Shenzhen-based Smile Formula, which sells its 3D printed invisible tooth aligners directly to end-users, cutting off the middlemen, is disrupting the market with a fixed-price package of RMB 14,999 for full orthodontic treatment – slightly over a quarter of the RMB 50,000 charged by Invisalign, the market leader.
The startup's business model was conceived by CEO and founder Sam Xu while he was studying for an MBA at the Harvard Business School from 2017–2019. Xu learnt about the DTC (direct-to-customer) model that made orthodontic treatment affordable in the US and decided to bring it back to China.
Traditionally, orthodontic treatment in China involved multiple middlemen, including sales representatives of aligner makers, hospitals and clinics. Distribution costs further drove up prices. At the end of the supply chain, a consumer may pay up to more than RMB 100,000 for teeth straightening, depending on oral health and material options, and it is not covered by public health insurance.
Since the founding of Smile Formula in July 2019, the young startup has served over 2,000 customers. In April, it raised RMB 10m seed funding from Global Founders Capital, money that it plans to use for brand promotion, setting up experience stores and R&D for new products.
Online 24/7
With a DTC business model that was based on online customer service, Smile Formula was unaffected by the coronavirus outbreak that saw many orthodontic appointments being cancelled. "None of our customers encountered any delay,” said Xu. “Users had regular checks online with our orthodontists while staying at home, avoiding the risk of getting infected."
Each customer will have a brief online consultation with an orthodontist, followed by a 3D oral scanning at home to assess eligibility for the treatment. For those who are, one more oral X-ray at a local partner clinic is all Smile Formula needs for it to proceed.
Based on the data collected from the scanning and X-ray images, orthodontists make customized plans for the clients. Smile Formula engages orthodontists from top hospitals and clinics worldwide to work remotely on cases, eradicating the need for long waits for dental appointments and frequent hospital visits.
Aligners are made from medical-grade plastic with Smile Formula's imported 3D printing technology. An animated video of the tooth alignment process is shown to the client before the aligners are mailed to the customer. Follow-up consultation is available online 24/7 or offline at local, partner clinics.
Promising market
Smile Formula is emerging at a time when orthodontics is getting popular among Chinese consumers. More lifestyle and fashion KOLs are speaking on social media about how aligners can improve facial beauty and boost self confidence. These stories are well-received by young adults with higher disposable incomes or well-off parents, making them Smile Formula's target audience.
Invisible aligners are popular among Smile Formula's customers, not only because they are comfortable and easy to put on or take off, but also because they cause no disruption to social life compared to conventional metal braces.
As every step of the process is standardized and mostly done online, Smile Formula is able to more efficiently scale its products and services nationwide while maintaining quality compared to traditional orthodontic treatment, which has high venue overhead costs and can involve wide variations in the skills and experience of dentists depending on whether they are in large cities or lower tier cities.
To achieve best results, Smile Formula cherry-picks customers who do not require teeth extractions or other orthodontic procedures. Customers who may need those procedures are referred to offline hospitals or clinics but 60–70% of orthodontic cases in China require surgical extractions, which narrows the startup's customer base.
Prioritizes user experience
Smile Formula is not the only player in the invisible aligners market. Platforms like AliHealth, Alibaba's healthcare arm, and SoYoung, China’s first listed cosmetic services company, partnered with clinics to offer orthodontics services ahead of Smile Formula.
Tianjin-based Magicalign and Shanghai-based Smartee are also releasing invisible aligners, while other brands, including Smilelab and Xixilab, are luring customers in China with attractive pricing by using similar DTC models.
Another startup, MirMico, provides software and hardware to clinics, enabling dentists to make aligners in-house, reducing the high cost of ordering aligners from manufacturers. MirMico is also considering a DTC model similar to Smile Formula's.
But Smile Formula is unperturbed. “The success of a business model depends on how well it works for users,” said Xu, who places a premium on user experience and is prepared to pump cash and efforts to improve it. For example, Smile Formula is planning to send notifications to users via an online treatment tracking and monitoring system, reminding them to replace aligners and upload photos and videos of their teeth, which orthodontists can check and provide feedback.
With its newly-raised funding, Smile Formula plans to improve its O2O services by opening more experience stores where prospective customers can have a look at its products and try 3D oral scanning. Last month, it opened its first experience store in Guangzhou.
