Canadian Startup Koge Seeks to Disrupt Vitamin Industry with Online Approach

Toronto-based startup Koge launched its direct-to-consumer vitamin and supplement company yesterday.

Cofounders Andrew Lenjosek and Alex Hyssen both left banking jobs on Wall Street and Bay Street respectively to tackle a marketplace rife with consumer issues. It’s also a space ripe for the online taking.

“This is a huge market,” explained Lenjosek to Techvibes. “In North America alone we’re talking $28 billion every year and what blew my mind is out of this $28 billion, internet sales are only 4%.”

The 23-year-old said that other outdated mediums like mail-order catalogs make up 6% of the industry. Meanwhile online sales are about to grow at about 13.5% annually over the next five years.

Koge is the first online-only vertically integrated vitamin company in Canada. They have exclusive access to their own manufacturer and they guarantee that consumers won’t be charged even close to some of the mark-up schemes of established industry players.

“What ends up happening is these vitamin stores will charge five times product markups, the vast majority going towards things like marketing, labour, leasing and really nothing to do with the product,” says Lenjosek. “We’re able to offer the same high-quality products under our own brand for under a third of the cost.”

They also feel that the vitamin-buying experience can be a confusing one. Accordingly they’ve been working with a team of nutritionists to develop multi-product packages to simplify the process.

As well they’re working with these doctors to design an online proprietary assessment tool that will offer consumers tailored nutritional advice along with specifically recommended products. Users enter some personal information and they receive a customized solution. This is something that the industry giants cannot currently offer, “or their models would fall apart if they did,” said Hyssen.

The startup is taking advantage of some helpful family connections as well. Hyssen’s family have been in the health industry for nearly 30 years developing some of Canada’s most known companies. Many will recognize the name Dr. James Hyssen as the co-founder of Herbal Magic and other major health brands in Canada.

From the get-go the company has been clear about their philanthropic initiative as well. For every sale they donate vitamins to African children under the age of five who are suffering from malnutrition. They believe the initiative resonates well with their target market of 20 to 40 year olds and so does a fellow Western University alumnus who has served as a mentor recently. Via the Richard Ivey School of Business Alumni Network Koge was able to connect with Michael Aniballi, Vice President of Digital at JWT Canada.

The e-commerce specialist Aniballi says it’s “amazing to see how fair they’ve come.” Critical to the pair’s success will be continually maintaining the 20-40 year old clientele who want to be actively engaged with social companies like Koge.

“I think in these circles people are very supportive of those who take risks, step outside of the box and do something a little different, and I think they’ve tapped into their own network socially,” said Aniballi. “If they can really evolve that social ecosystem I think they’re going to be massively successful.”

For now the team is riding on $200,000 of angel investment, of which they both put their savings into. They’re currently in the midst of deciding if an accelerator program will suit their needs.

A future funding round is in the works according to Lenjosek, as they want to expand to the US markets and offer more diversity in their current selection of supplement packages. As well they want to make a full transition into custom solutions.

Eventually the pair would like to buy out their own manufacturing facility. “That would be the ultimate end game goal,” said Lenjosek. “Because then I would be able to be 100 per cent certain that at all times our product is literally as good as it can be and as cheap as it can possibly be.”

Not bad for two guys who were once living in Hyssen’s basement chasing their dreams.