Could Shell’lock become a real business?
Could Shell’lock become a real business? As we want to develop a test deployable in the field we wanted to properly evaluate if Shell’lock would be a feasible venture. To that end, we conducted a thorough economic analysis and developed a business and marketing plan.
Steps
Knowing Our Environment
Before commercializing a product, it is first necessary to know the market, the supply and the demand concerning our product. For this purpose, we conducted a survey to explore the demand, we summarized the existing supplies and we conducted a PESTEL analysis (strategic framework used to evaluate the business environment in which a company operates) to identify the factors affecting our market that we do not control.
The first step to better understand our economic environment and to precisely define our position was to analyze the demand. To achieve this we submitted a questionnaire to the main stakeholders: the oyster farmers. These are preliminary data based on 9 answers, we aim at increasing the number of answers to confirm these data. When we asked oyster farmers if they were affected by oyster infection (figure 1), they all answered yes (100%).
Infection had an economical impact for two third of the farmers (figure 2).
We also asked oyster farmers if they think that Vibrio Aestuarianus is an interesting pathogen to detect. They all answered yes (figure 3).
To go further into the market analysis, we asked if farmers would be interested in detecting oyster pathogens on their own. They answered yes for 89% of them (figure 4).
However, approximately 50% of them prefer to entrust the carrying out of the test to laboratories (figure 5).
Conclusion
The conclusion is that our project seems to meet the demand of oyster farmers but communication needs to be improved to make them understand the interest and reliability of a self testing procedure. Based on this statement we developed an informative booklet dedicated to oyster farmers.
The second step was to precisely identify competing products. There exists 3 different types of competition: i) the direct competition, which corresponds to products or services of the same nature that meet the same need; ii) the indirect competition, which corresponds to substitutable product or service that are nonetheless meeting the same need; and iii) the generic competition, which corresponds to competition between products and services that are completely different, but meet the same need. Our market study is summarized in table 1.
| Competition type | Detection technique | Price | Usability | Rapid | Quantification | Need of laboratory equipement | Multiplexing |
|---|---|---|---|---|---|---|---|
| Shell’lock | Paper-based test using SHERLOCK technique | $5 | Doable by oyster farmers Need to mix water sample with provided solution and put it on the paper test | 1 hour | Not really easy but doable | No | Yes (3) |
| Direct | We do not have any direct competition: the product we want to commercialize to detect oyster pathogens does not exist in the market. | ||||||
| Indirect | We do not have any indirect competition because the other products do not have the same characteristics as Shell’lock. Indeed, the already existing tests to detect oyster pathogens are not doable by oyster farmers themselves, laboratory equipment is needed. An indirect competing product would have been, for instance, colorimetric detection of oyster pathogens deployable in the field. | ||||||
| Generic | Digital PCR | Need to buy expensive laboratory equipment and laboratory products | Require scientific training . Not easily doable by oyster farmers | < 2 hours | Yes | Yes | Yes (5) |
| Real time PCR | Need to buy expensive laboratory equipment and laboratory products | Require scientific training . Not easily doable by oyster farmers | One day | Yes | Yes | Yes | |
| Classic PCR | Need to buy expensive laboratory equipment and laboratory products | Require scientific training . Not easily doable by oyster farmers | One day | No | Yes | Yes | |
| Cultivability of bacteria on non-selective synthetic medium | Need to buy expensive laboratory equipment and laboratory products | Require scientific training . Not easily doable by oyster farmers | Few days | No | Yes | Difficult to identify different bacteria | |
Conclusion
Our conclusion is that we do not have either direct nor indirect competition. This means that our product is unique in the market. There exist substitutes, the digital PCR is the more promising because of its rapidity, high sensitivity and quantitative nature. However, that approach is not doable by oyster farmers, as expensive laboratory equipment and scientific expertise are needed to perform the test. This is not in line with the demand of the stakeholders, namely to do the test themselves (89% of them find it interesting to detect oyster pathogens themselves). However, we have to mention that approximately 50% of oyster farmers prefer to rely on laboratories to realize the test, this is why we also decided to sell our product to these laboratories, for them to have a quicker test than the one available for the moment.
The third step is to analyze exogenous factors that might affect our market. To achieve this, we conducted a PESTEL analysis (figure 6).
All the factors mentioned in this PESTEL analysis (figure 6) have to be taken into account all along the commercialization process of our product, but we want to stress some of them: The “national or local subventions attributed to develop oyster farming and / or research in this field” and of the “recognition of oyster production loss as compensable”. In fact, if more subventions are allocated to oyster production and research, the development of our product will be faster. If the oyster production loss is recognized as compensable, oyster farmers will be encouraged to realize tests. Concerning the economical aspects, if our startup has financial assistance, it will be easier for us to develop the product, to produce and to sell it. On the other hand of the environmental aspect, the increase of water temperature due to climate change is something to take into account because the presence of oyster pathogens might be impacted by this issue. Conversely, collecting real-time data about pathogen infection over the years thanks to our product may provide ecologically-relevant information. One other factor to be highlighted is that SHERLOCK is patented, we have to deal with that by asking for authorization to adapt the detection technique. The last factor to focus on is the development of new technologies to detect oyster pathogens. Indeed, if other techniques appear to offer the same service as us, it will change our business strategy. Moreover, we can add that our detection technique is adaptable to other pathogens (fish pathogens, detection of viruses in wastewater…), it is a strength.
Conclusion
From this market analysis, we conclude that the problem of oyster infection detection is beginning to be tackled by the development of digital PCR. However, no solution is deployable in the field and no test can be done by oyster farmers. The demand analysis allows us to gain a more accurate view of what the oyster farmers really want. This data will be useful to develop a suitable marketing and communication plan. Finally, we identified exogenous factors that might affect the commercialization of our product, and will take them into account for future developments.
Our Product
The second step of this entrepreneurship plan is to characterize our product in detail. In fact, it is necessary to summarize and be aware of the strengths and weaknesses of the venture, which we accomplished with a SWOT matrix and a Business Model Canvas. Moreover, we have to define the message to convey with the stakeholders.
How Shell’lock meet the demand?
The company wants to develop Shell’lock, a diagnostic technique that: i) is precise and accurate; ii) is deployable in the field; ii) is inexpensive; and iv) helps oyster farmers to decrease loss of production. At present, a procedure to perform on-site oyster pathogen testing by oneself is not a clearly articulated demand of oyster farmers. We believe that this is steaming from a lack of awareness and we want to involve producers to help them realize the benefits of our product. In fact, we want to demonstrate to them that with regular water sampling they can avoid at least part of their production loss. The message to convey is that our test is user friendly, fast to perform and trustable, and that it can help in reducing oyster loss.
We first conducted a Business Canvas (figure 7) to describe how our company creates value and thus ensures its own sustainability.
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Customer segments
We will develop a business in two different ways: business to business and business to consumer. In fact we can directly sell our product to oyster farmers, to oyster nurseries and to water analysis laboratories (B2C) through a website but we can also sell our product to veterinarians and analytical laboratories (B2B) through commercial canvassing. Veterinarians and analytical laboratories will then sell the test to oyster farmers and oyster nurseries.
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Channels
The communication channels are blogs reserved for oyster farmers and the company website. We want to develop an attractive website to incite oyster farmers to realize the test and to be interested in the topic. We also want to publish information on blogs that are reserved for oyster farmers. Through these blogs we will reach our target directly. The distribution channels are first local and French. Then, we will study the potential development in oyster producers countries.
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Customer relationships
The customer relationships depend on the type of business. For the B2C we offer after-sales services and field support. It means that we have employees that are responsible to accompany oyster farmers while they are testing their culture. For the B2B, we offer commercial rebates and advisory assistance for them to sell our product.
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Revenue streams
For B2B the paiement is after delivery. We apply lower prices than B2C because they realize regular purchases in high quantities to build up a stock. For B2C, the paiement is before the shipping, we apply higher prices than for the B2B and they order the product when it is needed.
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Value propositions
The company has the same values and will since the beginning. We want to sell a test to detect oyster pathogens which is user-friendly (doable by oyster farmers), rapid and inexpensive. We also want to accompany oyster farmers in the use of the test by providing training. We also want to propose workshops to introduce them to the interest of realizing tests regularly. Moreover, the company can provide help to analyze the result of the test and we plan to develop a smartphone app to take the picture of the paper test and quantify it. And to finish, we are engaged in ecosystem preservation and local economy preservation.
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Key resources
All the services of the company are present in the same building to promote team communication; for that we need to buy or to rent a building composed of a laboratory part and offices. We have to ask for authorization to sell and for the reuse of the patent. Moreover, we need employees: researchers, engineers, technicians, communication team, commercial and marketing team. All the employees have a background in biology. We also need an investment fund.
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Key activities
What we do in our company is the scientific design of the detection technique, the product production, the product marketing, the communication and the oyster farmer training.
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Key partners
To develop our business, we need key partners to buy the raw material and laboratory equipment we need. We also need a partner to produce the packaging of the test and the paper test used to deliver an answer to oyster farmers. We need a distributor at point of sale and an accountant. Moreover, to develop the scientific part of our project, we need to keep in touch with research laboratories such as IFREMER and with syndicates (such as the Syndicat Mixte du Bassin de Thau).
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Cost structure
We can differentiate variable and fixed costs. In our case the variable costs are composed by the raw material prices and by the costs applied by the key partners. The fixed costs are the insurance, the repayment of the loan for the purchase of the building or the payment of rent and the employee salaries. The most expensive key resources are the employee salaries and the most expensive key activities are the product production and the scientific design.
The conclusion is that our project has an added value and can help oyster farmers to solve oyster production loss by considering the different aspects discussed in the business plan. To go further into the details concerning what is our added value, we conducted a value proposition analysis.
Through this value proposition analysis we can confirm that our company has the keys to meet the demand. To further analyze our company in the making, we carry out a SWOT analysis.
What can we conclude about our product and our company?
Our company proposes Shell’lock, a user friendly, deployable in the field, rapid and inexpensive product to detect oyster pathogens present in the Thau lagoon. Our important strength is that we meet a demand formulated by stakeholders. To accompany them in their will to save their production, we are close to the field by the development of training and workshops dedicated to oyster farmers and resellers and by the support for the analysis of tests. Through the different analysis conducted in our business plan, we have a glimpse of how we can ensure our sustainability, of how we can produce added value and of which are our weaknesses, external opportunities and threats. All these parameters have to be taken into account all along the company development process.
Marketing And Communication
Once we have defined our product in detail and the values of our company, it is necessary to develop a marketing and communication plan. The product marketing concerns the packaging and the company marketing includes the brand image we want to develop. Communication is the way we want to sell our brand image and our product.
Shell’lock: an attractive and user-friendly packaging
Selling a product with an attractive packaging is important to encourage the purchase and to convey messages about the product. In our case, we decided to have a simple packaging. However we included details: the name of the product “Shell’lock”, the logo, a sentence to describe the product and a shield shape. The meaning behind that is if the oyster farmers perform the test, they will protect their culture against infection.
To better explain to oyster farmers how to perform the test, we wrote instructions for use in an educational way.
Shell’lock company: a company close to the field
In addition to the efforts done for the product marketing, we want to share precise values about our company. We want to be seen by oyster farmers as a company that is close to them and that is there to help them. Concerning the paper test holder, we want to manufacture the holder in biodegradable material. Moreover, we thought of developing a reusable starter pack containing a test holder, thermometer, tube holder and strip refills.
Communication is the key to sell our product
By discussing with oyster farmers, we realized that communication is key in the way we sell the product and explain our project. In fact, water testing is seen by the profession as a presage of closure for health risk. By selling Shell’lock we do not want to be seen as a quality control company. To communicate with oyster farmers, we will organize meetings every three months that will take place where they are located. During these meetings, we will listen to them about their needs. For us, it will be a way to evolve our product. In fact, as we developed a detection technique that is adaptable, we can adjust the detection machinery depending on the problems encountered by oyster farmers. Moreover, if we adapt the product each time there is a new need, it will allow us to tackle the natural life cycle of a product (figure 4). On top of that, we want to develop workshops to introduce oyster farmers to water testing and to explain to them clearly what is the information they will obtain by sampling water.
Conclusion
Explain, communicate, make ourselves accessible are our watchwords.
Financial Plan And Product Price
The objective of this section is to estimate the price of a test and to evaluate the revenues and expenditures of our company to ensure its sustainability. Please note that this financial plan is the best one we can consider.
Tests price
We wanted to develop a test that is inexpensive enough to be used routinely by oyster farmers, this is why we focused on minimizing the costs. The production cost of one single test (i.e to test one pathogen once) is mentioned in table 2.
| Component of the test | Manufacturer | Purchased product | Price for one test ($) |
|---|---|---|---|
| Paper strip | Milenia Biotec Hybri-Detect | 215 € (≈ 220 $) → 100 bands | 2,2 |
| Cas13a | MCLAB | 100 µg → 218 $ | 0,276 |
| Guide RNA | IDT | 75,86 $ for the two primers | 0,2262 |
| Probes (Ab - Gold nanoparticle) | IDT | 190€ (194$) → 100 nmoles | 0,000000000039 |
| Paper test buffer | Milenia Biotec | Included with the paper strips | 0 |
| SHERLOCK buffer | Promega | Different reactants are included into the SHERLOCK buffer | 1,7969219 |
| Reaction tubes (x2) | Fisher Scientific | 22,75 € (23,30$) → 500 tubes | 0,0932 |
| Paper strip support | - | - | 0 |
| HUDSON buffer | Fisher Scientific and Thermo fisher | Composed by EDTA and TCEP | 0,1636 |
| Nuclease free water | Promega | 15€ (15,34$) for 300 mL | 0,0001534 |
| TOTAL | 4,746 $ | ||
For the moment, we do not have any partnership with manufacturers but we want to develop that in order to decrease the price of our tests. Moreover, we do not want to produce paper test holders into plastic. In fact, we want to produce them into biodegradable materials.
The final cost of one test is approximately 4,8$. We will sell it 5$. You may note that if we buy large amounts of raw material, the price of one test will decrease. In this financial plan, we considered the retail price of each raw material.
To evaluate the price that oyster farmers want to pay for one test, we added a question in our survey about this topic. The result is the following:
Going from 2€ to 10€ is a large scale, however almost 80% of the oyster farmers are ready to pay at least 5€ for one test, meaning that the final cost is not higher than the price expected by oyster farmers.
Financial plan
Before establishing our financial plan, it is essential to determine our legal status. As we are a startup, the ideal is to be considered as a SAS (Société par Actions Simplifiées) because it is the most flexible legal status and it minimizes risk (3).
Revenue plan
Note: In the next revenue plan, we consider shellfish farming instead of oyster farming because our test is adaptable to the majority of shell pathogens. As the propagation of Vibrio aestuarianus is quite rapid (4), we consider that realizing one test per week is recommended.
However, for a question of time, shellfish farmers are not ready to perform tests so frequently. Indeed, in the survey most of them answered that they do not want to perform more than one test per month (see figure 16). If we consider that, we can say that shellfish farmers will buy 12 tests per year, which represents $60 if we consider that one test costs $5. In France there are approximately 2300 shellfish companies (5). According to the survey, we can see that half of them prefer a laboratory to test water (see figure 17), which means that 1150 shellfish farmers will buy 12 tests per year. It represents $69K.
To increase our revenues, we think that selling our product to private laboratories and to veterinarians that work for the French state and for health controls is one of the ways. As laboratories and veterinarians are obliged to conduct tests according to scientific advice, we assume that they will conduct at least one test per week for all the shellfish farmers in France. These consumers will represent: 52 tests per year for each shellfish farmer → (52 x 2300) = 119600 tests / year. If we consider that we propose a discount to these BtoB consumers by selling one test for $4, this part of the market will represent $478,4K. Moreover, we can sell our product to water quality control companies or national institutions. Indeed, by diversifying the targeted pathogens, we can expand sales to a larger domain than oyster farming. For example, the “Agences Régionales de la Santé” and accredited laboratories conduct 310 000 water sampling each year to control the quality of tap water (6). If we consider that each water sampling leads to microbiological analysis, 310 000 tests can be sold each year, it represents $1240k (if one test costs $4). Finally, the previous plan considered only the French market (85% of the European shell production), but shellfish farming is present all around the world. We can think about selling our product, first in Europe (Spain and Italy) and then in asiatic countries especially in China that represent 75% of the mondial shell production. According to that, we can establish the following revenue plan for the next six years.
| Consumer | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 |
|---|---|---|---|---|---|---|
| French shellfish farming companies | $0 | $69k | $75,9k + $5 1380 tests | $82,8k + $5 1380 tests | $88,7k +$5 1380 tests | $89,7k +$5 1380 tests |
| National Institutions* | 0$ | $478,4k | $472,9k - $4 1380 tests | $467,3k - $4 1380 tests | $461,7k - $4 1380 tests | $456,2k - $4 1380 tests |
| Private laboratories and veterinarians* | 0$ | 0$ | $620k | $1240k | $1240k | $1240k |
| European shellfish farming companies*** | 0$ | 0$ | $35,8k | $53,8k | $71,7k | $71,7k |
| Chinese shellfish farming companies**** | 0$ | 0$ | 0$ | $358k | $717k | $1435,2k |
| TOTAL | 0$ | $547,4k | $1204,66k | $2202,78k | $2579,9k | $3292,80k |
In this revenue plan, we considered only the selling of the product. However, as explained in the first second section of this business plan, we want to sell our services. In fact, we want to help oyster farmers in the analysis of the result, we have to charge it.
Expected costs
After the evaluation of the forecast revenue, we analyzed the expected costs from 2023 to 2028. Estimations are based on costs either on different websites or personal talks.
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|---|---|
| Trademarks, copyrights | 200 | 0 | 0 | 0 | 0 | 0 |
| Lab renting costs* | 0$ | $40k | $40k | $40k | $40k | $40k |
| Laboratory equipment and furniture** | $20k | $20k | $20k | 0 | 0 | 0k |
| Lab supplies | $10k | $10k | $10k | $10k | $10k | $10k |
| Salaries *** | $18,5k | $18,5k | $18,5k | $18,5k | $18,5k | $18,5k |
| Marketing, communication and packaging of the product **** | 0 | $100k | $150k | $250k | $300k | $300k |
| Distribution, storage **** / ***** | 0 | $177,4k | $227,4k | $317,4k | $353,4k | $427,4k |
| Manufacturing cost of the test **** | 0 | $200k | $500k | $800k | $1000k | $1200k |
| TOTAL | $48,7k | $565,8k | $965,9k | $1435,9k | $1720,9k | $1995,9k |
Note: This expected costs plan does not take into account the payment of the patented technology SHERLOCK. As it is explained on the company’s website , they are open to partnership with companies. We already contacted them to know more about this partnership, without any answer. We plan to contact them again.
Cash flow plan
Cash flow is a term that refers to the difference between the revenues and the expenses over a certain period. It allows to highlight the shortfalls in funding that will have to be filled. In this plan, we also decided to include the donation from investors and from donors that were not included in the calculation of the total revenues.
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|---|---|
| Investment cash flow from investors* | $300k | $340k | $250k | 0 | 0 | 0 |
| Investment cash flow from donators** | $100k | $100k | $100k | 0 | 0 | 0 |
| Total revenue | $0 | $547,4k | $1204,66k | $2202,78k | $2579,9k | $3292,80k |
| Expected costs | $48,7k | $565,8k | $965,9k | $1435,9k | $1720,9k | $1995,9k |
| Expected costs | $48,7k | $565,8k | $965,9k | $1435,9k | $1720,9k | $1995,9k |
| Profit before taxes | -$48,7k | -18,4k | $238,76k | $766,88k | $859k | $1297,08k |
| Paid tax (tax rate = 20%) | 0 | 0 | $47,752k | $153,376k | $171,8k | $259,416k |
| Cash balance | $351,3k | $421,6k | $541,008k | $613,504k | $687,2k | $1037,664k |
We assume that in the first three year, the financial status of the company will be ensured by donors and investors. Then, the company’s costs will be covered by its own revenues meaning that we reach break-even and start to make profits.
Shell’lock In The Future
This last part aims to recap the timeline of our project for the next six years.
In addition to this time line, we have to take the life product cycle into account. In fact, when the product is correctly selled, a new R&D cycle has to begin. As we demonstrated that we are able to detect targets from different organisms, we can consider the multiplexing of our technique. We can also think about enlarging the panel of targets to reach other users, to work on reusable devices as explained before, to develop an app for automatic quantification (see implementation page), develop a participative science project, and from this, study the correlation between positivity levels and oyster mortality...
Shell'lock beyond testing... Finally, to increase the revenues, we can think about consultancies in case of positive test. In fact, testing with time and spacial resolution is a big advantage of our method, we can give a vision in which, based on water flow, modelling, impact of the infection on the farm we can propose an exit strategy to oyster farmers.
References
1. France Naissain. Farming methods [Internet]. Available from:
https://www.francenaissain.com/en/the-oyster/the-oyster-in-france/farming-methods/
2. Comité National de la Conchyliculture. Les Chiffres Clés [Internet]. Available from: https://coquillages.com/les-statistiques/
3. Tourisme Sète. L’Etang de Thau: une mer intérieure [Internet]. Available from: https://www.tourisme-sete.com/l-etang-de-thau-une-mer-interieure.html
4. ANSES. Neurological disorders associated with the consumption of shellfish : health professionals still unfamiliar with their diagnosis. 2021 Mar. (The bulletin for all of ANSES’s vigilance schemes).
5. Samain JF, McCombie H. Summer mortality of Pacific oyster Crassostrea gigas. The Morest Project. 2008;
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8. Azéma P, Lamy JB, Boudry P, Renault T, Travers MA, Dégremont L. Genetic parameters of resistance to Vibrio aestuarianus, and OsHV-1 infections in the Pacific oyster, Crassostrea gigas, at three different life stages. Article number: 23. 2017 Feb; Available from: 10.1186/s12711-017-0297-2
9. Garcia C, Mesnil A, Tourbiez D, Moussa M, Dubreuil C, Goncalves de Sa A, et al. Vibrio aestuarianus subsp. cardii subsp. nov., pathogenic to the edible cockles Cerastoderma edule in France, and establishment of Vibrio aestuarianus subsp. aestuarianus subsp. nov. and Vibrio aestuarianus subsp. francensis subsp. nov. 2021 Feb; Available from:10.1099/ijsem.0.004654
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11. Cross I, Rebordinos L, Diaz E. Species Identification of Crassostrea and Ostrea Oysters by Polymerase Chain Reaction Amplification of the 5S rRNA Gene. Volume 89. 2006 Jan; Available from: 10.1093/jaoac/89.1.144
12. E. Asplund M, Rehnstam-Holm AS, Atnus V. Water column dynamics of Vibrio in relation to phytoplankton community composition and environmental conditions in a tropical coastal area. 2011 Sep; Available from:10.1111/j.1462-2920.2011.02545.x
13. Elgarch A, Vale P, Rifai S, Fassouane A. Detection of Diarrheic Shellfish Poisoning and Azaspiracids Toxins in Moroccan Mussels: Comparison of LC-MS Method with the Commercial Immunoassay Kit. 2008 Oct; 10.3390/md6040587
14. J.Kellner M, Koob J, S.Gootenberg J, O.Abudayyeh O, Zhang F. SHERLOCK: Nucleic acid detection with CRISPR nucleases. 2020 Mar; Available from: 10.1038/s41596-019-0210-2