taking on big pharmaceutical brands is an intimidating prospect, and one many have tried and failed to do. The biggest advantage for Waldo, Hinde explained, is its touch points with customers – something the likes of Johnson & Johnson can only dream of.
“These big pharmaceutical brands have very little say in the customer experience as that’s done through an online vendor, high street chain or third party. Being online and able to use all the different tools that online businesses do means we can learn fast using customer feedback.”
For Hinde and Waldo to get this far, investment has been a must. Backing of £600,000, from investors including Nigel Ray, Richard Golding and JXC Ventures, has been secured – allowing the business to invest in its online infrastructure and finance the marketing necessary to attract early customers.
On the subject of venture backing, Hinde had some useful advice for fellow business builders going through the process. “There are quite a lot of soft skills that tend not to get spoken about here. Things like learning the jargon, which is the reason why I studied finance [at Harvard] last year.
“It’s hard to sit in meetings with investors when you don’t know about pre or post-money valuations, or shares, or about how to value your business. That can put entrepreneurs at a disadvantage. People can get scared by jargon, but it’s not hard to understand.”
To get her slice of a £290m market, Hinde is investing heavily in PR, social media and the online user experience. She wants to get as many people clicking to the Waldo site, and then make sure it is very easy to sign up once they do arrive there.
“One of the things that will be a learning opportunity for us is finding out how to target consumers that wear lenses, as it’s not a product for everyone. Waldo is bringing in people who are specialised at that, and we have been working very closely with the team at Simba [a UK mattress brand] who are strong technically with ecommerce and engaging customers.”
One growth tool Hinde is keen to exploit is word of mouth. While not everyone wears lenses, there’s a pretty good chance they know someone who does. She also cited the recent story of a women in a West Midland’s hospital being admitted with 27 lenses they didn’t know where in their eye as evidence that everyone knows a horror story about contact lenses.
Hinde knows she has a bit battle ahead of her, one which will involve convincing a large amount of people to change the way they browse and purchase a very particular product. However, as the lives of consumers becomes increasingly digitised, and the expectation that most services should be supplied online, Waldo has an opportunity to remove pain points such as the up-selling opticians often do or the lack of customer service provided by major pharmaceuticals.