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The Israel- and New York-based digital diabetes management system developer earned a spot on Walmart's online shelves as part of the retail giant's initiative to dedicate more of its online and physical real estate to health services.
The news also underscores DarioHealth's plans to zero in on tie-ups with retailers a means of growing its footprint: Just last week, it announced that it'll begin selling its product on Best Buy's website and hinted that deals with more retailers were in the pipeline. For context, DarioHealth's system includes glucose monitoring devices that link up with an app.
Digital therapeutics (DTx) vendors are increasingly taking a business-to-business-to-consumer (B2B2C) approach to distribution — and selling to a diverse pool of businesses could be a key growth driver:
- DarioHealth is shifting away from a direct-to-consumer sales model, as it can be an unsustainable method for reaching users en masse and generating revenue growth. In its Q3 2019 earnings call, DarioHealth CEO Erez Raphael said that the company is seeing "tangible evidence that broadening [its] focus from the direct-to-consumer channel alone… is working well." Raphael has also claimed that honing in on its enterprise-facing model is expected to drive revenue growth, which makes sense considering DarioHealth is tapping players that lay claim to a ton of consumer mindshare to accelerate its sales: Walmart's and Best Buy's websites both earned places on the list of top 5 most popular online stores in the US by revenue — and high site traffic could convert into boosted sales for DarioHealth.
- Selling to a variety of businesses — with unique customer bases — can reel in a heftier repository of user data, which enhances the efficacy and value of DTx products. DTx companies rely on a bevy of user data to augment analytical and predictive functions, so getting products into as many consumer hands as possible is also beneficial from a product development standpoint. And, for some, selling solely to payers — a primary mode of B2B2C sales for DTx firms — won't be enough: Payers' outreach efforts via snail mail and email aren't particularly consumer-oriented and could be weighing on enrollment, making retail team-ups an attractive add-on.
But DTx firms will need to be strategic about which retailers to partner with to ensure their products aren't being sold alongside their competitors'. For example, DarioHealth competitor One Drop — which also develops proprietary devices and an accompanied software program for diabetes patients — is featured on both Apple's and Walmart's shelves. And while DarioHealth's system isn't on display on Walmart's online store just yet, its $70 price tag on BestBuy.com exactly mirrors One Drop's price on Walmart's site.
Hence, DarioHealth will likely be vying for sales with its rival at the same price point — and One Drop could have an edge since it's enjoyed a longer presence on the site. As such, DTx providers should move quickly to forge ties with retailers that are new to the DTx space to avoid directly competing with similar products.
We think, specifically, we'll start to see pharmacy retailers like CVS and Walgreens — which have been becoming more digital health-oriented — make room in their stores for DTx solutions in the year ahead, opening up an opportunity for fast-acting DTx firms operating in contentious markets like diabetes management to earn spots on their shelves first.
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