Our client, a top European provider of clinical laboratory testing services, had a bold vision—adding EUR 75-100 million in revenue to its core business offering medical test kits directly to customers. Their hypothesis? There is an unmet need for convenient health care experiences; ones that cut out GP middleman and deliver “at your fingertips” practicality of direct-to-consumer (D2C) experiences or direct collaboration about results with doctors.
However, the D2C online approach was relatively new in the medical world, particularly in Europe. Uncertain whether this business model had potential to reach the desired revenue target, or whether the organization was ready to pursue it, the client engaged us to evaluate its hypothesis and capabilities.
Armed with robust validation of the D2C opportunity and a comprehensive financial model based on unit economics, the client is well-positioned to green light the project into the proof of concept and growth stage, with a clear understanding of the potential revenue and profit margins.
Despite having D2C setups in Slovakia and the Netherlands, the client was uncertain about the model's potential in the non-COVID home-testing arena in its target markets of the UK and Germany. It needed evidence-based proof in three core areas before making heavy investments in time, money or resources:
We began with a deep dive into market demand for medical and lifestyle at-home testing kits, both worldwide and in Europe. Market trends, VC funding activity, and competitor analysis were all key to understanding the state of the market, technology developments on the horizon, and growth potential.
Based on three market sizing approaches (top down, bottom up and market signals), we were confident that EUR 75-100m was a realistic goal within the next 4-5 years. Since home testing was not a winner-takes-all market, the client had an opportunity to capture significant market share.
As this was a D2C model, it was crucial to get a healthy dose of feedback on customer pains, needs and preferences. We surveyed more than 1,000 people in two nations, getting insights into what tests they would be interested in, how much they would pay, and what features were important.
The results showed demand for the concept, especially lifestyle-related tests such as intestinal health, vitamin balance and weight optimization. We gained insight into unmet customer needs that could be solved by value-added services, formulating solid assumptions to test.
To validate the viability of the D2C business model, we calculated a feasible pricing corridor per test and identified key factors that could impact the profit pool (COGS, repeat orders, average order volumes etc).
The customer lifetime value reflected potential for a highly profitable business case, supporting a self-sustaining D2C offering.
During prototyping, we conducted two smoke test campaigns along with five test kit options and value proposition messaging.
Campaigns on Facebook and Instagram led to over 3,400 visitors, 142 transactions, and 171 orders from our 'fake' landing page, proving the hypothesis and confirming the possible winning formulation for the first tests to enter the market.
Here's how we collaborated with our client to validate the market opportunity and feasibility for the client's entry into the D2C space.
In a 4-week investigation phase, we analyzed competitors, market trends and vertical investment against the backdrop of regulatory constraints.
Evolving Stryber's proven exploration model, we designed a roadmap for the project with clear decision gates and risk-mitigation strategies.
Through surveys and statistical analysis, we identified top consumer pain points, priorities and potential gatekeeping, including cultural preferences for speed, diversity, and digital accessibility in two key markets.
Analyzing key drivers of the D2C business model (repeat purchases, COGS, average order value) helped validate the project's headline potential for long-term margins.
We used the high-level costs breakdown to signal the minimum investment needed to reach revenue and EBITDA goals in the four-year horizon.
We tested traction, product, and value proposition by deploying "smoke tests" using a placeholder brand. This included launching a fake webshop and running targeted social media campaigns to measure click-through rates, conversions and transactions.
Finally, we examined the client's operations which were missing key competencies for a successful D2C business. Using Stryber's proven venture-building methodology, we recommended a phased approach to build an e-commerce culture, attract the right people, and minimize investment risk.
Stryber's analysis delivered strong validation of the market opportunity, showing positive traction with target customers, and building confidence that revenues could reach EUR 45-70 million within 4-5 years. Execution was put on hold pending a sale of the company by its majority owner. One unintended-but-very-desirable consequence of the project's in-depth analysis was that it helped strengthen the client's position for the sale. The case has now been handed over to the acquirer to pursue with significant enthusiasm as a source of future revenue growth.
