Subscriptions have been around forever and increasing in popularity, especially in the Los Angeles market. OceanX is the subscription commerce technology platform that recognizes the lucrative potential behind brand management and subscription services. Specializing in business intelligence for brands and retailers that are looking to execute large-scale subscription programs, the company is an off-shoot of the wildly successful Guthy-Renker. Already OceanX’s technology platform powers the direct-to-consumer subscription businesses for 32 brands with over $30B in direct sales in only two short years.
AlleyWatch spoke with CEO and founder Georg Richter to discuss how the vibrant energy and talent in LA is helping to rapidly expand this profitable company.
Tell us about OceanX service.
OceanX helps companies to start, grow and scale direct-to-consumer recurring revenue models like subscriptions and memberships. Our all-in-one subscription technology platform and the people who support it, form the backbone of our company. We have extensive background in direct-to-consumer subscriptions and partner with companies on their journey to create meaningful relationships with their consumers. We are technically a “start-up” in that we are only a little over 2 years old, but our team has built this technology and operations over 25 years, building the platform behind one of LA’s most quietly successful D2C retail companies – Guthy-Renker. We are a spin-off of Guthy-Renker, which built a few billion-dollar brands like Proactiv all based in Los Angeles.
How is OceanX different?
We are the only subscription platform that brings together e-commerce technology, recurring order and billing, direct-to-consumer fulfillment, customer service and data into a single platform
Beyond the operations and the platform, we also focus advice and insights based on our 25 years in subscriptions and share that data, and our assessment of that data, with our clients to help them learn which marketing channels and offers work so they can really scale
We are a true 1 stop shop for direct to consumer subscriptions. Subscriptions and memberships are the only thing we do. We’re not an e-commerce provider who ‘also’ provides subscription services.
Direct to consumer subscriptions and memberships are one of the hottest growth areas in 2018. The Amazon model doesn’t work for everyone, especially not for those who want to establish and retain a relationship with their customers. Our core markets are; large CPG brands who have ignored the direct to consumer channel for too long, omnichannel retailers who want to add subscription to their strategy, existing large subscription and direct response retail businesses and even media companies who want to add a new recurring revenue channel to their business. Therefore, the market size is massive.
What is the business model?
Our platform works best when we do everything for our clients. However, we have learned that we also have to be flexible in our business model to fit the needs of our clients. A large-scale CPG, for example, may need different types of services than an omnichannel retailer who may already have a direct to consumer website, in-house fulfillment and even brick and mortar stores. In broad strokes- we charge based on variety of elements including – a startup/onboarding fee, monthly platform fees, per shipment/transaction and customer service per usage. We initially thought that we would have one “standard” pricing model but have learned that we have to adapt to our clients who also have different needs over time as their subscription businesses grow.
Do you foresee that the technology that powers subscription businesses will be commoditized?
There are already several ‘plain vanilla’ solutions on the market. However, most of those targets are either digital subscription, billing only, or for retailers- are aimed at small “mom and pop” companies and startups. The issue now is that most companies are outgrowing these startup technologies or have to cobble together and manage a bunch of existing “commoditized” technology systems in order to run their business. We are specialists with deep experience and are only focused on physical retail subscriptions. Furthermore, we also execute and therefore provide unrivaled end-to-end solutions from device to doorstep.the
Tell us a little about your background and what inspired the business?
My whole business life centers on subscriptions. I may be one of the only people in the subscription industry that has over 30 years in this space in Europe as well as North America. My experience goes back to Book of the Month Club and BMG Direct Music Clubs which people often forget how large they were during their times.
Out of necessity, while I was President and COO of Guthy-Renker, I was forced to build a cloud-based system for this very special channel to handle the massive direct-to-consumer subscription business. This system now sits at the core of what makes OceanX special. Recurring revenue models are in demand across retail and not just from the subscription companies that people think of first–like Dollar Shave Club or Birchbox. Seeing this trend through my years of experience, plus seeing whitespace in technologies and systems for large-scale direct to consumer businesses helped to inspire OceanX.
Tell us what building your company in LA has been like?
LA is such an amazing place right now in the world of technology and specifically direct to consumer e-commerce. It is competitive, but we also have some of best talent. The competition for technology talent has its challenges, but I can’t think of a better place to run a data/technology focused company. There is also a great source of industry intelligence and know-how in the subscription space because of past successes like Guthy-Renker, Beachbody, Dollar Shave Club, TechStyle, Honest Company and so many more. I grew up in Austria and spent a lot of time in New York in my career- I can’t think of a better place to build a business like ours than Los Angeles.
What are the milestones that you plan to achieve within six months?
Technically, OceanX is 2 ½ years old. We are profitable and we’re growing rapidly in clients, transaction volume and people. Currently, we’re handling direct to consumer subscription services for 32 brands – likely we will cross the 40 brand milestone before the year is over. Our next milestones will be around new large client launches and the growth in transactions and shipments of our current amazing clients.
If you could be put in touch with one investor in the community who would it be and why?
We love having intelligent conversations with investors who back break-through/disrupting businesses in the physical retail space. We have been lucky to have our current investors (GR Ventures) make so many introductions to the local investment community. The LA investment community with the likes of Upfront Ventures, Crosscut Ventures, A-Grade, Mucker and more combined the talent agency investors like CAA Ventures, UTA Ventures plus all of the incubators and accelerators make for such a vibrant and creative community. I think LA investor community is much more in tune with consumers and retailers compared to a more established community in Silicon Valley. Currently, we support two of our own incubation experiments. I can’t single out any one investor, as we are always ready to connect with passionate people.
What does being “Made in LA” mean to you and your company?
Again, the best possible place to be located. OceanX will be located at 100 N. Pacific Coast Highway after the change the name from Sepulveda to PCH this summer– even the street name is perfect since PCH is the ultimate LA street with a real connection that runs across almost the entire state. We’re enjoying the OceanX view of the Pacific Ocean while providing Ocean deep expertise in our space.
What else can be done to promote early-stage entrepreneurship in Los Angeles?
Success leads to success. There have been many successful start-ups in our area and that has a halo effect which can create more entrepreneurs. I just met with an entrepreneur from San Diego who said at the end our of meeting that he ‘has to move his company to LA’ because of the vibrant and creative community.
What is your favorite restaurant in LA?
Eveleigh in West Hollywood, Charcoal in Venice