Introduction

After.com is an online cremation planning and fulfillment service that provides a simple, convenient, and transparent customer experience to rapidly growing nationwide demand for alternative after-life products and services. After.com delivers a solution for simple online arrangements for both bereaved seeking the care of a loved one and for individuals pre-planning their final arrangements.After.com is poised to own the entire customer experience at scale and provide higher quality service before, during, and after a death with tech-enabled services and significant savings compared to traditional funeral homes in an enormous and growing market ripe for disruption.

The Market

The deathcare market has two fundamental components: pre-need and at-need. Pre-need, or pre-planning, is for consumers purchasing funeral plans in advance via insurance or trusts. At-need is for families seeking the care of an individual who has recently passed.

The pre-need deathcare market was valued at $28.09 billion in 2018 and is expected to reach $41.47 billion by 2027 (Pre-Need DeathCare Market, 2020).

The at-need deathcare market generates $27.8 billion in annual revenue and increases each year.After.com is positioned to expand further into both the pre-need and at-need markets at scale.

The average cost in the United States of a full-service funeral with a burial vault is $9,135. The average price of a direct cremation without funeral services is $2,145.

There are 19,136 funeral homes in the United States. Of these, 89.2% are privately owned, while publicly-traded corporations own 10.8%. Of the 89.2% privately owned funeral homes, the majority serve only a singular market and care for an average of 113 decedents annually (National Funeral Directors Association -Statistics, 2019).After.com is a software-first company enabling us to serve geographical areas up to 10x the size of traditional brick and mortar-based funeral homes.

The average age of a funeral home owner in the United States is 55 years old. As a result, the ownership of the vast majority of funeral homes will likely trade hands in the coming decade leading to a sea change in the industry.

Funeral homes tend to fall into two general categories: Traditional, full-service providers and low-cost or cremation societies. Traditional providers are heavily focused on producing traditional funerals requiring large facilities, numerous staff, funeral vehicles, and embalming/preparation facilities: all necessities to serve the growing minority who still value this type of service. Low-cost providers and cremation societies typically have smaller facilities and staffing and have a limited offering of services and value. This industry segment is the most fragmented, with providers in every major county in the US and less than a dozen multi-state operations. Most are limited to a small geographic region, and many put basic responsibilities back on the family who has lost a loved one.

After.com’s unique opportunity in the deathcare market results from the convergence of three important trends: a rapid increase in cremation rate, increased velocity in annual deaths, and universal adoption of online purchasing among the baby boomer demographic.

Rising Cremation Rates

The national cremation rate has increased from less than 10% of funerals in 1980 to over 50% today. Rates have grown faster in the last five years than in the prior 30 years. This meteoric growth is projected to increase to nearly 80% in the next ten years. Reasons contributing to this include, but are not limited to:

a) A decline in religion in the US;

b) Distribution of families–rarely are children living and working where their parents and grandparents are from;

c) Increased environmental conscientiousness and efforts to reduce our carbon footprint;

d) Continually increasing costs of funerals; and

e) Democratization of information and ease to shop options.

Increased Annual Deaths

As the Baby boomer generation ages, annual US deaths will be propelled to historic rates reaching more than 3.6 million in 2037. Moreover, the number and percentage of people who die will increase every year between now and 2055 before gradually leveling off.

Online Consumer Adoption

In 2020 consumers 65 and older became the fastest-growing group of online buyers, spending 49% more on the web than in the year prior. The frequency of their purchases also increased by 40%. After.com’s target demographic is comfortable now, more than ever, to purchase goods and services online. In addition, 92% of Baby boomers report they shop online and research shows that Baby boomers spend an average of 27 hours online, 2 hours more than millennials.

Additionally, millennials and GenXers are increasingly making end-of-life decisions for their parents and expect the convenience and simplicity of an online experience. Therefore, tech-enabled services will be critical in their buying decisions as they are accustomed to “comparison shopping” and a digitally native experience.

It is clear that modern consumers, regardless of age, are willing and capable of navigating the web with the intent to buy.

Our Customer

Our customer is the growing majority of Americans that desire the ease and convenience of an online solution to a traditional problem. To put it simply, everyone experiences death, and in the coming years, nearly 80% of people will opt for cremation. By offering solutions to serve both the pre-need and at-need markets, projections are that After.com will have a marketable service to millions of consumers nationwide.

We understand not every customer will choose direct cremation services. However, with our value proposition of convenience, affordability, and tech-enabled processes, we believe After.com will be the obvious choice for consumers seeking a simple cremation option for themselves or a loved one. The average age of our customers varies by service. In pre-need markets, the average age is currently 64. However, individuals as young as 40 and as old as 80 have funded pre-need policies. At-need markets vary widely, but those using our service to arrange a cremation for a loved one are generally in the Baby Boomer or Gen X generations.

Our customer values innovation over tradition and convenience over ceremony, regardless of age.

The Problem

While research suggests a clear shift in consumer preferences for both simple cremation services and the convenience of online arrangements, traditional funeral homes are not structured to meet these needs effectively. Further evidence of the decrease in demand for traditional funerals is the surprising trend that despite an increase in annual deaths, the number of funeral establishments in the United States has decreased by 1,421, nearly 8%, in the last decade.

To compensate for a loss in revenue resulting from the increase in consumers opting for cremation, funeral homes are forced to charge inflated prices for cremation services to subsidize their staffing and facility expenses. This is evidenced by the fact that funeral goods and services have dramatically outpaced other items and commodities in CPI-U and PPI.

Even those that desire a simple cremation must jump through the cumbersome and uncomfortable hoops of the traditional funeral arrangement process. According to a 2018 report from the Consumer Federation of America, of the traditional funeral homes surveyed across the country, only 25 percent include their pricing online. Fueled by lack of competition and failure to provide transparent pricing, consumers often end up paying more for additional goods and services they don’t necessarily need, especially if they seek a more straightforward solution.

While funeral homes and simple cremation providers share a customer with the same fundamental problem, their approach to providing a solution is vastly different.

Our Strategy

Through experimentation with our platform and intensive industry R&D, After.com has a clear pathway to success and scalability. After.com will dramatically amplify the lifetime value of an individual by becoming the go-to for all stages of the deathcare experience by delivering value before, during, and after a death has occurred.

We plan to accomplish this by implementing three main strategic initiatives:

Initiative I: Provide a virtual pre-need offering that allows customers to fund their future cremation in 20 minutes or less.

An increasing number of people choose to plan their final arrangements in advance. According to a study conducted by the Funeral and Memorial Information Council (FAMIC) in 2015, 69 percent of adults over the age of 40 indicated they would prefer to arrange their own service. Furthermore, of those who felt pre-planning was important but had not yet pre-arranged services, 55 percent said they would like to do so within the next five years. This pace has been further accelerated in recent years with the hyper-awareness surrounding death due to the pandemic. 2020 Q2 earnings reports from the four largest funeral conglomerates showed a 30% increase in advance funeral funding compared to prior years.

However, mirroring the frustrations of the traditional funeral process for those in the at-need market, the barriers to purchase pre-need coverage involve lengthy in-person meetings with a salesperson and stacks of paperwork.

Homesteaders Insurance, one of the largest funeral planning organizations in the world and who generated $583 million in pre-need sales in 2020, reported that 80% of their funeral planning still happens at a funeral home, with 18% involving a representative visiting the clients home.

Existing pre-need providers also continue to use archaic marketing strategies. For example, Precoa, which generated $400 million in sales in 2020, allocated most of its marketing budget to traditional marketing techniques such as direct mail and in-person events.

After.com has developed tech-enabled processes that give consumers the ability to purchase a pre-need cremation policy online, from the comfort of their home, in less than 20 minutes.

After.com has created an internet-first marketing flywheel that destigmatizes the taboo nature of planning in advance. We eliminate many of the barriers to purchase that exist in the current market landscape.

So what prevents a company like Precoa or Homesteaders from accomplishing a similar model? Perhaps most prevalent is that these large companies are beholden to territorial exclusivity agreements with local traditional funeral homes across the country. As a result, funeral homes, and their sales agents, are disincentivized to sell simple cremation policies because they are a fraction of the cost of traditional funerals and reduce commissions and revenues. In short, the breadth of their offerings fundamentally eliminates the possibility of their process being simplified in the way After.com has.

By contrast, Neptune Society, a direct cremation organization, has successfully presented simplicity to the consumer. Neptune Society was acquired by Service Corporation International in 2011, generating $55 million in sales annually at the time. Neptune now generates $93.9 million in annual sales. However, Service Corporation International has decelerated the growth of Neptune Society of late because of the inherent competitive conflict it has with the other 1,500 traditional funeral homes and 400 cemeteries they own that generate the lion’s share of their revenues.

With After.com, we recognize by building a robust pre-need customer base, we can expand both the lifetime value and duration of the customer. At the sale of the pre-need policy, we can generate income from the insurance or trust as a commission on the sale while still being able to realize all revenues from the policy when death occurs. This allows us to secure the customer for a longer period of time, enabling us to continue offering products and services of value prior to the death occurring.

Initiative II: Provide consumers with a simple, transparent, white-glove cremation experience at an affordable price, arranged from the comfort of their homes.

After.com provides cremation services at a price point that can’t be matched by traditional funeral homes, with a value and experience that low-cost providers can’t compete with.

The process is simple: for one flat price, we provide everything you need to get your loved one placed at rest without you ever having to leave your home. At the time of death, our staff is dispatched to bring your loved one into our care. Immediately, the family is virtually introduced to their Care Specialist, who, over the next 48 hours, collects the necessary information and signatures through our tech-enabled process. During this time, the Care Specialist provides frequent updates, providing transparency unmatched in the industry. In addition, our unique client portal allows families to track their loved one throughout the process, providing an additional layer of peace of mind. Following the completion of the cremation, the cremated remains and Death Certificates are hand-delivered to the family’s home.

The current process would require several trips to a funeral home, a two-plus hour meeting with a Funeral Director, and the declining of a myriad of unwanted sales offerings, all while in an emotionally-compromised state of grieving. Often, the task of traveling to the local vitals location to obtain Death Certificates is passed to the family. Should it not be possible for all family members to make it to the physical meeting, the burden of obtaining the necessary signatures from every required member of the family would also typically fall on the family. These frustrations and many others are solved through the asynchronous, tech-enabled process at After.com.

Following the cremation, the services rendered from the funeral home would typically stop. However, having built a solid relationship with the customer and having their confidence, we recognize there are so many remaining problems facing the customer and so much more value left to deliver. This brings us to the opportunity of the next initiative.

Initiative III: Build out an end-of-life platform solving the many problems that arise after a death occurs.

Unlike many industries moving online, the deathcare space remains highly fragmented and difficult to break into. One main contributing factor to this difficulty is acquiring customers before and immediately following a death-related event. The subject is often taboo for many individuals and families to discuss and plan for until they are faced with it.

Most consumers never contemplate the many logistical and emotional challenges that follow death. After suffering a loss, a family is now faced with grief, settling estates, transferring ownership of assets, notifying social security, and dealing with insurance organizations. Unfortunately, companies such as Lantern, Brighter Mornings, and Full Circle Aftercare have struggled with customer acquisition despite having valuable products that could assist with these issues.

We believe by performing the necessary service of cremation for families at the time of death and building lasting trust and confidence, we will be most poised to provide these services through partnerships and/or self-fulfillment. We have already seen this play out in our first cohort of customers.

Initially, we plan to test interest and conversion rates by partnering with existing organizations to provide these services as wholesale resellers. Then, at scale, we will determine which of these offerings we’d like to bring in-house to increase our customer LTV and which we’ll keep as trusted partners.

The services requested that we’ve already identified as potential value-adds and additional revenue streams range from a variety of categories including, but not limited to: a) digital trusts and wills, b) managing of online accounts, c) grief support and counseling, d) becoming a marketplace for cremation disposition options (diamonds, keepsakes, jewelry, stones, human composting, etc.,) e) celebration of life events, f) customizable memorials and merchandise.

Conclusion

After.com is seizing a once-in-a-generation opportunity in the rapidly changing deathcare industry. With extensive experience in deathcare disruption and scaling a relevant adjacent baby boomer-focused online business, our fast-moving team is well-positioned to create significant value and shareholder upside in this extremely outdated industry. In addition, our perfect public review rating with families and month-over-month growth is a strong indication of our tech-enabled model being well received.

Sources Cited

National Funeral Directors Association -Statistics. (2019). National Funeral Directors Association. Retrieved 2021, from https://nfda.org/news/statistics

Pre-need Death Care Market was Valued at USD 28.09 Billion in 2018 and Expected to Reach a Value of USD 41.17 Billion by 2027 at a CAGR of 4.3% Says Absolute Markets Insights. (2020, February 4). Insurance News Net. Retrieved August 25, 2020, from https://insurancenewsnet.com/oarticle/pre-need-death-care-market-was-valued-at-usd-28-09-billion-in-2018-and-expected-to-reach-a-value-of-usd-41-17-billion-by-2027-at-a-cagr-of-4-3-says-absolute-markets-insights