Investor Overview
Revenues
Pricing structure
We will have two subscription tiers. A standard tier where our subscribers pay €20.00 per month and a premium tier that costs €35.00 per month. In the standard tier, the number of daily reminders is limited to 2 and the premium tier gets the extra of being able to chat with health professionals. We expect a ratio of 2:1 for the standard and the premium tier. The reasoning for this is that we think that most people will choose the standard tier as it is cheaper. Quite some people have already figured out what vitamins work for them, but there are also a lot of people that are starting off and have questions. The way that we provide information to them is very instantaneous, efficient and not even very expensive in comparison to what dieticians normally cost. Therefore, we do expect 1 in 3 of our customers to subscribe to the premium tier.
Per Customer Return
Our incomes are monthly and proportional to the number of customers. Considering a 2:1 ratio of normal subscribers to premium subscribers, we get an average of €24.75 per subscriber per month. We also expect to make money off of affiliate links through vitamin sales in our online store. Considering 10% on average monthly expenditure this would be €3.30 per customer per month. This totals €28.05 per customer per month. It is important to note that customers get their first month free. Therefore, they will only start paying from the second month forward.
Expenses
Production costs
Our production costs are expected to be €24.20 per unit. We calculated the cost for the first 10,000 units. For the internal computers we will spend €6,000, for the 6,000 load cells, we will spend €90,000. The injection molded plastic pieces will cost €3,367 and the wood cover vinyl will cost €74. Fasteners are another €10,000 and for logistics we calculated €90,000. Then we added assembly costs of €2,216.67 and finally we added an error margin of 20%. This is another €40,331.47. All of this comes to a grand total of €241,988.80 and a per piece cost of €24.20.
Initial expenses
Our initial expenses will be a total of €366,000. Starting off, we will invest €60,000 in marketing, to get the base of customers we need. We will spend €4,000 on in-house servers. To produce the first 1,000 products, we will spend €242,000. For this we will also need to produce molds for the parts, which we can keep using for 1,000,000 parts in total. This will cost €60,000.
We use AD agency to reach influencers which has the average CPM (cost per followers) of €16.5 according to Cook (2020). Based on RightSpend (2022), the average agency cut is 15%. Using €60,000 as our initial marketing investment, the total impressions are:
(€60,000*(100-15%))/€16.5 CPM = 3.09 million impressions
Monthly expenses
Then we will be making some expenses monthly that do not fluctuate a lot with the number of customers we would have. This will be a monthly total of €49,050. €14,850/month of this will go to programmers to run our website and app, €10,000/month will go to server costs. Then we will be producing 1,000 more products each month for a monthly total of €24,100. After adding an error margin of 1.2 for the production, the total monthly expenses come to €58,860.
Per Subscriber expenses
Then finally there are some monthly costs that are proportional to the number of customers we have. Per month per customer these are €7.84. Payment processing will cost €2.12/customer/month. This was calculated from an average across payment systems via Ayden. Considering a 2:1 ratio of normal subscribers to premium subscribers, and one dietician per 480 premium subscribers we plan to play it safe and have 1 dietician per 1200 customers. Per customer, this will be €2.92/month. Then we plan to do marketing proportionally to the number of current customers. By investing 10% of our income in marketing, this will be €2.81/customer/month. After adding an error margin of 1.3 to the total monthly cost per customer, we get €10.19.
Growth Potential
Market growth
The dietary supplements market experienced further growth in 2022, although it was largely due to an increase in the average unit price caused by significant increase in production costs due to including the rising price of energy and ingredients. According to Expert Market Research (n.d.), the European dietary supplements market size is expected to grow at a projected Compound Annual Growth Rate (CAGR) of 9.50% during the forecast period of 2023-2028. Thus by 2028, it is anticipated that the market will reach a value of USD 33.95 billion. Currently, the market is being driven by the increasing geriatric population in the region and rising awareness of the benefits of dietary supplements.
There are several key factors that are expected to fuel the growth of the European market. First, the increasing geriatric population, characterized by a growing proportion of elderly individuals, will contribute significantly to the demand for dietary supplements. As people age, the need for nutritional support often rises, leading to a greater adoption of dietary supplements. Second, growing health and wellness awareness is expected to drive market growth. With a greater emphasis on preventive healthcare and the promotion of holistic well-being, individuals are becoming more conscious of the potential benefits that supplements can offer. As a result, the health and wellness industries are expected to experience significant growth as more individuals prioritize their well-being.
Moreover, the importance of convenience cannot be underestimated in the market growth. Today’s fast-paced lifestyle has led consumers to seek convenience and timesaving. One of the best examples is a self-ordering kiosk in restaurants. Similarly, products that incorporate automation features, such as vitamin intake reminders in this case, can effectively meet individuals’ specific needs, especially when they focus on individuals with personalized guidance.
Furthermore, the availability of a wide range of dietary supplements across various categories and formulations is expected to boost further market expansion. Consumers have access to an extensive selection of supplements tailored to their specific needs, including vitamins, minerals, herbal extracts, and specialty supplements. This diverse range of options that are offered to consumers who have varied preferences and requirements can positively affect market growth.
Target Group
Identifying the target group is important to evaluate the potential of our product service system in the market. We can gain insights into the size, behavior and characteristics of the target group and can therefore clarify the growth potential of VitDaily. Next to this, defining your target group makes it easier to identify the unique needs and desires of the user.
In response to the pandemic, many individuals sought to enhance their health and well-being by incorporating dietary supplements into their routines. As a result, an estimated 66% of Dutch adults over the age of 17 turned to dietary supplements for health improvement. The COVID-19 pandemic in 2020 triggered a surge in the sales of vitamin D and C supplements, leading to a normalization of supplement usage in Dutch households. Supplements such as folic acid are used by women to increase pregnancy rate, vegans use B12 and those with little or no dairy consumption need calcium and vitamin D. Among all these supplements vitamin D emerged as the most popular choice, with over 36% of dietary supplement users opting for it. On average, consumers spent €74.50 on nutritional supplements in 2020. The market for food supplements in the Netherlands witnessed a notable increase, reaching 693 million euros in 2020 compared to 670 million euros in 2019, representing a growth of 3.4%. This shows that there is an increase in the target group and therefore an increase in demand. Therefore, there is a lot of potential for VitDaily to grow.
Competitors
Analyzing our competitors was crucial to see how VitDaily stands in relation to its competitors. By looking at the competition’s strategies and strong and weak points, we could see how we could differentiate and improve. Next to this, competitor research allows for a better understanding of the overall market landscape and clarifies the opportunities, risks and strategies within this market.
We looked at companies such as Loba, which will be in the same market as us. Some strengths they have are that they have a good working app with intake reminders and an aesthetic looking organizer. Some weaknesses they have is that they can only store up for a week of pills, which means you still need an extra place to store all your vitamins. They also do not provide any information about the stock of vitamins and therefore do not provide as much ease and convenience. These were points we focused on and aimed to improve.
Points of Difference & Value Proposition
It was essential to know what differentiates VitDaily from its competitors and why customers will choose us over other existing businesses. That is why VitDaily contains a personal aspect. This personal aspect can improve user experience but also protect other companies from stealing our ideas. Personal data enables us to provide personalized experiences, recommendations and offers to users. This personal approach can enhance user engagement and loyalty. Next to this, having access to personal data can give us a competitive advantage where we can stay ahead of market trends. This strong user retention and competitive advantage can contribute to long-term revenue growth.
When the user sets his VitDaily up, he goes through several steps where he can specialize his needs and preferences. This way, the user will get personal notifications about for example that his specific vitamins are in sale at our partner, or that his specific vitamins are almost running out of stock. Next to this, VitDaily allows users to upload their personal data. This can be done by doing the VitDaily personal vitamin test or by uploading your blood test results in the app. VitDaily can give advice and tips based on this personal data.
Another aspect that makes VitDaily stand out from the crowd is its automated order system in combination with the weighing sensor in the VitHome. This is a feature we haven’t seen yet in the competition, but it is definitely something the user wants and cares about. This way, the user never has to worry about his vitamins running out of stock and can therefore ensure that he can always take his vitamins.
Our unique value proposition is personalization and convenience. We help users to reach their health goals in a fast, easy and effortless way. Once your VitDaily is set up, you don’t have to think about a thing. VitDaily keeps your vitamins in stock and reminds you to take your vitamins. VitDaily also gives personal notifications and advice based on the user his needs. VitDaily will do everything for you such that you can focus on your health goals in a convenient manner.
Growth Projection
We expect to acquire 1,000 paying customers per month. This number is partly based on the target group and market growth research. Therefore, we expect a total revenue of €28.05 * 1,000 = €28,050 after the first month they pay (being the second month), and exponential growth from there.
This graph shows the expected growth of the company in its first two years. The labels on the horizontal axis are months. In this graph, the filled stacked surfaces represent the cumulative amount of money spent, divided into initial spendings, monthly spendings and customer proportional spendings. The light blue line represents the initial investment, and the orange line represents our further expected revenues. Those two together, minus all the costs, is the company’s capital, represented in red. The dark blue line is 20% of the red line and thereby represents the value of the share of our investor, solely based on the company’s capital.
Because of our initial spendings, the company’s capital is expected to decrease in the first 4 months but start to make a profit after that. When the capital is lowest, sometime during the 5th month, the company will still have €64,960. This can be considered the buffer space on the investment. The total capital surpasses the investment in month 12. At this point, the company will have generated more revenue than it has spent on costs. In month 22, the investor’s share’s value based on the company’s capital surpasses their investment’s value. At this point in time the investors’ share’s value based on the company’s capital will be increasing with 11.4% per month.
Our Proposition
We ask for an upfront investment of €600,000 in return for 20% equity in our company.
This is a 5x discount on the company value based on the DCF model.
We will spend €366,000 of this money immediately on marketing production and some other costs. Over the first couple of months after that we will continue to invest money more than we get in revenue, however our revenues will increase and within 5 months we will break even at a capital of €64,960 and from then on, our revenues will outgrow our spendings, meaning we will start turning a profit. We expect that the value of the investors’ share in the capital of the company will surpass their investment just within two years.
The above financial projections and details are more fully explored in this document.