Smile Direct Club (SDC) is a healthcare business using a solutions business model to provide fully customized, 3D printed, plastic orthodontic aligners to customers who pay via a subscription service. Even if Smile Direct shows some elements of a product business model such as durable unit economics with some costs reducing with volume; the engagement with customers to design personalized products to match different treatment goals, suggests it is a solutions business model.

Smile Direct Club delivers “teledentistry” (i.e., the use of information technology and telecommunications for dental care) seeking to disrupt the traditional orthodontic market in which customers engage in face-to-face consultations with licensed orthodontists.

Through a med-tech platform, Smile Direct delivers a co-created solution based on strong customer engagement before and during treatment. While pricing remains consistent, the length of treatments varies depending on customer needs, likely meaning that costs of provision of the licensed dentist or orthodontist are spread across the customer group.

Smile Direct Club aligners compete with traditional braces and transparent alignment companies. Looking at the competitors, Invisalign provides plastic aligners following consultation with a traditional orthodontist, costing £2500-5500; and Clear Correct provides plastic aligners following consultation with a traditional orthodontist.

On 29 November 2019, Smile Direct shares were trading at $9.98, giving a $3.9bn and 5500 employees valuation. SDC operates in the USA (since inception), Canada (from 2018), UK, and Australia (from 2019).


Smile Direct Club was founded in 2014 by Jordan Katzman and Alex Fenkell. SDC was initially funded by equity from the Camelot Venture Group. Growth was supported through investments from other interested parties, including Align Technology in 2016, and then a significant $380million raised in equity capital in 2018, giving a valuation of $3.2bn (from investors including Clayton, Dubilier, and Rice) and entering the unicorn club. In September 2019, the SDC Initial Public Offering on NASDAQ raised $1.35bn with shares priced at $23, giving a $9bn valuation.


Smile Direct Club targets a “direct-to-customer” approach via its med-tech platform, enabling to target customers in all the countries in which SDC has established marketing, orthodontist, and distribution system. Smile Direct suggests that 85% of the world has a form of malocclusion, with less than 1% treated annually. Their IPO prospectus indicates that the potential of the market is up to $945bn globally.

Learn more about the Solutions Business Model

A dyadic relationship where your physical good or service can only be designed and delivered after prior interactions with the customer.

Engagement  — Value Creation Proposition

Smile Direct Club has a high level of engagement with customers, who provide an impression of their orthodontic needs via a 3D scan at a “Smileshop” or “SmileBus” – or produce a personalized mold via an impression kit sent to their home. Within 48 hours, customers receive a customized treatment plan following a review of their case by a licensed dentist or orthodontist. Custom-made aligners are shipped to customers throughout their treatment, which lasts 5-10 months, during which time the licensed dentist reviews progress via the remote teledentistry platform at least every 90 days.

Delivery — Value Chain

Smile Direct Club provides value to customers in different ways:

-Cost: Smile Direct Club claims its product is up to 60% cheaper than traditional orthodontics; $1895 compared to up to $8000.

-Convenience: traditional orthodontic treatment is said to require 10-15 face-to-face consultations over 12-24 months. Smile Direct Club achieves a similar result for many customers through its “doctor-directed teledentistry” with zero requirements for face-to-face visits, over 5-10 months, depending on the personal condition. All treatments are delivered to home within 3-4 weeks of the initial consultation. In addition to SDC “SmileShops” and “SmileBuses,” SDC’s partnerships with CVS and Walgreens (April 2019) have enhanced convenience for US customers wishing to engage with a physical representation of the product at their local store.

-Access: Smile Direct Club claims that only 40% of US counties have access to orthodontists; their product is opening access to all prospective customers in all the countries in which SDC operates.

Monetisation — Value Capture

Smile Direct Club makes money by leveraging the subscription model with “SmilePay,” which requires a $250 upfront payment (to cover the cost of aligner manufacture) and an average monthly payment of $85 over 24 months. Approximately 65% of SDC customers use the SmilePay system, which does not require a credit check and is currently offered at c17% APR. SDC claims some customers (particularly in countries without access to free healthcare) may find it difficult to access credit to fund orthodontics, whereas their model “democratizes healthcare.”

Digital Technology

SmileDirectClub uses information technology and telecommunications for dental care, consultation, education, and public awareness (compare telehealth and telemedicine). SDC leverage the patient data collected through the sale of aligners, to increase customer engagement and offer tailor-made solutions to match different customer needs.



Disclaimer — Written by Elizabeth Hegarty, revised and updated by Francesca Hueller under the direction of Prof Charles Baden-Fuller, in 2020. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. The information contained here should not be used for investment advice and is simply indicates the individual’s understanding of the company’s business models as of April 2020. © 2020